In Memoriam: Robert A. Conquest (1917–2015)

RobertConquestOne of the great ironies of modern history is that the person most responsible for bringing to light the magnitude of Stalin’s terror is a man whose last name is synonymous with occupation and subjugation: Robert Conquest. In word and in deed, the world-renowned historian, who passed away on August 3 at the age of 98, was, of course, nothing like the monster he wrote about in books such as Stalin: Breaker of Nations, Stalin and the Kirov Murder, Kolyma: The Arctic Death Camps, Harvest of Sorrows: Soviet Collectivization and the Terror-Famine, and The Great Terror: A Reassessment.

Independent Institute looks at Robert Conquest (who also served as a founding member of the Board of Advisors of our quarterly, The Independent Review) with reverence and gratitude. In 1992, we hosted a national dinner in his honor, featuring presentations by Preston Martin, Czeslaw Milosz, Aaron Wildavsky, John O’Sullivan, Elena Bonner, Harry Wu, and the honoree himself (video, audio, transcript). Conquest also penned a brilliant op-ed for the occasion, “Learning to Unlearn the Leninist Mindset”—still instructive a quarter century after the fall of the evil empire. In 2000, he published Reflections on a Ravaged Century, and he graced us once again, by speaking at our Oakland headquarters, at an event titled “Freedom, Terror, and Falsehoods: Lessons from the Twentieth Century” (video, audio, transcript).

For too long, the Western intelligentsia ignored Robert Conquest (although he had legions of fans behind the Iron Curtain, where his works circulated clandestinely). Happily, several obituaries and remembrances will help preserve his legacy. (For a sampling, see the New York Times, the Wall Street Journal, George Will, National Review, John O’Sullivan, The Economist, the Daily Beast, and the BBC magazine.) For readers of The Beacon, however, I thought it most fitting to close not from a eulogy, but from Conquest’s op-ed referenced above:

It has been wisely said that the two great causes of human troubles are impatience and laziness. Intellectually, these are precisely the phenomena that produce such destructive fantasies. Ideological quick fixes for all intellectual and social problems are sought, rather than an understanding of their real complexities. The Soviet Union was a proving ground for such approaches. We in the West still have much to learn, and to unlearn, from the events in the former communist countries.

[This post is adapted from the August 18, 2015, issue of The Lighthouse. To subscribe to this weekly email newsletter and other bulletins from Independent Institute, enter your email address here.]

Safe, Legal, and Rare, Part I: Safe?

abortion word cloudIn the historic debate over abortion, the “pro-choice” mantra was “Safe, Legal, and Rare”: the argument being that if abortion were legalized, it would be both safer than oft-cited “back alley” abortion, and, coupled with an expansion of sex education and access to contraception, would become increasingly rare.

In light of the continuing release of videos exposing the actual practice of abortion by Planned Parenthood, it’s now fair to assess: 40 years following Roe v. Wade, is abortion in America “Safe, Legal and Rare”?

First, Safe:

The first thing to be aware of is that there is literally no way of knowing how safe abortion is in America, because—unbelievably—even where they exist, reporting requirements are not enforced, and no source has established any meaningful method of tracking abortion. While the Centers for Disease Control and Prevention (CDC) maintains an “Abortion Surveillance Unit,” it in fact has no systematic means of collecting data on abortion-related statistics—including deaths.


Price Transparency Laws Don’t Work

priceless_180x270In a functioning market, you know what you owe before you buy a good or service. That is not the case in health care, as we know. Because of increasing deductibles, the failure of price transparency is becoming increasingly irritating to patients.

Some believe a solution can be legislated. This has occurred in New York and Massachusetts; and one of my favorite state legislators, Senator Nancy Barto, has tried to legislate it in Arizona.

Effective January 2014, Massachusetts law requires health providers to provide a maximum price for a procedure within 48-hours of a prospective patient asking. Well, it has not worked, according to a ”secret shopper” survey of professionals conducted by the Pioneer Institute:

Dermatology practices were asked the price of a routine exam and removal of a wart. Office staff were not well informed about the law and didn’t have systems in place to provide prospective patients with price information.

When price information was obtained, it often came in wide bands such as from $85 to nearly $400

Gastroenterology practices were asked for the price of a “routine screening” colonoscopy with no removal or biopsy of polyps. This proved to be the most complex request because the procedure requires at least three fees: the gastroenterologist’s, the anesthesiologist’s and the hospital or clinic facility fee.

Many doctors, facilities and anesthesiology services required the consumer to provide a “current procedural terminology code” to get a price estimate despite its not being required under state law. When all three fees were included, the overall routine colonoscopy fee ranged from around $1,300 to $10,000.

I have always suspected that laws which simply command that prices shall be transparent would fail, and it looks like I am being proved correct. They simply cannot be reasonably enforced. A better solution is what I call the common law approach.

A Call to Order in the Hobbesian Jungle

8031023_S“Why do we have a government at all?”

Occasionally, I have the chance to ask students this question. After examining the unintended consequences of government policies and discussing the economics of politics (i.e. public choice economics in the tradition of James Buchanan and Gordon Tullock), the rosy picture of government from their high school civics classes has been, with any luck, irreparably damaged. We see how many times government policies actually make problems worse, not better. Given that’s the case, would it be better to not have a central government at all?

With very few exceptions, most of the time students look at me like I have two heads. What do you mean, do we need a government? Of course we need a government. They stare at me, questioning my sanity.

I push them to elaborate. “Ok. That’s an acceptable answer, but one-word answers have absolutely zero persuasive power. Can you tell me why?”

At this point, someone usually mentions the idea that government is the fundamental tool for preserving order in society. Without it, there would be absolute chaos—rape, pillage, and plunder lurking around every corner.

While many of the students I encounter are quite bright, they aren’t the first to make this argument—not by a long shot.

In his 1651 book, Leviathan,Thomas Hobbes (1588-1679) made a similar argument. To Hobbes, the default state of mankind is...less than kind. Instead of trading with your neighbor to increase your wealth, Hobbes argued you’d be more inclined to club him over the head and steal his stuff. It follows that government exists to provide order where there would otherwise be chaos. Without government life would be “nasty, brutish, and short.”

There is great debate on the fundamental state of human nature. Whether people are inherently “good” or “bad” is not really of primary concern in this discussion. In fact, we can assume that people are generally inclined to bludgeon their neighbor. Does this make government necessary? Stated differently, is there a solution to the “Hobbesian problem” without the “Hobbesian solution” of government?

There are a variety of reasons to think that self-governance or anarchy (properly defined as the absence of a centralized government) would work better than people tend to think. First, we can observe that for most of human history, there was no such thing as a central government. In present day, the world is still anarchic on an international level—there is no “world government” (unless you count the U.N. Seriously, let’s not kid ourselves). If, in fact, government was necessary, centralized governments should have arisen quickly in human history.

We can also see how a variety of groups have worked throughout the course of history to solve highly complex social problems outside of or absent a state. Take, for example, the creation of language, currency, and even the origins of English common law. These were all developed through a system of private interaction. A variety of people used both formal rules (e.g. contracts) and informal rules (e.g. customs, social norms, etc.) to create enduring institutions that continue to benefit mankind.

In fact, a growing body of literature is illustrating that private forms of governance have been, and continue to be, an important way of organizing human behavior. In his book, The Invisible Hook, economist Peter Leeson demonstrates how some of the most brutal and untrustworthy members of society–pirates–were able to privately create and enforce rules to make individuals better off and decrease conflict. In their book, The Not So Wild, Wild West, Terry Anderson and Peter Hill explore how people out on the American frontier created their own systems of governance and illustrate that the “Wild West,” was actually much more tame than we tend to believe from watching John Wayne movies. Most recently, economist David Skarbek examined how yet another unsavory group—hardened convicts—are able to govern themselves both in and outside of prison via a system of gangs in The Social Order of the Underworld: How Prison Gangs Govern the American Penal System.

Certainly, a blog post cannot do justice to the theoretical and empirical arguments for self-governance. But as I tell my students, self-governance or anarchy may give us more than we think. Too often, when we encounter problems in our society and throughout the world, our default solution is to suggest more government, more regulation, and more oversight. But the answer may not be so simple. In fact, we’d do well to remember that, throughout our history, individuals acting in their own self-interest have developed some pretty amazing solutions to very serious problems!

Obama Supports Worker Freedom?

DoctorObamaOccupational licensing occurs when the state government legislates that a person cannot practice a trade—for example, law, medicine, or hair-braiding—without a license. For years, libertarian and conservative researchers have recognized that occupational licensing increases costs and reduces choices for consumers, and prevents entrepreneurs from entering the market.

Now look who’s joined the ranks of critics of occupational licensing: President Obama! In a welcome report bearing the imprimatur of the White House, the Department of the Treasury, the Council of Economic Advisers, and the Department of Labor note that:

Over the past several decades, the share of U.S. workers holding an occupational license has grown sharply. When designed and implemented carefully, licensing can offer important health and safety protections to consumers, as well as benefits to workers. However, the current licensing regime in the United States also creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job. There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines. Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing. In some cases, alternative forms of occupational regulation, such as State certification, may offer a better balance between consumer protections and flexibility for workers.

The report comprises a thorough literature review and original research on the consequences of the current regime of occupational licensing in the U.S. This is especially important in health care.

As shown in Figure 3, the proportion of workers in health care and education has increased from about 13 percent of the workforce to 22 percent. As shown in Figure 4, health care has the highest proportion of workers subject to occupational licensing.

20150810 F3

20150810 F4

Hospital Job Growth Up versus Other Health Jobs

The July Employment Situation Summary from the Bureau of Labor Statistics showed health services jobs growing at about the same pace as other jobs: 0.18 percent growth versus 0.15 percent growth. This is a break from most previous months, when health services job growth outpaced other nonfarm civilian jobs significantly. 28,000 of the 215,000 jobs added in July were in health services.

However, July saw a significant uptick in the rate of jobs growth in hospitals: Adding 16,000 jobs, hospital employment counted for significantly more than half of health services jobs growth (see Table I). Jobs growth in nursing care facilities continued to stagnate.

Employment in nursing care facilities has been flat for twelve months (See Table II). Over the longer term, ambulatory care services have accounted for the lion’s share of new health services jobs. Last month’s growth in hospital jobs may simply be catching up. It would be unfortunate if the trend of health services jobs shifting out of hospitals was over, because hospitals are the highest-cost type of facility.

20150807 Health Workforce TI

20150807 Health Workforce T2

Democrats and Republicans to Blame for Public Pension Crisis

36930686_MI’ve appeared on more than 70 television and radio talk shows coast-to-coast in the past three months to discuss my new book California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis. One common question has been: “Aren’t Democrats responsible for creating the unfunded public pension debt by over-promising pension benefits?” My answer, to the surprise of many hosts, is that it was a bipartisan failure to manage the pension funds responsibly. New evidence supports my claim.

Total unfunded public pension liabilities for state and local governments are $4.7 trillion, according to a recent analysis, which uses prudent accounting assumptions. The conventional wisdom, as illustrated by this quote from the Wall Street Journal, is that Democrats are largely to blame: “For decades, Democrats have bought union support in elections by using surplus revenue during good times to pad pension and retiree health-care benefits.” The evidence, however, shows that politicians of both political parties played the pension game.

The graphic below shows that Democrats in state legislatures across the country voted for state-level pension-benefit increases at a 97 percent rate from 1999 through 2008. Republicans voted for the same pension hikes at a 92 percent rate. Politicians of both parties hiked pension benefits to buy votes and campaign contributions from pension beneficiaries and their family members, pension-fund employees, union officials, and investment consultants, advisors, and brokers.


Source: Adapted from Sarah F. Anzia (University of California, Berkeley) and Terry M. Moe (Stanford University), “Polarization and Policy: The Case of Public Sector Pensions,” working paper, 2015.

This time period of 1999 through 2008 was especially significant since it was when many of the largest public pension benefit increases in history were approved; including California’s retroactive pension hike, SB 400, in 1999.

Notice that after the Great Recession, 2009 through 2011, when the media and public became more focused on the massive pension debt, Republican support fell, although a strong majority (66 percent) still voted in favor of pension increases after the recession.

Politicians of both political parties got us into the pension mess, and now it’s time for voters to intervene and put an end to it. My book California Dreaming shows how to do it.

Government Failure Compounds Denial in Abortion Policy

Denial and govt failureFurther to last week’s post on denial as a basis for abortion policy, such denial in large part is no doubt a function of most Americans’ perception of how government works.

According to high school civics classes, government functions to protect us from bad meat, bad medicine, bad buildings, and bad guys in general.

In the real world, we find that this is mostly not true. Yes, there are lots of regulations and agencies whose purported function is to protect us from such dangers, but in practice we find that the various agencies get captured by the big players in the industries they are supposed to be regulating, and thus function primarily as protection rackets, keeping new entrants from competing with established special interests.

As has been eminently clear in the aftermath of the grisly Gosnell case, and the now-unfolding exposé of Planned Parenthood’s mining fetal body parts, the regulation and oversight of abortion clinics has functioned even more perversely—that is to say, there is virtually none.

In Pennsylvania, where Gosnell performed his barbaric spinal-chord snipping operations under indescribably filthy conditions, there had been no inspections of abortion clinics for 17 years. And this has been seen to be the rule, not the exception: in state upon state, abortion clinics are subject to less inspection than a common barber shop, nail salon, or pizzeria.

That this is the case ought not be surprising. Politicians have learned that the subject of abortion is so dangerous to their careers that it is safer, politically, to simply stay out of clinics altogether. In the aftermath of Gosnell, several states passed or attempted to pass regulations to ensure that abortion clinics meet a minimum level of cleanliness and safety, which attempts were mostly blasted by self-proclaimed “women’s rights advocates” as attempts to “end abortion.”

The upshot has been that dirty, dangerous, and unethical clinics continue to operate with little to no oversight, with women seeking abortion subject to a crapshoot of conditions.

In a normally competitive market for services, government failure isn’t a problem: bad providers are filtered out through various information channels—private rating agencies such as Yelp or Angie’s List, or certification by an independent ratings agency such as Consumer Reports for hospitals. In less competitive markets such as college campuses, there are even ratings for professors.

One candidate for providing such a service for abortion clinics, the National Abortion Federation, denied membership to Gosnell’s clinics for failing to meet acceptable standards. But when criticized for not blowing the whistle on the conditions later uncovered that included flea-infested cats wandering the halls, urine-and blood-splattered walls, and corroded suction tubing, the head of the Federation said, “What we saw didn’t meet our standards, but they’d cleaned the place up and hired an RN for our visit. We only saw first-trimester procedures”—thus not following standard procedures for rating agencies that usually include unannounced and multiple visits.

The upshot is that in the name of protecting a woman’s right to choose, abortion advocates have in practice delivered a network of abortion providers that in too many cases do not protect a woman or her unborn child—with politicians and bureaucrats providing cover for abusive practices.

Government failure in abortion is now fully evident, with the White House demonstrably captured by the biggest abortion special interest of them all: Planned Parenthood. At last Thursday’s White House press conference, press secretary John Earnest, when asked about the videos, parroted Planned Parenthood’s stance:

there’s ample reason to think that this is merely the tried-and-true tactic that we’ve seen from extremists on the right to edit this video and selectively release an edited version of the video that grossly distorts the position of the person who’s actually speaking on the video.

And Planned Parenthood has indicated that’s exactly what’s occurred here.

When asked if there was any consideration of investigating Planned Parenthood, Mr. Earnest further defended the organization, claiming the videos misrepresented the “organization’s policies and ... the high ethical standard that they live up to.”

Those wishing to undertake a thoughtful consideration of how to best care for women unintentionally pregnant and unwanted children should therefore not rely on government to inform or decide.

Further, we can discuss and debate policy and practice on the termination of more than a million pregnancies each year, but we ought no longer pretend the issue is simply a matter of denying high quality and ethical care of women, and removing unwanted, amorphous “fetal tissue.”

Though not for the faint of heart, the videos, regardless of editing, document extended discussions of positioning the body to be aborted in order to ensure that specific, desired body parts can be recovered intact.

The second part of the fourth video—definitely not for the faint of heart—clearly shows tiny bodies in the lab with their easily identifiable parts (leg, eye, brain, heart) being separated out and discussed.

Removing all question of precisely what is being examined, at 9:03 of this video, the Planned Parenthood doctor, looking at the aborted remains in the lab, says:

“It’s a baby.”

Do we care so little about women in our culture that we want them subjected to dirty and dangerous conditions; that we want them lied to about what abortion entails; that we want them to sign uninformed permissions when already under distress for their babies’ bodies to be used as lab specimens?

And do we value children so little that we accord them no rights or status—subject solely to choices made on any basis?

How “Progressive”.

FreedomFest Recap: Why Obamacare Stifles Healthcare Innovation

26925793_MI had the pleasure of speaking recently on a healthcare panel at FreedomFest in Las Vegas. Here’s a recap of my remarks on innovation and entrepreneurship in healthcare.

In the 2012 book Priceless: Curing the Healthcare Crisis by Dr. John C. Goodman, my colleague at the Independent Institute, John wrote: “The ACA [Obamacare] approach will stifle innovation and entrepreneurship” (p. 263).

Why was John so certain that Obamacare would slow healthcare innovation?

The approach to innovation in Obamacare is to spend money on pilot programs and other experiments, find out what “works,” and then copy it on a grand scale.

This is not entrepreneurship! Rather, this is top-down cookie-cutter replication, where government bureaucrats decide what “works,” not healthcare consumers and their doctors.

True entrepreneurship consists of thousands, often millions, of people trying NEW things, not copying current approaches. Successful innovations come from challenging conventional thinking, not by replicating it. True innovation is the antithesis of replication. It is about trying new approaches, discovering what works—as judged by decentralized consumers—and going against accepted ways of doing things when needed.

This is why Obamacare stifles true innovation – the rewards go to copycats who pursue known ways of doing things, not to radical disruptors. And no sector of the economy needs entrepreneurial disruption more than healthcare.

As a result of the Obamacare approach to “innovation,” Dr. Goodman describes the resulting healthcare sector as “a sea of mediocrity punctuated by islands of excellence” (p. 43).

Despite severe impediments to true innovation in healthcare today, there are green shoots of innovations that would put consumers in the driver’s seat, if only governments would get out of the way. For example, Heal allows patients to open an app and request a doctor to be dispatched to their home. Payment ($99 per visit) is done through the app, and doctors can do things from standard checkups to blood tests onsite. Ultrasounds and vaccines are in the pipeline.

GiveForward is an online fundraising platform that helps patients handle out-of-pocket medical expenses through crowd funding.

Castlight Health allows patients to enter their zip code and the service or procedure they need, and it gives them a list of area doctors, as well as a breakdown of what they charge for their services.

iTriage connects symptoms to potential conditions and offers real-time features like wait times at nearby emergency rooms and urgent-care clinics.

Emmi Solutions is a company that uses teams of visual and graphic artists, voice artists, scriptwriters, and patient focus groups to simplify complex medical information to provide people with information they can easily understand. Think of it as healthcare infographics for the general public.

ZocDoc lets users view a map of doctors in their insurance network and read patient reviews to help choose the right doctor. Brighter lets consumers compare dentists by price and reputation.

This is what true entrepreneurship and innovation looks like. It’s messy, scattered, and about disrupting conventional approaches. These innovations give new meaning to “consumer-driven healthcare.”

In contrast, Obamacare pilot projects are about conformity—a centralized cookbook approach that promises failure on a grand scale.

Healthcare needs entrepreneurial disruption focused on consumer satisfaction and consumer empowerment, not bureaucratic conformity focused on aiding political cronies.

Ai Weiwei Goes to London

AeiWeiWeiBritain’s Home Office has rectified the decision to grant Ai Weiwei—China’s most famous artist and somewhat of a “cause célèbre” among victims, critics and dissidents in China—a 21-day visa in connection with the exhibition that will open soon at the Royal Academy of Arts. Home Secretary Theresa May has backtracked and granted him the six-month visa he had originally requested.

It is obvious that the offensively restrictive permit was aimed at preventing Mr. Weiwei from being in London at the same time that Chinese president Xi Jinping will be visiting Britain to discuss investments and trade with his hosts in October. The desperate attempt to clear the way for Mr. Jinping originally led the British government to prove once again the close connection between the absurdity of political bureaucracy and absurdist art that goes back to Dadaism and surrealism in postwar Europe, and which Weiwei’s own art exemplifies, in part reflecting the lack of communication in a world devoid of meaning.

London had alleged that the Chinese artist concealed a criminal conviction in his application. Actually, he concealed nothing because the Chinese government thugs who kidnapped him and placed him in arbitrary detention for three months in 2011, and who subsequently kept him under house arrest for four years, never charged him or sentenced him.

What Weiwei did get was a “tax fine” of $2.4 million that he was able to pay only with the help of some 30,000 sympathizers who sent him money—and to whom he gave in return beautifully designed and drawn IOUs that are probably worth much more than their face value.

This kind of attitude by Western liberal democracies towards dictatorial regimes always begs the question: Is it a case of servile obedience to the express wishes of the government they are trying to please, or simply an anticipatory gesture based on an interpretation of what those wishes might be?

Prime Minister David Cameron was not always as ready to please the Chinese authorities. In 2012, for instance, he caused a stir in Beijing by meeting with the Dalai Lama. A few months later, however, he seemed to atone for that act of diplomatic impudence by publicly rebuking the same Dalai Lama before taking a major trade delegation to China on an official visit.

He had further occasion to show remorse when, last year, he resisted every request to express sympathy for the valiant pro-democracy activists who were denouncing China’s move to change the voting system in Hong Kong. He has exercised no such restraint when invited by the Beijing authorities to embrace China’s efforts to gain influence over its neighbors and beyond—for instance by having Britain join the Asian Infrastructure Investment Bank.

By all means, let the Brits and the Chinese engage each other commercially and even politically. But why should the price of political and business engagement be to limit or bar other types of engagement, including the civic, moral and spiritual kind that Weiwei embodies by taking his conscience and his tongue wherever he is able to go? Only if one has a narrow-minded and perverse notion of what free exchanges mean can one find any sort of reason in restricting a visit from Weiwei in order to facilitate a visit from Jinpin.

Restricting Weiwei also amounts to restricting the Brits from deciding by themselves whether they want to see, talk to, listen to, or debate with this man who has a message he wants to share with them.