Oil and Dictators

Low-prices-of-OilWill the collapse of oil prices benefit or erode petrodictators in the Middle East, Eurasia, Africa, and Latin America?

At first glance, the answer would seem obvious. Venezuela, Nigeria, and Iran need crude prices as high as $110 per barrel to fund their states in their present condition. Russia, half of whose government budget depends on black gold, is not far behind. Saudi Arabia, which did much to reverse the “Arab Spring”, announced in recent years new oil-funded projects costing about $500 billion and aimed at pre-empting adversaries who could use the discontent with the regime in Riyadh to agitate the mind of the masses.

But things are more complicated than they seem.


CROmnibus and Cronyism for Blue Health Plans?

Reid-Boehner-ObamaDespite the end of Obamacare’s “bailout” for health insurers, some of our friends who seek to repeal and replace Obamacare insist on finding a crony capitalist under every bed and in every closet.

Yuval Levin, at National Review Online, appears to have been the first to identify an adjustment to an insurance regulation, buried in the CROmnibus, as “cronysism” for non-profit Blue Cross and Blue Shield health plans. This has been picked up by Louise Radnofsky at the Wall Street Journal and Timothy P. Carney at the Washington Examiner.

Mr. Carney notes that there is “no clear right or wrong in this matter,” but he criticizes the adjustment for “providing Obamacare relief for exactly one corporation.” However, the relief does not apply to “exactly one corporation.” It applies to all Blue Cross and Blue Shield plans.


Katniss Everdeen and the Paradox of Revolution

MockingjayHistorically, the common form of revolution has been a not-too-efficient despotism which is overthrown by another not-too-efficient despotism with little or no effect on the public good. Indeed, except for the change in the names of the ruling circles, it would be hard to distinguish one from the other.” —Gordon Tullock

For the past three weeks, The Hunger Games: Mockingjay — Part 1, the third installment of the popular dystopian trilogy, has reigned at the top of the national box office. I finally had the pleasure of seeing the film last weekend. Although one reviewer has criticized Mockingjay—Part 1 for being “unnecessarily protracted,” other viewers including myself understand that the penultimate chapter is saving the main action for the franchise finale. Overall, I was pleased that the third film continued to build upon the atmosphere and themes of Suzanne Collins’s bestselling books, thanks to strong performances by the stellar Jennifer Lawrence (Katniss Everdeen), Woody Harrelson (Haymitch), Julianne Moore (President Alma Coin), Donald Sutherland (President Coriolanus Snow), and the late Philip Seymour Hoffman (Plutarch Heavensbee).

Many commentators have already discussed and analyzed the series’ underlying socio-political themes. Various interpretations have been embraced by the Left, Right, and everything outside and in-between. It’s likely that the deliberate ambiguity is what allowed for the series to become a political Rorschach inkblot with universal appeal. But broadly speaking, at least to me, The Hunger Games trilogy seems to contain a libertarian message that highlights the moral worth of the individual and resistance to oppression, tyranny, and centralized control over daily life.


Normalizing Relations with Cuba: Good Policy

Havana cigars texturePresident Obama announced that the United States will restore full diplomatic relations with Cuba, which is a good move for both countries. The economic impact of the policy will be limited, however, because the economic embargo the United States has imposed on Cuba can be removed only by Congress. This presents the obvious political roadblock of a lame duck Democratic president pushing up against a Republican Congress.

If the trade embargo were relaxed or eliminated, it would benefit Cubans more than it would affect anyone in the United States, because it would give Cubans more access to US goods. The impact on the US economy would be minimal, because Cuba is small and poor. Commerce with a poor country of 11 million people cannot have much of an impact on a wealthy country with a population well above 300 million. Their economy can’t produce very much to sell to us, and for the same reason, Cuba can’t be a large market for American exporters either.

The trade embargo has surely done more to support Cuba’s communist government than to undermine it. The embargo allows the Cuban government to blame the country’s economic hardships on the United States. Were the embargo to be removed and relations completely normalized with Cuba, the Cuban government would no longer have the US to blame for its problems, which would make it more apparent to Cuban citizens that their poverty is a direct result of their own government’s policies.


Student Debt and Default Explode While U.S. Department of Education Fiddles

StudentDebtA new report from the U.S. Department of Education’s Office of Inspector General (OIG) examined what steps it had taken from fiscal years 2011 through 2014 to improve student debt and loan repayment rates.

In a nutshell, a big fat nothing—and taxpayers will be stuck paying off tens of billions in bad loans as a result. According to the OIG:

The Department’s outstanding student loan debt portfolio more than doubled in the last 6 years, from $516 billion at the end of FY 2007 to $1.04 trillion at the end of FY 2013. Based on the most recent official cohort default rate information published by the Department, 1 in 10 borrowers who were required to begin repaying their loans in FY 2011 defaulted on their student loans within 2 years and about 1 in 7 borrowers defaulted within 3 years. (p. 1)


Economics 101: Uber’s Prices Don’t “Exploit” People

The past few weeks have been full of travel—between Denver, Atlanta, Louisville, and Washington, D.C., I’ve had more than my fair share of layovers and flight delays. (I was also forced to contemplate what terrible thing I might have done to deserve sitting next to the woman who let out a scream every time the plane made a noise.)

Despite the headaches it may bring, I love traveling. I get the chance to meet new people, explore new places, and I always learn something. In my recent travels, I’ve learned once again to appreciate the fundamentals of economics. My teacher? Uber.


The Program No One Dares to Question: Social Security

SSI recently exchanged letters with Joe Davidson, columnist for the Washington Post, about the Social Security program, in which I raised a central problem with this program, a defect consistently ignored by all its supporters. (Incidentally, the $1,000 reward I promised Mr. Davidson—which he did not attempt to claim—remains open to any staff member of the Washington Post and to any employee of the U. S. Social Security Administration). The correspondence is as follows:


The Long Road Back from Torture

The Romans perfected torture of their political prisoners. It didn't save them.

The Romans perfected torture of their political prisoners. It didn’t save them.

If it’s true that the first step towards recovery is admitting you have a problem, then last week’s release of the report detailing the CIA’s torturing of prisoners can at least hopefully provide the impetus for Americans to disavow such methods and begin to rein in the out-of-control security state that has grown especially since 9/11.

As Peggy Noonan recently wrote in the Wall Street Journal—a paper not otherwise known to be soft on the War on Terror:

...America should never again do what is asserted and outlined in the report, which enumerates various incidents of what I believe must honestly be called torture. ...

... Torture is not like us. It’s not part of the American DNA. We think of ourselves as better than that because we’ve been better than that.

It is almost childish to say it, yet children sometimes see obvious truths. We can’t use torture methods and still at the same time be the hope of the world. You’re [either] an animal like other animals or you’re something different, something higher, and known to be different and higher.

Especially in this season celebrating the birth of Christ, the Prince of Peace who taught us the Golden Rule of “Do unto others as you would have others do unto you,” we need to take this opportunity to affirm that these methods are totally unacceptable in the eyes of man and God.

As Americans held the German people accountable for the acts of Hitler, and Iraqis for the policies of Saddam Hussein, we ought not be surprised or think we can escape being damned for torture carried out by our political masters and their henchmen.

We thus, individually and collectively, must stand up and loudly declare, “I would rather die in a country that upholds every human’s inalienable rights than live in a country ‘protected’ by barbarous thugs.”

Shooting the messenger as many commentators seem to think would solve the problem will not unmake the facts: torture is now part of the American culture. The only point to address now is: do you condone torture or do you condemn it? If you condemn it, you must speak up and help eradicate every justification floated for such abuse.

The only way to uncorrupt our culture is to return to our roots and reimmerse ourselves in the principles upon which the kind of culture worth preserving rests: all humans are equally beloved children of God, endowed inalienably and equally with rights which must be respected regardless of circumstance. No ends can justify an unjust means—every means is itself an end.

Christmas provides an excellent starting point: read the life of Jesus. Remember how it ended, in torture and death. Then decide whose example you wish to follow, and do your best to do so.

How Obamacare Hurts Its Beneficiaries: Two Vignettes

PovertyTrapLast week, the mainstream media ran two stories about two Obamacare “beneficiaries” who were actually victims.

The first was about a woman whose husband was already extremely sick, and was subject to the risk of being unable to buy health insurance in the individual market if he lost his employer-based benefits. That was a legitimate problem before Obamacare. My proposed solution is health-status insurance, or “insurance against becoming uninsurable”—a type of re-insurance. Obamacare’s solution is a federally regulated health-insurance bureaucracy:

The transition to Obamacare—at least for a 59-year-old man and a 56-year-old woman in south Orange County—wouldn’t be quite that bad. But it would be, in three big ways, far rougher and more frustrating than I’d ever dreamed.

1. Obamacare brought us new health insurance options, but cost us our more affordable plans.

2. We learned patience, but we couldn’t keep our doctors.

3. The Affordable Care Act saved us money this year, but it didn’t alleviate our concerns about obtaining affordable medical care.

The second story involved a woman explaining how Medicaid, expanded by Obamacare, “forces families like mine to stay poor.” Her pregnant sister-in-law suffered a tragic car accident, and fell into the social-safety net:

After the birth, Marcella would have been able to join the university’s student health plan. The baby would be covered by the Children’s Health Insurance Program, the federal-state plan for lower-income children. Marcella and Dave thought they were all set. And then, with the accident, they fell down the social assistance rabbit hole.

At first I thought I would be a great help to Marcella and Dave as they negotiated this web of programs. After all, I’d been teaching and writing about social policy for years, first at Harvard and then at MIT. But I was soon humbled by how immensely complicated the programs are on the ground, and shocked by how penurious. The programs that Marcella now needs as a quadriplegic have helped her in many ways, but have also thrust her, my brother, and their young son into poverty, with little hope of escape. Until this accident, I did not realize the depth of the trap.

And this is not just the story of one family hit by tragedy. Millions suffer under such program strictures and limitations. Between ages 25 and 65, two-thirds of Americans will live in a household receiving means-tested benefits, according to sociologists Mark Rank and Thomas Hirschl.

This “poverty trap” is a consequence of very high effective marginal income tax rates, caused by the loss of benefits as household incomes increase, which incentivizes people to keep their incomes low.

* * *

For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.



All Men Are Brothers, but All Too Often They Do Not Act Accordingly

WorldUnityIn “The Communist Manifesto,” Marx and Engels tell us that “[t]he history of all hitherto existing society is the history of class struggles.” In a sense, I agree, although I define the struggling classes differently than they did. In any event, it seems clear enough from what we know about the past ten thousand years or so of human history that people everywhere have been marvelously creative in finding ways to define certain people as members of a class or other group that can and should be treated with contempt, denied equal justice, and exploited without mercy.

Sometimes the groups have been defined along racial or ethnic lines, at other times along religious lines, at still other times along lines of their place of birth or their citizenship status, sometimes by their level or kind of education, sometimes by the language they speak, and so forth, on and on.

When I was a boy, growing up in the San Joaquin Valley of California, I lived in a place where about two-thirds of the population consisted of Mexicans and their native-born children, people who often suffered mistreatment at the hands of the authorities and members of the public. For many of them, the fear of deportation and police abuse was a constant in their lives.

I myself, however, was a member of a different despised class, the migrants from Oklahoma known as Okies. Although these people had previously suffered considerable mistreatment at the hands of the California legislature, police, landowners, and others, by the time my family arrived, in 1951, such mistreatment had greatly moderated, and although I was always aware that we Okies were looked down on by some people for our poverty, our lack of education, and our speech, I never dwelt on such minor lack of respect, and indeed I personally suffered not at all in this regard when I attended the same small-town schools as everyone else and succeeded there academically and athletically without my group membership’s holding me back at all.

After I became a professor, I spent much of my time during the first fifteen years of my career engaged in research and writing about American blacks since the War Between the States. This work was often hard to bear because of the nature of the subject. It was not that I was studying people who had low incomes, little education, or other deficiencies, often as a result of their treatment at the hands of the powers that were, especially in the South. It was more because of how the whites in general treated the blacks with contempt and viewed them as inferior by virtue of nothing but their race. This sort of pervasive withholding of basic human respect made my blood boil. As I studied occasions when such disrespect spilled over into the outrages for which the South became justly infamous – lynchings and similar savageries—I often had to struggle to keep my tears from staining my notes.

Nowadays, I have the same reaction to the contempt with which so many Americans treat the migrants from Mexico, Central America, and elsewhere solely because they belong to a different ethnic group, speak a different language, are very poor, or—worst of all—lack the official stamp of government approval that endows them with permission to be here, a right that no peaceful person ought to have been denied in the first place. Reading about the injustices perpetrated so lavishly on these people, especially by police, but also by various vigilantes, nativists, xenophobes, and other yahoos, I find again that my blood boils and my tears well up.

When, oh when, will people finally learn to treat all human beings as their brothers and sisters? Sad to say, I believe the answer is, never.