By Mary Theroux •
Sunday November 24, 2013 4:31 PM PST •
With Thanksgiving upon us once again, we offer a reminder of the economic lesson that made our first Thanksgiving possible:
The Pilgrims’ Real Thanksgiving Lesson
by Benjamin Powell
Feast and football. That’s what many of us think about at Thanksgiving. Most people identify the origin of the holiday with the Pilgrims’ first bountiful harvest. But few understand how the Pilgrims actually solved their chronic food shortages.
Many people believe that after suffering through a severe winter, the Pilgrims’ food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the pilgrims continued to face chronic food shortages for three years until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.
In 1620 Plymouth Plantation was founded with a system of communal property rights. Food and supplies were held in common and then distributed based on “equality” and “need” as determined by Plantation officials. People received the same rations whether or not they contributed to producing the food, and residents were forbidden from producing their own food. Governor William Bradford, in his 1647 history, Of Plymouth Plantation, wrote that this system “was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort.” The problem was that “young men, that were most able and fit for labour, did repine that they should spend their time and strength to work for other men’s wives and children without any recompense.” Because of the poor incentives, little food was produced.
Faced with potential starvation in the spring of 1623, the colony decided to implement a new economic system. Every family was assigned a private parcel of land. They could then keep all they grew for themselves, but now they alone were responsible for feeding themselves. While not a complete private property system, the move away from communal ownership had dramatic results.
This change, Bradford wrote, “had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been.” Giving people economic incentives changed their behavior. Once the new system of property rights was in place, “the women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability.”
Once the Pilgrims in the Plymouth Plantation abandoned their communal economic system and adopted one with greater individual property rights, they never again faced the starvation and food shortages of the first three years. It was only after allowing greater property rights that they could feast without worrying that famine was just around the corner.
We are direct beneficiaries of the economics lesson the pilgrims learned in 1623. Today we have a much better developed and well-defined set of property rights. Our economic system offers incentives for us—in the form of prices and profits—to coordinate our individual behavior for the mutual benefit of all; even those we may not personally know.
It is customary in many families to “give thanks to the hands that prepared this feast” during the Thanksgiving dinner blessing. Perhaps we should also be thankful for the millions of other hands that helped get the dinner to the table: the grocer who sold us the turkey, the truck driver who delivered it to the store, and the farmer who raised it all contributed to our Thanksgiving dinner because our economic system rewards them. That’s the real lesson of Thanksgiving. The economic incentives provided by private competitive markets where people are left free to make their own choices make bountiful feasts possible.
Tags: Agriculture, American History, Civil Society, Economics, Food, Free Market, Liberty, Property Rights
By J. Huston McCulloch •
Thursday November 21, 2013 10:08 AM PST •
It is elementary economics that subsidizing an activity encourages it to expand, while taxing an activity encourages it to shrink. Unemployment benefits subsidize unemployment and are paid for, sooner or later, by taxes on employment. The natural result is more unemployment and less employment.
The current “Great Recession” has only been the second worst since the 1930s in terms of peak unemployment: Unemployment reached 10.0% in 2009, but hit 10.8% in 1982. However, unprecedented unemployment benefits that extend for almost twice as long as in any previous recession have helped make this the worst recovery from a recession since the 1930s.
According to a recent article in the New York Times, unless Congress acts soon, the unprecedented extended benefits will expire at the end of December and during the first quarter of 2014 (“Extension of Benefits for Jobless is Set to End,” Nov. 18). Congress therefore has a rare chance to end the “Great Recession,” through what might be called “creative inaction.”
Tags: Employment, Unemployment
By John R. Graham •
Tuesday November 19, 2013 2:16 PM PST •
Beacon readers are ahead of many other witnesses to the Obamacare train wreck, having had the benefit of my November 7 blog post explaining the “risk corridors” by which the taxpayer will subsidize health insurers who lose money in the Obamacare health-insurance exchanges.
That blog post argued that health insurers are in a pickle, because the Obama administration cannot indemnify them fully from the larger than expected losses that they will likely experience in the exchanges.
Now, it looks like the administration will try anyway. When the president announced that he would not enforce the provisions of PPACA that caused insurers to cancel millions of policies, insurers reacted badly. Karen Ignagni, CEO of America’s Health Insurance Plans, the industry’s trade association, stated that “Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers. Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace.”
In a nutshell, insurers fear that Obama has given policy-holders a free option. If they want to keep their old polices they can, and if they want to go into exchanges they can do that. The problem with this free option is that it amplifies the adverse selection that we are already seeing. Obamacare’s subsidies for people with household incomes below 400 percent of the Federal Poverty Line are available only in the exchanges. Lower-income earners are also likelier to be sicker. (This is called the “health socioeconomic gradient”.) Therefore, given the choice, higher-income earners will stay with their plans and leave the poorer and sicker to go into the exchanges.
Tags: Bailouts, Business, Government subsidies, Healthcare, Insurance
By Anthony Gregory •
Tuesday November 19, 2013 10:25 AM PST •
Once again we hear calls to close Guantánamo’s prison camp. Every once in a while, Americans see reminders of this detention facility in the news cycle. Months ago, we heard about the hunger strike, yet it was scarcely in the national headlines early in Obama’s presidency, when I first read about it, and today we hear much less about it, although it continues.
The president is taking steps, five years into his administration, toward the promise he had made to close the facility by the end of his first year. But what does that actually mean? In practice, it means transferring the inmates to another prison. Indeed, this was Obama’s idea all along. Several years ago he floated the idea of a Gitmo Lite somewhere in the Midwest, much to the horror of those who think any superficial change toward leniency in the war on terror is a victory for al Qaeda.
But here’s one of the most troubling things, which Americans don’t seem to want to confront: Most of those Guantánamo detainees are totally innocent of terrorism. This was always true. Of the nearly eight-hundred detainees in total, about three-fourths have already been released, mostly through executive decision, and mostly because there was no evidence they were terrorists.
Of the initial number, most were rounded up by the Northern Alliance or Pakistani warlords. In Pakistan, the U.S. government dropped leaflets that encouraged the round up of as many poor schmucks as possible. They read
You can receive millions of dollars for helping the anti-Taliban force catch al Qaeda and the Taliban murderers. This is enough money to take care of your family, your village, your tribe for the rest of your life—pay for livestock and doctors and school books and housing for all your people.
Tags: Civil Liberties, Fascism, Presidential Power, The State, Torture, War
By John C. Goodman •
Tuesday November 19, 2013 9:52 AM PST •
This was in a Cutler editorial in the Washington Post last Friday:
In 2007, Obama asserted that his health-care reform plan would save $2,500 per family relative to the trends at the time. The criticism was harsh; I know because I helped the then-senator make this forecast. Yet events have shown him to be right.
Cutler is taking the recent slowdown in health spending—which no one thinks was caused by Obamacare—and attributing it to Obamacare. He conveniently omits the Administration’s own forecast of the effects of the Affordable Care Act. This is courtesy of Chris Conover:
[Cross-posted at Psychology Today and John Goodman's Health Policy Blog.
For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.]
Tags: Budget and Tax Policy, Healthcare, Propaganda
By David J. Theroux •
Monday November 18, 2013 10:22 AM PST •
On the November 17th edition of “Meet the Press,” NBC’s David Gregory admirably confronts Nancy Pelosi, having been a key architect and political organizer for Obamacare as House Majority Leader, regarding her June 10, 2009, MSNBC TV-interview statement that, “What we are talking about is affordable, quality, accessible healthcare for all Americans. It’s about choice. If you like what you have and you want to keep it, you have the choice to do that.”
Clearly stunned by having this recorded statement by her aired now, she is then asked by Gregory, “Are you accountable for saying something that turned out not to be correct?” She then proceeds to try to duck the issue by offering equivocation, lies, and other self-serving and clueless nonsense in response.
For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book:
Tags: Budget and Tax Policy, Corruption, Government subsidies, Health, Healthcare, Insurance, Law, Liberalism, Media, Nationalization, Politics, Power, Progressivism, Propaganda, Regulation, Socialism, The State, Theft, Transparency, Video, Welfare
By Vicki Alger •
Friday November 15, 2013 1:27 PM PST •
Earlier this month a Farragut High School senior, Ethan Young, explained to the Knox County, Tennessee, school board why he believes the local school district should dump Common Core national standards:
The president essentially bribed states into implementation via ‘Race to the Top,’ offering $4.35 billion taxpayer dollars to participating states, $500 million of which went to Tennessee...And much like No Child Left Behind, the program promises national testing and a one-size-fits-all education, because hey, it worked so well the first time.
Young went on to explain (rightly) that the “voluntary, state-led” standards were actually “contrived by an insular group of testing executives with only two academic content specialists” (beginning at 24 seconds). He added that far from being “rigorous,” Common Core standards are at best just different, crafted for “an industrial model school” (beginning at 1 minute). In reality, experts note that the Common Core standards are about in the middle of the pack compared to states’ previous content standards–yet they’re twice as expensive.
Thankfully, this young man is standing up for something better by standing up to the government schooling establishment.
Tags: Civil Liberties, Constitution, Education, Politics, Presidential Power, Privatization, The State, Uncategorized
By John C. Goodman •
Thursday November 14, 2013 10:02 AM PST •
Here is irony: the people who talk the most about the need for a social safety net (including the president himself!) are cheerleaders for a health reform that is going to shred it.
How is that happening? By means of the Affordable Care Act (Obamacare).
Through the Medicare and Medicaid programs, the federal government provides billions of dollars in subsides every year to hospitals that see a disproportionate number of patients who are poor and uninsured or who are on Medicaid. In both cases the result is the same: hospital revenues fall well short of the cost of care they dispense.
The shortfall is what people in the health policy world call “uncompensated care,” and the payments are referred to as “disproportionate share” money.
Readers can be forgiven if they are naturally suspicious of hospital accounting. Just as hospital charges are for the most part phony numbers, so are most estimates of uncompensated care. Still, there is no denying that hospitals like Grady Health in Atlanta and Parkland Memorial in Dallas would not exist, or would not be able to maintain the current level of service, without a great deal of government money.
Tags: Government subsidies, Health, Healthcare, Insurance, Medicaid, Medicare
By Robert Higgs •
Wednesday November 13, 2013 2:31 PM PST •
In my capacity as the longtime editor of The Independent Review (reduced earlier this year to the harmless status of Editor at Large), I have often received unsolicited copies of recently published books from the publishers, who hope to obtain reviews that will help them drum up sales. Today’s mail delivery brought me such an unrequested volume, a book titled The End of Authority: How a Loss of Legitimacy and Broken Trust Are Endangering Our Future, by Douglas E. Schoen.
Skimming quickly, I found that the book deals with what the author calls “a crisis of governance, a crisis of legitimacy, and, indeed, a crisis of authority.” “All around the world,” he declares, citizens “have lost confidence in those charged with the responsibility of governing them.” (Notice the language, “those charged with the responsibility,” rather than “those who, by hook and by crook, have impudently imposed themselves on their exploited subjects.”) In this dire situation, Schoen intends his book “to offer clear, unambiguous solutions” to this allegedly urgent problem (p. 245).
My first reaction was, “Crisis of Authority? I wish.” Although ruling elites may be distressed by the various expressions of discontent and even outrage being expressed by particular groups of (what they surely take to be) troublemakers, they are accustomed to a certain amount of discontent and rebellion. Suppressing such outbreaks and pounding, tricking, or soothing people back into line are all in a day’s work for the rulers. Given the ruling elites’ disproportionate possession of wealth, connections, and firepower, they usually succeed, and I expect that in most cases those who are feeling pressed today will, sooner or later, succeed in reining in their restive populations. The Arab Spring will turn to Arab Summer, Arab Fall, and Arab Winter. The Tea Partiers will lose interest and drift away—many have already been coopted or politically disarmed by the established major parties. The little bands of libertarians will squander their energies, feuding with their fellows and arguing about not-so-pressing issues in lifeboat ethics. The European rioters will be tear-gassed, sprayed with fire hoses, and beaten about the head and shoulders until they find better uses for their time and energy.
Tags: Morality, Nationalism, Politics, Power, Propaganda, The State
By Vicki Alger •
Wednesday November 13, 2013 10:05 AM PST •
Common Core national standards are weak, costly, politicized, and unconstitutional. That last fact tends to be downplayed among the education expert set, but it’s worth emphasizing that there’s a very good reason our federal government has no authority over education—a word, by the way, that does not even appear in our Constitution.
Recent revelations about what in fact is going on in government-run K-12 classrooms across the country in the name of Common Core national standards underscore a leading rationale why Washington politicians and their special interest allies are not granted Constitutional authority over education: to protect students and their families.
Students’ privacy rights are protected by the Family Educational Rights and Privacy Act (FERPA). As the Heartland Institute’s Joy Pullman noted earlier this year, the U.S. Department of Education (ED) released a report with some chilling implications for student and family privacy:
Previous FERPA interpretations required data collectors to identify students by random numbers. No one knows what personal data the Common Core tests will collect, because those tests have yet to be written and released. But this information mother-lode has to come from somewhere. Since the tests are being written by private organizations, although entirely funded so far by the federal government, no one can do a public records request to find out. In short, the government wants to collect a dossier on every child, containing highly personal information, without asking permission or even notifying parents.
Tags: Bill of Rights, Children, Civil Liberties, Civil Society, Constitution, Education, Family, Law, Liberty, Personal Liberty, Politics, Privacy, Socialism, Surveillance, Uncategorized