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.

Although the story never specified the kind of political economy that characterizes Panem (the post-apocalyptic land of what used be North America), my impression from reading the books and watching the films is that it is some form of feudalism. A tyrannical central authority, the Capitol, exercised total control over twelve defeated Districts that are best thought of as vassal states. A disarmed populace was reduced to complete serfdom under the ruthless Capitol, which maintained a monopoly on all the weapons and technology. Without any means of resistance, there was no option for the people but to submit and obey.

Each District was forced to produce a specialized good or service, according to Capitol mandates, and to pay (literal) tribute every year. The futility and stupidity of a planned economy were on full display with the resulting mass poverty and thriving black markets. In fact, black markets were portrayed in a very positive light as the protagonist Katniss made a living selling poached game to acquire essential supplies. Even under the worst social conditions, people were willing to engage in voluntary exchange, flout regulations imposed by the State under the pain of death, and seek to improve the lives of their fellow human beings.

The last book in The Hunger Games trilogy, Mockingjay, contains profound lessons on the reality of war and revolution. After surviving a second ordeal in the Hunger Games and seeing her hometown firebombed into oblivion by the Capitol, Katniss joins the underground resistance movement, led by the once-hidden District 13, and agrees to be its symbol of rebellion, “The Mockingjay.” With a subtle nod to filmmaker Leni Riefenstahl, the rebels and Capitol engage in a massive propaganda war with Katniss at the focal point. Much of the recent film adaptation focuses on this aspect of the plot to the chagrin of some viewers. But George Mason University law professor Ilya Somin praises this emphasis:

It enables us to feel the moral ambiguities of propaganda and the manipulation of public ignorance, even when done in a good cause.... The portrayal of District 13 effectively evokes its oppressive socialism (even more than in the book), while also giving some nods to fascism and militarism. One speech by President Coin even includes veiled references to two lines associated with the Nazis (“One people, one nation, one leader,” and “Today Germany, tomorrow the world”).

From the very start, the lofty ideals and better life the rebels promised seem elusive and suspicious. District 13 is a garrison state where every good is rationed and every aspect of daily life is regimented. (As Ludwig von Mises observed in his critique of nationalism and militarism, “Within a militarist community there is no freedom; there are only obedience and discipline.”) In addition, District 13 shows no signs of a functional legislature or an independent judiciary, just the one-person rule by the charismatic but Machiavellian President Coin (I’m pretty sure the symbolism surrounding her name was intentional). Also, it is unclear that the rebels enjoy popular support among the people of Panem. (Why else would District 13 invest so much time and resources on propaganda, if not to bolster its perceived legitimacy?)

The late Gordon Tullock applied public choice theory to shed light on societies characterized by violence. I believe his insights also apply to the fictional revolution in Mockingjay. In one prominent analysis, “The Paradox of Revolution,” Tullock points out that revolutions suffered from a collective action problem: For a rational individual, the risk of death or punishment exceeds the expected benefits, participation is unlikely to have much influence on a successful outcome, and he or she can free ride on any potential successful outcome without being an active participant. Most importantly to Tullock, “the discounted value of the rewards and punishment is the crucial factor.” In other words, to convince a rational individual to take part in a fool’s crusade, he or she must perceive that the private benefits far outweigh the costs.

On a similar theme, Tullock also notes that most revolutions are actually carried out by insiders against other insiders. He throws cold water on the romantic view of revolutions typically mythologized in the trope of a downtrodden people rising up against an oppressive tyranny, emerging triumphant in a just struggle, and establishing/restoring a noble republic with their victory. In Tullock’s words, the real story goes more like this:

[I]n most revolutions, the people who overthrow the existing government were high officials in that government before the revolution. If they were deeply depressed by the nature of the previous government’s policies, it seems unlikely that they could have given enough cooperation in those policies to have risen to high rank. People who hold high, but not supreme, rank in a despotism are less likely to be unhappy with the policy of that despotism than are people who are outside the government. Thus, if we believed in the public good motivation of revolutions, we would anticipate that these high officials would be less likely than outsiders to attempt to overthrow the government.

From the private benefit theory of revolutions, however, the contrary deduction would be drawn. The largest profits from revolution are apt to come to those people who are (a) most likely to end up at the head of the government, and (b) most likely to be successful in overthrow of the existing government. They have the highest present discounted gain from the revolution and lowest present discounted cost. Thus, from the private goods theory of revolution, we would anticipate senior officials who have a particularly good chance of success in overthrowing the government and a fair certainty of being at high rank in the new government, if they are successful, to be the most common type of revolutionaries.

In Catching Fire and Mockingjay, Philip Seymour Hoffman’s character, Plutarch Heavensbee, is the prime example of a double agent/insider who takes on a prominent revolutionary role and ends up in a comfy, high-ranking position in the new regime after the war.

But whatever Katniss’s political beliefs and other motivations may be, it is apparent that most of her actions throughout the series are driven by a selfless love for her sister Prim. In her desire to see Prim protected at all costs, Katniss sacrifices herself for the Hunger Games, survives against all odds, and sets off a chain reaction that eventually leads her to become a reluctant participant in the rebellion in Mockingjay. Once the war begins, all bets are off.

Near the end of Mockingjay, after the rebels win their Pyrrhic victory and the new government starts to take hold, one revealing conversation between Katniss and Plutarch highlights the brutal truth of realpolitik:

“Are you preparing for another war, Plutarch?” I ask.

“Oh, not now. Now we’re in a sweet period where everyone agrees that our recent horrors should never be repeated,” he says. “But collective thinking is usually short-lived. We’re fickle, stupid beings with poor memories and a great gift for self-destruction. Although who knows? Maybe this will be it, Katniss.”

Maybe. But in our species’ short time on Earth, any proclamation of “the war to end all wars” is at odds with human nature and the lessons of history. The story’s author, Suzanne Collins, having come from a military family, understood these fundamental insights and incorporated them into her writings. Mockingjay vividly illustrates the risks and uncertainties of using violent revolution for regime change. Power corrupts, and absolute power corrupts absolutely, as Lord Acton rightly recognized. Many Mockingjay readers were upset about its dark ending, but this unflinching realism is needed to drive the message home. The costs of war, even for a righteous cause, could never be fully accounted for. Physical and psychological scars are permanently seared onto the survivors.

The last book in The Hunger Games trilogy makes it dramatically clear that revolutions usually end up substituting one tyrant for another. If there is but one takeaway from this haunting series, it is that putting hope in a political savior is foolish.

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.

Congress should follow the president’s lead and remove the embargo. Doing so would have only a small effect on the American economy, but would have two positive effects on Cubans. First, it would enhance their standards of living by giving them access to American goods. The Cuban people are the biggest victims of their government’s oppressive economic policies, and don’t deserve being further oppressed by US policies. Second, it would make the effects of the Cuban government’s oppressive policies more apparent to Cubans, who would exert more pressure on their government for reform.

President Obama made the right move, but in Washington, where everything is political, it appears the Republican Congress will do what it can to stand in the way of further progress.

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)

Here are some other troubling statistics:

As of June 30, 2014, nearly 40 million borrowers had outstanding student loans totaling about $1.1 trillion that were either held or guaranteed by the Department. (p. 4)

Based on information contained in the Department’s FY 2015 Budget Proposal, graduating seniors with student loans held an average of $29,384 in combined private [not federally subsidized] and Federal student loan debt in award year 2011-2012, 27 percent more than the average combined debt of $23,118 in award year 2007-2008. (p. 4)

Total private and Federal student loan debt is currently the second largest form of debt in the nation, behind only home mortgages. (p. 4)

Borrowers are defaulting on their Federal student loans at the highest rate since 1995. (p. 4)

We’ll recall that back in 2010 Education Secretary Arne Duncan was blasting heavily subsidized private lenders and insisting that federal “direct lending” through his department was a better plan. Nearly two years later, student debt continued to balloon. We also know that the “cohort” default rate used by ED underestimates the actual student loan default rate significantly—a fact the OIG admits in a footnote (p. 5, n. 8). Also buried in a footnote is this disturbing fact:

According to estimates contained in the Department’s FY 2015 Budget Proposal, the Federal government will not be able to recover between $0.04 — $0.13 of every loan dollar (calculated on a cash basis and excluding collection costs) that goes into default. (p. 5, n. 9)

Given that outstanding loan debt now tops $1.04 trillion, that works out to anywhere from more than $40 billion to over $135 billion each year, plus who knows how much more in unspecified collection costs.

Making matters worse (but hardly shocking as far as government bureaucracies go) the OIG found:

The Department does not have a comprehensive plan or strategy to prevent student loan defaults and thus cannot ensure that default prevention efforts conducted by various offices are coordinated and consistent. (p. 13)

[The Department] did not explicitly establish default prevention activities in the 2009 TIVAS [Title IV Additional Servicers] contracts or adequately monitor calls to delinquent borrowers. (p. 18)

The Department now has 30 days to come up with a corrective action plan. While we wait with bated breath for that one, we’ll be piling on all those billions of dollars in bad government-held student loan debt to our public debt. According to a 2012 Council on Foreign Relations report:

With a pair of new laws in 2008 and 2010 [the Ensuring Continued Access to Student Loans Act of 2008 and the Student Aid and Fiscal Responsibility Act of 2009, or SAFRA], Congress fundamentally changed the student loan market, making the U.S. government the sole supplier of Federal student loans, rather than just the ultimate guarantor. In itself, this does not affect the government’s net debt,” noted the CFR. “This new direct lending does, however, add to the gross debt held by the public. The $1.4 trillion in direct federal student loans that will be outstanding by 2020 will amount to roughly 7.7% of gross debt. This is 6.3 percentage points higher than it would have been had the scheme not been nationalized.”

The feds nationalized student loans under the guise of eliminating the middle man to keep college costs down (it hasn’t). Just days before SAFRA passed the House, Duncan took to the press, preaching:

We’re not asking the taxpayers for one single dollar. We’re simply making the choice to stop subsidizing banks, to invest our young people back here.

SAFRA sponsor Rep. George Miller (D-CA) was similarly breathless, and Democratic House Speaker Nancy Pelosi (D-CA) gushed that this federal lending takeover was a cornerstone of the Obama Administration’s overall “fiscally sound,” deficit-reducing 2010 budget.

So here we are today. Technically, Duncan was right: we’re not paying one single dollar. We’re paying tens of billions of them.

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.

Uber is a ride-sharing company that originated in San Francisco. Using the technology in smartphones, the firm arranges rides between drivers and riders. Riders use an application on their phones to request and track their vehicle and driver. By the end of August 2014, Uber was available in more than 45 countries and 200 cities worldwide.

Uber has received a great deal of criticism, mainly over a part of its business model called “surge pricing.” Stories involving very expensive rides have led many to call Uber’s practices unfair. One woman’s 10.8-mile ride in Minneapolis, for example, cost an impressive $411 dollars. Uber made headlines once again this week when the company enacted surge pricing during a hostage crisis in Sydney, Australia.

These expensive rides have induced many to call for the regulation of surge prices. But before we decide that regulating Uber’s prices is necessary or desirable, we need to remember the important function prices serve in our economy.

Prices reflect a wealth of information about a good or service in one easy-to-understand metric. Importantly, prices serve as a signal to both producers and consumers. As conditions in supply or demand change, the price adjusts up and down. If consumers demand more of a particular good or there is a drop in supply, prices rise. If consumers demand less of a product, or more producers enter the market, the price falls.

This system is how market prices, including Uber’s, are set. When many people want rides at a certain time in a particular area, this increase in demand pushes the price of rides higher. This higher price sends two signals—one to Uber drivers, and one to customers.

First, the higher price sends the signal to Uber drivers that they can make more money by bringing their service to the high-demand area. Second, the higher price sends the signal to customers that rides are in high demand. Those who don’t highly value the ride (those not willing to pay the higher rate) choose an alternative, freeing up Uber rides to those who really want them (aka: those willing to pay the higher fare).

As more drivers move into the “surge area” in search of a higher payout, the supply of Uber vehicles available to consumers increases. Those unwilling to pay the higher price for a ride drop out of the market. As a result of these movements in supply and demand, the price falls back down.

I asked one of my recent Uber drivers about surge pricing and what it meant to him as a driver. His response captures the above mechanism perfectly (and yes, it was such a great example I wrote it down on the back of a receipt!).

I see that they are doing surge [in a particular area] and I rush over. It tells me that they need more cars. It also tells customers, if they really don’t need a ride they should wait. The prices [go] down pretty fast. Sometimes, by the time I get [to the surge area], everyone else is there too and the surge price is gone.

Some would still claim that this type of pricing is unfair, that customers are blindsided with an astronomical fee without knowing. But this simply isn’t true. Customers are told when surge pricing is in effect and how many times the normal rate their fare will cost. For those who choose, the app allows a rider to calculate their estimated fare. In either case, users must agree to the surge pricing before requesting a ride (you have to type it in manually).

Uber Surge Agreement


Many have pointed to the use of surge pricing in Sydney as the pinnacle of greed and unfair business. But consider that it is the very mechanism being criticized, the surge pricing, that induced Uber drivers to potentially put themselves in harm’s way to pick up passengers. (It should also be noted that, once it was revealed why so many people were demanding rides, the company didn’t charge riders at all.)

This is not to mention the very important fact that this whole exchange is perfectly voluntary. Saying that customers “don’t know” or “don’t understand” what they are doing implies that individuals are, pardon my bluntness, too stupid to figure out what’s best for them—it’s paternalism writ large.

The fact is, consumers aren’t forced to use the service. Lyft (an Uber competitor) and cab companies provide competitive alternatives. If you find Uber’s pricing scheme offensive, by all means express your displeasure by using a different service. If someone agrees to pay the price, then by their very action, we know they value the ride at least as much as the price they paid.

What also seems to fall on deaf ears is the fact that “surge” pricing happens all the time, in all kinds of markets. When the price of bananas increases from $0.49/lb to $0.99/lb, you don’t hear calls to regulate those terrible banana producers. It’s understood that changes in the supply and demand of bananas determine the price. The same laws of supply and demand underlying the market for fruit likewise discipline the market for Uber rides.

So the next time you hear a story about a $200 Uber ride, remember, it’s market forces at work. Far from exploitative, these forces are truly awesome, benefiting both consumers and producers.

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:

September 24, 2014


Dear Joe,

In your August 15, 2014 column in the Washington Post, you urged readers to “celebrate” Social Security as “a venerable program that reflects what government should do, making life better for the nation’s elderly. . . .”

As a political scientist, I have spent many years researching public policies and the reasons why people approve of them. My experience in this field has led me to the conclusion that support for government transfer programs is not based on rational assessment, but instead springs from illusions. I am writing to see if this conclusion applies to your support of the Social Security program.

Any system of taxing the public and then attempting to return the funds in the form of benefits involves economic waste, both on the taxation side and on the disbursement side. For Social Security, these costs include: 1) the disincentive costs of taxation (people work less since you are reducing their wages); 2) the disincentive effects of payments (people work less in order not to lose benefits and people work less because they don’t “have to”); 3) tax compliance costs (paperwork); 4) benefit compliance costs (the paperwork to get and maintain benefits); 5) litigation costs (the time and money devoted to complaints, hearings, and lawyers, on the tax side; 6) litigation costs on the benefit side; 7) the losses associated with inflexible benefits (for example, you can’t use your Social Security “wealth” to buy a motel to run, which would give you greater retirement income).

How large are the indirect and hidden costs of the Social Security transfer system? It might be, for example, that the waste factor in Social Security is 200 percent, compared to a system of simply allowing workers to privately save for their own retirement. Instead of receiving today’s benefit of $1,294 a month under Social Security, the average retiree would therefore have an income of $3,882 per month. If this were the case, a responsible columnist should be deploring Social Security for “making life markedly worse for the elderly.”

Does Social Security have such high overhead costs? Unfortunately, few ever ask this question. Most people are victims of what I call the illusion of the frictionless state, the belief that government, a superior, God-like entity, can transfer resources with negligible overhead cost. Under the influence of this illusion, generations of activists have championed transfer programs, and generations of administrators fail to compile estimates of the indirect costs in their transfer programs. And generations of pro-government columnists embrace them without the slightest inkling that these programs might be destroying wealth on a vast scale.

My suspicion is that you are a victim of the illusion of the frictionless state. I invite you to refute this idea by identifying a study that seriously attempts to estimate Social Security’s indirect and social costs (including, at least, the seven costs I mentioned above), a study that shows these costs are rather low. I am so sure that you will be unable to identify any such study, that I will send you a check for $1,000 by return mail if you can produce one. I will also send you an apology for having supposed that your support for the Social Security program is intellectually shallow.


Sincerely yours,

James L. Payne


PS: I am hoping to publish this letter in article form. I will be happy to include your reply in the article (100-word limit).


Mr. Davidson replied (on October 3, 2014):

Hi Jim,

I don’t choose to get into a discussion about Social Security.

I do appreciate your letter. May I publish it? All letters go through an editing process. Your letter likely would be shortened.

Thank you. Best, Joe


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.

Anti-Government Movements

Occupy_Tea_PartyThe past five years have seen four major anti-government movements gain momentum. These movements have not been revolutionary movements, but rather movements that pushed to limit the scope of government in various ways.

The Tea Party movement began in 2009 with the motivation of electing candidates to office who supported a reduction in the size and scope of government. The Tea Party leans Republican, supporting lower government spending, lower taxes, and reduced regulation.

The Occupy movement, which began in 2011, is more associated with the Democratic party, and objects to the cronyism in which government policy favors the 1% over the 99%. Despite the apparent political differences with the Tea Party movement, both are objecting to the scope and power of government, so have more in common than first meets the eye.

Next, the revelations of government surveillance programs by Edward Snowden in 2013 led to a global backlash against government surveillance both by the federal government and by lower-level governments. While this backlash didn’t include political rallies, as with the Tea Party, or demonstrations, as with the Occupy movement, the substantial negative reaction was bi-partisan and widespread.

More recently, demonstrations across the nation in response to the police killings in Ferguson, Missouri, and New York, were protests against the arbitrary use of police power, and the perception that the legal system and government policies more generally work to the disadvantage of the nation’s most disadvantaged citizens.

The common element in all four of these movements is that they object to the scope and power of government, and the way government power is arbitrarily used for the benefit of the elite and to the detriment of the masses. Currently, these anti-government movements are separate entities, and the main players in each have not appeared to recognize the objections they share in common to the scope and power of government.

Indeed, despite their objections to the abuse of government power, many members of some of these movements often favor enlarging government, even as they object to the way the government uses the power it currently has.

If all of these groups, who are very motivated to pursue their own narrow anti-government agendas, would wake up to the common anti-government agenda that unites them, the nation could see a much stronger backlash against its bloated and power-hungry government.

Hiring in Ambulatory Clinics Back on Track; Other Health Jobs Lagging

timthumb.phpLast Friday’s employment report from the Bureau of Labor Statistics caused some joy in the land: 321,000 jobs were added in November. My Forbes colleague Bruce Japsen cheered about an “Obamacare jobs bump” in health services. If true, this would be an example of Bastiat’s broken-window fallacy: Broken windows create employment for glaziers, so the government should encourage breaking windows.

Similarly, Obamacare “broke” health care. So, we cannot be sure if jobs added in health care are adding value to society, or are just a response to Obamacare’s making health care even more inefficient than it was.

However, there was no Obamacare jobs boom in November. As shown in Table 1 and Table 2 (below), jobs in health care increased by 0.19 percent from October. Non-health nonfarm civilian jobs increased 0.23 percent. So, healthcare jobs increased at a marginally slower rate than other jobs.

However, ambulatory hiring resumed its torrid pace, after a lull in October, when hiring in outpatient clinics froze. In November, it was nursing and residential care facilities which froze hiring, while hospital hiring increased only 0.09 percent.

We continue to see a significant transfer of employment in health services from inpatient institutions to ambulatory facilities. Hopefully, this is a positive change.

Table 1: Employment Situation Summary (seasonally adjusted, thousands)

10/31/2014 11/30/2014


Percentage Change

Total Nonfarm















Offices of Physicians





Outpatient care centers





Home health care services










Nursing & residential care facilities





Nursing care facilities





Total Nonfarm less health





Source: Bureau of Labor Statistics, The Employment Summary, November (December 5, 2014)


Table 2: Employment Situation Summary (seasonally adjusted, thousands)

11/30/2013 11/30/2014


Percentage Change

Total Nonfarm















Offices of Physicians





Outpatient care centers





Home health care services










Nursing & residential care facilities





Nursing care facilities





Total Nonfarm less health





Source: Bureau of Labor Statistics, The Employment Summary, November (December 5, 2014)

* * *

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