The Independent Institute


Must We Work for Nuns If We Wish to Dodge Obamacare’s Mandates?

supreme_court_MLObamacare’s opponents are cheering the Little Sisters of the Poor’s apparent Supreme Court victory over Obamacare’s mandate to cover artificial contraception, about which I wrote when the controversy first erupted.

The Little Sisters defied the mandate, which is contrary to their Catholic faith. The mandate is relevant not to the nuns’ themselves (obviously), but to their lay employees who work in the Little Sisters’ nursing home and are covered by their plan.

The Supreme Court decision is not complete victory: SCOTUS vacated judgments and fines approved by lower courts and sent the case back to lower courts to give the Obama administration time to find another way to get contraceptive coverage to the Little Sisters’ lay employees.

Bravo to the nuns for standing up to Uncle Sam. However, I am growing increasingly concerned that advocates of small government have surrendered a lot of ground in the fight for individual liberty. Unless a person or persons have a sincerely held religious objection to a federal mandate, it is widely accepted that they must obey. There are a lot of problems with this principle.

When Is Living in Terror Defined as Living in Harmony?

This traditional image of harmony is clearly out of date: these stones have been disturbed by a human!

This traditional image of harmony is clearly out of date: these stones have been disturbed by a human!

The authors of the new Independent Institute book, Nature Unbound, assert that “human beings are an integral part of the natural order and merit no less consideration than Earth’s other treasures.”

To those who do not realize what a radical notion this is in today’s mainstream environmentalism—which views human beings as wholly foreign to “nature”—I offer Exhibit A: a recent article in the San Francisco Chronicle headlined, “Early Life of Harmony: 1st Indian Inhabitants Lived in Harmony by the Bay.”

Reading the story, one wonders at the author’s definition of “harmony.”

The article describes small bands of superstitious (“Rituals governed everything”), wandering Indians, hunting and gathering at a bare subsistence level:

Women did the gathering, shelling and crushing [of acorns], then sifted the flour through a finely woven basket and leached it by pouring water through it. The process was laborious, but it ensured that if hunting and fishing failed, the community would have enough to eat.

Not surprisingly, competition for scarce resources and prime localities resulted in exceptional violence between tribes:

A 2004 academic paper noted that almost one-fifth of all the Indian skeletons found in one part of San Jose had healed fractures and penetration wounds, more than anywhere else in North America.

So how could Indians living under the most violent conditions in North America be described as “living in Harmony”?

Their practices allowed them to survive for millennia without doing major damage to the Earth. [Emphasis added]

Somehow I doubt the author himself would find such a lifestyle so “harmonious,” and gathering and grinding acorns all day sounds less progressive than barefoot and pregnant.

For those who have a somewhat greater vision for both humanity and the Earth, I commend Nature Unbound: Bureaucracy vs. the Environment to you, offering bold principles to help us rethink environmental objectives, align incentives with goals, and affirm the notion that human beings are indeed an integral part of the natural order and merit no less consideration than earth’s other treasures.

All Monocausal Theories of Economic Growth Are Wrong

Confused_MLFor as long as economic growth has been a noticeable phenomenon—at least since Adam Smith’s day—economists, historians, and others have advanced theories to explain its occurrence. Many of these theories have identified a single factor that is regarded as “the answer” to the question at issue. Thus, the exploitation of wage labor, the enslavement and exploitation of African slaves, the presence of certain raw materials, the presence of a certain religion, and many other factors, one by one, have occupied center stage in these portrayals. Because all such theories have fairly obvious shortcomings, analysts have spent much time refuting one another’s pet hypotheses. Since World War II, the economics profession has even created a new subfield called development economics to deal with these disputes, often by the formulation of novel mathematical models or the econometric testing of various hypotheses. Notwithstanding all of these efforts, debates about the one or the main factor behind the process of modern economic growth have scarcely been settled, even among well-informed professionals.

Recently my old and greatly esteemed friend Deirdre McCloskey has attracted much attention to her trilogy The Bourgeois Era, in which she advances (again) the notion that the process of modern economic growth—as she calls it, the Great Enrichment—has sprung mainly and fundamentally from a change in reigning ideas, in particular, from cultural changes that began in Holland and Great Britain in the seventeenth and eighteen centuries and accorded for the first time great respect to innovators and capitalists who carried out the technological and economic changes whereby the rate of overall economic productivity growth was raised to a much higher level and average incomes increased eventually by a factor of 30-100. McCloskey, with tremendous erudition, argues against all the previously advanced theories—material capital accumulation, human capital accumulation, slavery, improved institutions (in particular, better-established private property rights), the presence of certain raw materials such as iron or coal, and all the others—and offers instead her own explanation rooted in the cultural and ideological changes that have often been lumped under the rubric of “liberalization” in the old, classical liberal sense of this term.

Parental Choice: A Better Way to Fulfill the Legacy of Brown v. Board of Education

school_MLThis month marks the 62nd anniversary of the landmark Supreme Court case, Oliver Brown et al. v. Board of Education of Topeka, Kansas, which struck down the notion of “separate but equal” public schooling for black students. In spite of the civil rights advances we’ve realized over the past several decades, equal educational opportunities remain out of reach for far too many American school children.

According to former US Secretary of Education Arne Duncan, in 1980 “the U.S. Department of Education opened with a mission to ensure equal educational opportunities for all students.” How? By spending more...lots more.

Back in 1980, the department spent nearly $7 billion, roughly $20 billion in current dollars, on elementary and secondary education, directing about half of that to Title I schools enrolling high proportions of low-income students. Today, that budget has more than doubled to almost $43 billion.

Yet over the same period elementary and secondary student enrollment grew less than 25 percent, from 41 million students to 50 million students. This means U.S. Department of Education spending has outpaced student enrollment by more than four to one.

Workers Increasingly Prefer Pay More Than “Benefits”

Pay increase_MLThe Employee Benefits Research Institute (EBRI), a research organization with a mission “to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education,” includes members as diverse as AARP, Aetna, Boeing, Charles Schwab, and Wal-Mart. In the benefits world, it sits firmly inside the establishment.

That is why EBRI’s latest research on how employees view their benefits should give some encouragement to reformers who want to change the tax treatment of health insurance, and weaken the iron triangle of big business, big labor, and big government that enforces the discrimination against individually owned insurance. From EBRI’s latest Note:

  • There appears to be the start of a trend away from being satisfied with the current mix of benefits and wages, toward more preference for fewer health benefits and higher wages. Between 2012 and 2015, the percentage of workers reporting that they are satisfied with the health benefits they currently receive fell from 74 percent to 66 percent. At the same time, the percentage of workers reporting that they would rather have fewer health benefits and higher wages has doubled, increasing from 10 percent to 20 percent.
  • Workers have mixed views about their preferred methods for obtaining health insurance. Nearly one-half (44 percent) prefer to continue getting coverage the way they do today. Four in 10 prefer to choose their insurance plan, having their employer pay the same amount it currently spends toward that insurance, and then paying the remaining amounts themselves. And 17 percent prefer their employer to give them the money and allow the workers to decide whether to purchase coverage at all and how much to spend.
  • Choice of health plans is important to workers, and many they say they would like more choices. Eight in 10 report that choice of health plan is extremely important (41 percent) or very important (39 percent), and 17 percent report that choice is somewhat important. Thirteen percent are extremely interested in more choices, nearly one-third (30 percent) are very interested, and over one-third (37 percent) are somewhat interested.

Litmus Test for Liberty: Is Exchange Willing or Unwilling?

exchange_MLA new Harvard survey reports that only 42 percent of those between 18 and 29 support capitalism, while 51 percent say they do not.

It has been suggested that such views may be traced, at least in part, to the word capitalism. A plausible case could be made, particularly since many believe Karl Marx invented the term to falsely imply that the system benefited capitalists at others’ expense, when, in fact, workers have been the greatest gainers from all the productivity enhancements the system has generated. That perception, in turn, raises the question of whether capitalism could be given a less misleading name.

One good suggestion comes from Deirdre McCloskey, most recently the author of Bourgeois Inequality: How Ideas, Not Capital or Institutions, Made the Modern World. (Read Donald Boudreaux’s review of Bourgeois Dignity, the previous book in the series, here.) Rather than the “C-word,” McCloskey suggests “technological and institutional betterment at a frenetic pace, tested by unforced exchange among all the parties involved.”

Old Enough to Choose a President, but Not to Buy Cigarettes?

no-smoking_MLOnce again, with Gov. Jerry Brown’s blessing, lawmakers in California have extended the long nose of government further into the private lives of their citizens. The latest intrusion comes from legislation that raises the minimum age for buying cigarettes and other tobacco products from 18 to 21 years old. With record-level support for marijuana legalization, and general recognition that the “War on Drugs” has failed, it seems odd to be moving backwards on tobacco.

Readers of a certain age may remember hearing young men deployed to the jungles of Southeast Asia complain that they were old enough to die for their country, but not old enough to vote. Eighteen year olds now can vote, of course, but California has joined Hawaii in prohibiting all of them (plus 19- and 20-year-olds)—except active duty military personnel—from buying cigarettes legally.

What accounts for the push to ban smoking by young adults, including regulating electronic cigarettes, which do not contain tobacco? One answer is that “vaping” is a substitute for smoking regular cigarettes and choosing that alternative cuts into tobacco tax revenues, which, if passed in November, Prop. 30 proposes raising from 87 cents to $2 per pack.

Supporters of stricter tobacco controls justify new restrictions on the grounds of promoting public health by significantly reducing youth smoking and smoking-related diseases drain on public healthcare resources, especially by Medicaid recipients. That argument, however, doesn’t get to the root of the problem.

For the Love of Teaching and Economics

Econ Teacher_MLI love teaching economic principles. There is something truly exciting about introducing students to the economic way of thinking for the first time. It’s a privilege and honor I take very seriously. It seems to me, if more people understood basic economics, we could avoid a lot of patently backward policies.

However, I also find teaching principles to be frustrating on some level. This is not because of my students, who consistently make my job abundantly rewarding, but is a result of current events. In an effort to keep my classes relevant and interesting to my students, I try as often as possible to bring news stories into the classroom. Why does this frustrate me? It’s because there are always stories of terrible economic policies. Moreover, they are terrible policies that have been repeated over and over and over.

Another Hit on Price Transparency in Health Care

16410076_MLJAMA, the Journal of the American Medical Association, has published a research article challenging the doctrine that price transparency leads to lower health costs. Sunita Desai, et al., found:

Two large employers represented in multiple market areas across the United States offered an online health care price transparency tool to their employees. One introduced it on April 1, 2011, and the other on January 1, 2012. The tool provided users information about what they would pay out of pocket for services from different physicians, hospitals, or other clinical sites. Using a matched difference-in-differences design, outpatient spending among employees offered the tool (n=148 655) was compared with that among employees from other companies not offered the tool (n=295 983) in the year before and after it was introduced.

Mean outpatient spending among employees offered the tool was $2021 in the year before the tool was introduced and $2233 in the year after. In comparison, among controls, mean outpatient spending changed from $1985 to $2138. After adjusting for demographic and health characteristics, being offered the tool was associated with a mean $59 (95% CI, $25-$93) increase in outpatient spending. Mean outpatient out-of-pocket spending among those offered the tool was $507 in the year before introduction of the tool and $555 in the year after. Among the comparison group, mean outpatient out-of-pocket spending changed from $490 to $520. Being offered the price transparency tool was associated with a mean $18 (95% CI, $12-$25) increase in out-of-pocket spending after adjusting for relevant factors. In the first 12 months, 10% of employees who were offered the tool used it at least once.

Captain America’s Civil War and Political Principle

565528cf83e51Captain America: Civil War blasted into U.S. theaters generating $192 million in its first weekend and more than $700 million worldwide. I’ll confess: I almost passed this one up: All I could envision were lots of explosions and major cities crumbling. I had my fill of that with the destruction of the fictional Sokovia in the predecessor film Avengers: Age of Ultron.

But Civil War, while a sequel to Age of Ultron, is in fact a very different film, and I’m glad I didn’t pass it up. Mainstream reviewers have emphasized the familial conflict between the Avengers as the core theme. But the glue that holds the entire plot together is a question of political philosophy that is crucial for liberty-minded viewers: Where do you draw the line when the State asks you to submit to its will?

True enough, much of the movie plays out as a test of loyalty between two literal brothers in arms: Ironman (aka Tony Stark) and Captain America (aka Steve Rogers). Both Robert Downey, Jr. (Ironman) and Chris Evans (Capt. America) give audiences top-notch performancessomething easy to miss because their work is so consistently goodand the movie has great special effects although they never overwhelm the story or plot. One of the downsides to Civil War is the dizzying array of action heroes that end up on screen. This was inevitable, a necessary concession to the story, because a “civil war” between two people is an alley fight, not a challenge to civilization’s survival. Most of these heroes serve very transparent roles: They are in the film to take sides and fight. But others, such as a very youthful Spider-Man, become story pivots.