The Biggest Threat to North Korea Might Be Dessert

chocopieThis past summer, some 200 South Korean activists and North Korean defectors launched 50 balloons into North Korea. The purpose? To deliver 10,000 Choco Pies—a cake and marshmallow combination coated in chocolate (think Moon Pie)—to the citizens of North Korea.

The pies saw their introduction in North Korea in 2004. The treats were given to North Korean factory workers as an incentive to work overtime hours in the Kaesong industrial complex. Near the DMZ, the factory employed both North and South Koreans. The North Korean government would not allow their workers to receive overtime wages—but they could take Choco Pies as compensation.

In a country that suffers from untold repression and extreme poverty (the country received an 18 out of 100 on the Global Hunger Index scale for 2013), it comes as no surprise that a black market emerged for the treats. As opposed to eating them, workers would take the pies home to friends or family, or sell the pies. At one point, a single pie could fetch as much as $24 on the black market. It was at this point, the North Korean government decided to crackdown on the distribution of the Choco Pie, calling it a “symbol of capitalism.”


Income Inequality Is a Statistical Artifact

pikettyThe past year or so has witnessed a tremendous outpouring of commentary about income inequality. Pundits and politicians have huffed and puffed about it, mainly about its alleged evils and what governments should do to diminish it. Mainstream economists have devoted a great deal of attention to dissecting French economist Thomas Piketty’s book Capital in the Twenty-First Century, a book focused on income inequality—and also a book whose shoddy craftsmanship would have repelled such attention had the book dealt with a different topic. All of this is unfortunate because it only helps to mislead the public and hence to increase support for pernicious economic policies to deal with a problem that, truth be known, is not even a real human condition, much less one that cries out for political remedy.

Income inequality is a statistical artifact, not a real human condition. As Thomas Szasz might have said, “Show me the lesion.” If you were to conduct autopsies on a random collection of human beings, you would find nothing to show that some of them had lived in societies with a high degree of income inequality and others in societies with a low degree of income inequality. The personal (or family or household) distribution of income is not a human condition. It is only, to repeat, a statistical artifact. It is a measure such as the Gini coefficient for describing the degree of inequality of the values of individual observations in any aggregate of such observations. The aggregate of the measurement is arbitrary: why, for example, should inequality be measured for the entire U.S. population, rather than for population of the city or state in which one lives, the entire North American population (including Mexico), the entire Western Hemisphere population, or indeed the entire world population? The answer is that the measurement is done for certain political units with an eye to “doing something about” the measured inequality, which is always to say, doing something to reduce it, whatever it now happens to be. Thus, this topic is and always has been a hobbyhorse for socialists and others whose ideologies rest on a psychological foundation of envy, of seeking to justify taking from high-income recipients and giving to low-income recipients.

Income inequality has no necessary connection with poverty, the lack of material resources for a decent life, such as adequate food, shelter, and clothing. A society with great income inequality may have no poor people, and a society with no income inequality may have nothing but poor people. Coercively reducing income inequality by fiscal measures may do nothing to reduce the extent of real poverty and may indeed—to tell the truth, almost certainly will—create incentives that increase the extent of real poverty (and many other social ills).

Probably no subject in the social sciences has created so much unnecessary heat. Yet, at the same time, economists actually know a great deal about it and can dispel the public’s confusion about it if they try. Sad to say, many (such as Piketty) do not try in a competent fashion, but only add to the confusion and feed the already raging fires of envy. These economists are therefore acting as ideologues, rather than economists, in such work.

Twenty years ago I wrote an essay on this subject. Although some of the examples I gave are no longer up to date, the analysis has lost none of its pertinence.

Interstellar Liberty and the Foibles of Progressivism

Interstellar_film_posterSpoiler Alert: This blog post may contain clues to key plot points in the 2014 film Interstellar.

One of the cornerstones of progressive political thought is that experts should be put in charge of public policy, using “scientific” management and “evidence-based” policy analysis to determine and implement social policy. Few areas of policy have been more steeped in this perspective than science policy. But this idea may have taken a pop culture hit in Christopher Nolan’s new film Interstellar, although it might be difficult to see at first.

At first blush, Interstellar seems like a conventional trope—the Earth is fast forwarding into environmental apocalypse, and it’s up to a few brave scientists and a NASA test pilot to find a new world for humans to colonize. The epic space opera includes a ton of great special effects, a tight script, and excellent acting by Matthew McConaughey (as former NASA test pilot Joseph Cooper), Anne Hathaway (as NASA scientist Amelia Brand), Jessica Chastain, Michael Caine (Dr. John Brand), John Lithgow, and Matt Damon (Dr. Mann), among others.


Small Business Suffers: The Riots, Past and Present


Small business owner Natalie Dubose saw her bakery destroyed by looters during the Ferguson riots. Help her out here:

Several years ago, I wrote an article for The Independent Review on the urban riots of the 1960s (and the Rodney King riot of 1992). Watching the events unfold in Ferguson, it seems those in charge of riot control learned nothing. Once again, the victims were small business owners—many of them African Americans (as was the case in the 1960s). Civil leaders held the police and Guard back, apparently following the same old “it is better to let them loot than shoot” policy. Belatedly, the Guard was posted at the stores that are usually rioted: pharmacies, liquor stores, etc.

Read my Daily Caller essay for a discussion of victims of looting and arson in Ferguson.

The response from law enforcement on Monday night was baffling, given the very realistic expectation of looting. Here is an excerpt from a article:

When asked if he had been unprepared on Monday night, Captain Ron Johnson of the Missouri State Highway Patrol said that, “none of us could have imagined last night would be what it was...we’ve never seen anything like this.” I’m guessing the man isn’t getting much sleep these days, but it’s fairly alarming that the on-scene commander of the Highway Patrol wasn’t familiar with, or hadn’t taken any lessons from, past instances of unrest following controversial and racially divisive judicial decisions.

On Tuesday, Governor Nixon announced he was tripling the number of troops responding, and their presence was quite visible. National Guard troops also played a different role than they did the night before, with soldiers actually going into crowds of protestors to make arrests. Troops were also stationed in front of businesses on at-risk roads—something the already looted/burned businesses would have no doubt appreciated the night before.

“Cadillac Tax” Will Hit 38 Percent of Employers in 2018

healthcare_categoryThe “Cadillac tax” is the excise tax on high-value health plans, which goes into effect in 2018. If the value of health benefits exceeds $10,200 for an individual or $27,000 for a family, the excise tax will be 40 percent.

A new report from the American Health Policy Institute breaks down the effect on employers. As well as concluding that the Cadillac tax will hit 38 percent of employers in 2018, it estimates that the average employer-based policy will be subject to the tax by 2031.

There is no doubt the Cadillac tax will put an administrative burden on employers, and reduce the attractiveness of employer-based benefits. On the other hand, as the AHPI report notes, the Cadillac tax will cause employers to increase workers’ wages in exchange for reducing health benefits. Indeed, the Congressional Budget Office anticipates that 75 percent of the revenue due to the Cadillac tax will be from income and payroll taxes due to wage increases, and only 25 percent due to the Cadillac tax itself.

Notwithstanding the tax hike, shifting workers’ income from benefits to money improves their welfare, because workers are free to spend their money on whatever they like. Also, the current exclusion of employer-based benefits from taxable income is a “tax expenditure” of over $785 billion over the next five years.

That is not a subsidy, as some assert, because it only reduces people’s taxes. It doesn’t get paid out to people who do not pay taxes. However, it does create a hole in the Treasury that prevents other tax cuts.

Is it fair to give employees an unlimited tax break if they get health benefits from an employer, but not if they choose their own health insurance? And while a plurality of citizens probably accept that a certain amount of health spending should be tax free, should it be unlimited?

Most free-market health reformers reject this notion, and they include some type of Cadillac tax in their reform plans, in exchange for a fairer tax benefit.

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

Will Obamacare Hit Its Enrollment Target?

ObamacareScreenHartWebThe media seems to think that Obamacare’s second open enrollment is going just swimmingly. (How could it be going worse than last year’s?)

Unfortunately, the Obama administration still isn’t counting last year’s sign-ups accurately. Jonathan Cohn of The New Republic has called the administration’s over-counting of Obamacare sign-ups “inexcusable.” And that’s from one of Obamacare’s biggest fans.

What happened is that the administration counted 400,000 dental-only plans as Obamacare plans. On November 10, it announced that 7.1 million people signed up for Obamacare as of the end of October, but that included the dental plans. The correct number is only 6.7 million. And this figure was not disclosed by the administration, but dug out by Republican congressional staffers.

The Obama administration also announced that in 2015 it expects 9.0 million to 9.9 million people to enroll in Obamacare exchanges (which it mischaracterizes as “Marketplaces”). This estimate is a dramatic scaling back of the Congressional Budget Office’s estimate of 13 million, most recently confirmed in April.

Obamacare exchanges signed up 8.1 million people during the first open enrollment, which ended last spring. The figure dropped over 1.4 million by the end of October. So, having lost over 17 percent of beneficiaries from the first open enrollment, the administration expects to add one-third (2.4 million) more people to the diminished number of current beneficiaries.

To put it another way, the Obama administration has to drag the missing 1.4 million back into Obamacare, and then go on another Million Man March to hit the bottom of its target. Wall Street analysts believe that Obamacare enrollment will beat the administration’s target.

We will see.

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

Stores to Open on Thanksgiving—Don’t Complain.

open for businessOver the past several weeks, the standard litany of holiday media stories has begun. While there is always some fun in guessing which reporter will get stuck with the “don’t set your house on fire with the deep fryer” segment, other stories are far more troubling.

Around Thanksgiving and the start of the Christmas season, it’s not uncommon to see stories discussing the season’s meaning and the “corrupting influence of capitalism.” Nowhere is this corruption supposedly more apparent than the idea of retailers opening on Thanksgiving Day. Many national retailers like Macy’s, JC Penney, Best Buy, Target, and Toys’R’Us will open at some point on Thursday to kick off their Black Friday sales.


I’ll Take Market Forces Over Government Force Any Day

Surveillance State cloudResponding to their customers’ increasing demand for privacy in the aftermath of revelations by whistle-blowers that the government is capturing and indefinitely storing every conversation, email, location, online transaction, and more, Apple, Google, WhattsApp, and others are developing new encrypted phones and services to thwart this now-universal warrantless spying.

Simultaneously, a bill that would have reined in the National Security Agency (NSA), was blocked in the Senate. The bill would have kept customers’ records securely with phone and internet companies, to be accessed by the government only when asked for, with cause.

Apple well knows that if it doesn’t produce a phone that will keep your conversations and transactions private, one of its competitors will take market share by developing and selling you one that will.


Students Won’t Be Collateral Damage in California Big Spenders’ Showdown

imagesThere’s a showdown brewing in California’s not-so-OK Corral—make that the UC Corral—and students are fed up with being the ones caught in the crossfire.

It started back in 2012 when Gov. Jerry Brown threatened to slash state funding for California’s ten University of California campuses unless his Proposition 30  (also known as the “Millionaire’s Tax”) passed. The UC Regents fired back, complaining that slashing funds would compel them to hike tuition some 20 percent mid-year—about $2,400.

The massive tax hike passed by more than 55 percent, and Sacramento’s coffers are brimming at $108 billion, with another $3 billion surplus projected for next year. In return, UC officials froze tuition—until this week, that is.

The UC Regents, led by UC President Janet Napolitano, say their share’s not big enough, and they want more of the spoils. So they voted to hike tuition 5 percent annually over the next five years unless they get more state funding.


Right-to-Try Laws Now in 5 States

21096315_SAfter this month’s elections, the number of states that have “right to try” laws for experimental drugs has hit five. One in ten states: Not bad for an effort run out of one think tank in Arizona.

However, I have seen no evidence that any manufacturer of an experimental drug is taking advantage of these laws to supply medicines to desperately ill patients in these states. This is understandable: Doling out the medicines to needy patients threatens the sanctity of clinical trials and, therefore, FDA approval.

Congress needs to reform the rules governing the Food and Drug Administration to make use of more real-world evidence in approving new medicines (as described in a recent book by Peter Huber, The Cure in the Code). This is statistically challenging and not to be undertaken lightly. Nevertheless, if more states pass “right to try” laws, I expect that Congress will see the necessity of taking action to relieve the pain of patients suffering needlessly from FDA’s regulatory burden.