On Wednesday morning President Obama unveiled his 2014 budget and urged the nation to reduce the federal deficit “in a balanced and responsible way.” Predictably, his opponents in Congress are offering a vastly different interpretation of what this sensible-sounding proviso should entail.

Some may even reach across the aisle and succeed in recruiting members of the President’s own party to support their vision of a balanced budget amendment. Before attempting this, however, they would be wise to consult a recent episode of legislative history.

On November 28, 2011, supporters of a balanced budget amendment, House Joint Resolution 2 (HJR2), came close to getting what they wanted—or more accurately, getting what they asked for. The measure garnered support from 62 percent of the House of Representatives, falling just short of the requisite two-thirds vote. It’s a good thing it failed.

An ineffective or poorly written balanced budget amendment would be worse than none at all, and according to economist J. Huston McCulloch (Ohio State University), HJR2 was flawed on several counts. Its passage would have been the triumph of symbolism over substance, not a victory for fiscal discipline.

The first section of HJR2, McCulloch explained in an article published last fall in The Independent Review, was worded so poorly as to make the entire amendment unworkable. But even if that flaw had been absent, the amendment still would have been ineffective because, as McCulloch noted, it lacked provisions to keep members of Congress from threatening to shut down the entire federal government if they didn’t get their way.

But even if that flaw had been absent, there was still the omission of a measure to prevent the Federal Reserve from circumventing the debt ceiling. One provision necessary to make a balanced budget amendment effective, McCulloch argued, is a definition of “outstanding debt” that includes monetary instruments issued by the Fed.

For these and other reasons, McCulloch lambasted HJR2 and offered an alternative free of such flaws, a version he called “the improved balanced budget amendment.”

In the off chance that this blog post will be read by anyone willing and able to help move this matter from the court of public opinion up through the legislative pipeline, I offer McCulloch’s proposed amendment in full:

The Improved Balanced Budget Amendment

SECTION 1. The outstanding debt of the United States shall not be increased above its level on the date of ratification of this amendment, unless three-fifths of the whole number of each House shall provide by law for such an increase by a roll call vote.

SECTION 2. Should the President determine that expenditures appropriated by law will necessitate borrowing in excess of the limit provided in Section 1 during any fiscal year, he or she shall impound any appropriations as necessary and expedient to remain within said limit. The compensation of members of Congress or of judges of the supreme and inferior courts may not be reduced under this provision.

SECTION 3. The limit on the outstanding debt of the United States may be reduced at any time to a level no lower than the then outstanding debt by a majority vote of both Houses of Congress by a roll-call vote.

SECTION 4. Outstanding debt shall include all obligations backed by the full faith and credit of the United States as well as all legal tender obligations and monetary instruments issued by the United States and its agencies. It does not include contingent claims of the United States and its agencies and excludes obligations backed by the full faith and credit of the United States held as backing for legal tender obligations and monetary instruments issued by the United States and its agencies.

Source: An Improved Balanced Budget Amendment, by J. Huston McCulloch (The Independent Review, Fall 2012)

I suspect that most readers of The Beacon tend to favor personal freedoms to a sufficient degree that they will immediately agree with the title of this post. If we want to live in a free country, freedom has to mean that we are free to make choices that others, including others in positions of authority, believe are bad choices. We are not free if we are only allowed to choose options government believes are good for us.

The tremendous harm that the war on drugs has around the world is common knowledge. It destabilizes and corrupts governments. The governments in Columbia, Guatemala, Mexico, Afghanistan, and many other places are corrupt and less functional because they have been pressured to adopt US drug policies. I suspect that even libertarian anarchists would argue that the citizens of those countries would be better off without the corrupting influence of US drug laws than with them. It has a similar corrupting effect in the US, as do all victimless crimes, although the US has not suffered as much as have many other countries forced to conform to our policies.

The war on drugs endangers innocent citizens because those involved in the drug trade are not protected by government, so they must arm themselves to protect their property and their business from law enforcement, and other private citizens. The violence that accompanies illegal drugs is present because they are illegal, not because they are drugs.

Users themselves are placed in more danger, because there is less quality control in underground markets, and because there is a premium placed on creating more potent, and therefore more portable and concealable, products.

Another obvious drawback is that violating drug laws can land the user in prison. This is obviously bad for the person who is imprisoned, but it is bad for everyone else too. It marginalizes that individual, making it less likely the individual can find a good job, and more likely that after incarceration the individual will engage in criminal activity. Everyone would be better off if we kept drug users out of prison.

So, why do we have these laws? One reason is that some people believe that if a certain behavior is undesirable (like using drugs), then it should be illegal. Another more utilitarian reason is that drug laws may keep some people from becoming drug users. If recreational drugs were legalized, some people who don’t use them now might start.

Let’s look at this argument more closely. To summarize all of what I’ve said already, US drug laws are bad for just about everybody around the world. They make governments more corrupt and make life more dangerous both in the US and abroad, and they impose potentially heavy costs on users. The advantage is that it may keep people from becoming users.

If we want to live in a free country, this argument fails because the “advantage” amounts to taking away individual freedoms. Creating a more totalitarian society is not an advantage.

Even if using recreational drugs is in some ways harmful to the drug user, in a free country it should be up to the potential user to weigh the costs and benefits, not the government.

In an attempt to protect some people from making choices that others might view as harmful, we are inflicting harm on everyone else around the world.

Freedom is meaningless unless people have the freedom to make poor choices. If we apply that principle to our drug laws, recreational drugs will be legalized, and the harm that is done by our drug laws to innocent people all over the world will be eliminated.

Eliminating harm is good. Promoting individual freedom furthers the American values upon which this country was founded.

The Affordable Care Act is expected to add up to 16 million more Medicaid enrollees and will significantly expand eligibility for families with incomes up to 133 percent of the federal poverty level. Initially, the federal government will pay 100 percent of the cost of the newly eligible, newly enrolled populations and 95 percent of costs through 2019. However, hidden costs will strain state budgets, and states will still find their share unaffordable.

The Cost of Enrolling the Already Eligible

An estimated 10 million to 13 million uninsured people are already eligible for Medicaid—but not enrolled. When the individual mandate to obtain health coverage takes effect in 2014, many states will find the cost of their Medicaid programs higher as a result.

For example, a decade after the new law’s implementation, Texas Medicaid rolls are predicted by the Texas Department of Health and Human Services to rise by 2.4 million people. Of these, only 1.5 million enrollees will be newly eligible, so a significant share of the cost for the remaining 9 million will have to be borne by the state.[1]

Low Medicaid Provider Payments

On the average, reimbursements for Medicaid providers are only about 59 percent of what a private insurer would pay for the same service, but as shown below, it varies from state-to-state.[2]

• New York pays primary care physicians only about 29 percent of what private insurers pay for primary care.

• The comparable figure in New Jersey is 33 percent.

• California pays primary care providers 38 percent of what private insurers pay.

• Texas reimburses primary care physicians for about 55 percent of what private insurers pay.

Low provider reimbursement rates make it more difficult for Medicaid enrollees to find physicians willing to treat them. Initially, the federal government will bear the cost of raising Medicaid provider fees to Medicare levels—but only for two years, 2014 and 2015. Then the rates will fall back to their previous levels, or the states will bear much of the cost of keeping Medicaid provider fees at a level necessary to ensure enough physicians are willing to participate in the program.

Lower Payment to Safety Net Hospitals

Disproportionate share hospital (DSH) payments are used to compensate hospitals that treat a disproportionate share of indigent and uninsured patients. The federal government distributes about $12 billion annually to offset part of the cost.

The ACA reduces DSH payments by about one-quarter, on average, through 2019. Beginning in 2018, annual reductions are about $5 billion per year. The federal government will initially deduct about three-quarters of hospitals’ historic allotment and then give back a portion of the funding reduction using complex formulas. The rationale is that as more patients have coverage, hospitals will have fewer uninsured patients. However, 23 million people will remain uninsured—some of whom may seek uncompensated care. States may have to bear some of the additional costs if their hospitals are to stay solvent.

Crowd Out of Private Insurance

Many of the newly insured under Medicaid will likely be those who previously had private coverage. Research dating back to the 1990s consistently confirms that when Medicaid eligibility is expanded, 50 percent to 75 percent of the newly enrolled are those who have dropped private coverage.[3]

A Better Solution: Give the States Control Over Medicaid

A good argument can be made for abolishing Medicaid. Given the freedom to spend the same money in other ways, state governments should be able to deliver more care and better care. Even if they decide to retain the basic structure of Medicaid, the states can implement a slew of reforms that will lower costs, improve quality and increase access to care.

The most straightforward solution is to give the states their share of Medicaid dollars with no strings attached except the requirement to spend the money on indigent care. The fairest allocation system is to let each state’s block grant reflect the proportion of the nationwide poverty population living in the state.

For more ideas on reforming healthcare, please see my Independent Institute book, Priceless: Curing the Healthcare Crisis.

Notes:

1. David Cutler and Jonathan Gruber, “Does Public Insurance Crowd out Private Insurance?” Quarterly­ Journal of Economics 111, No. 2 (1996): 391–430.

2. Thomas M. Suehs, “Federal Health Care Reform—Impact to Texas Health and Human Services Commission,” Presentation to Texas House Select Committee on Federal Legislation, April 22, 2010. http://www.hhsc.state.tx.us/news/presentations/2010/HouseSelectFedHlthReform.pdf.

3. Author calculations based on estimates of the ratio of Medicare to private insurers’ physicians fees and data from Kaiser State Health Facts. Also see Devon Herrick, “Medicaid Expansion will Bankrupt the States,” National Center for Policy Analysis, Brief Analysis No. 729, October 25, 2010, http://www.ncpa.org/pdfs/ba729.pdf.

[Cross-posted at Psychology Today]

As a rule, libertarians incline toward wishful thinking. They constantly pluck little events, statements, and movies from the flow of life and cry out, “Eureka! Libertarianism is on the march!” With some of my friends, this tendency is so marked that I have become amused by its recurrent expression—well, there he goes again!

Some of this tendency springs, I believe, from their immersion in abstract thought and writing. Many of them have read hundreds of books and articles on libertarianism itself or on closely related ideas and personalities. They love to point out that ideology controls everything and to remark that as soon as we can bring a substantial minority over to our way of thinking, the whole social and political apparatus will tip from tyranny into liberty—rather as the old Eastern European satellites of the USSR (seemingly) abandoned their Communist regimes and substituted much less oppressive regimes almost overnight, in most cases with little bloodshed.

Although I agree that ultimately ideology controls many other elements in social and political affairs, I do not agree that ideology in the Western welfare-warfare states is nearly as fragile as Communist ideology was in the old Soviet satellites. Libertarians rarely invest much time in the detailed study of how the dominant ideology is generated and maintained in the contemporary West. Even fewer of them dig into the detailed composition and operation of the many economic, social, and political institutions that are tied in countless ways into reliance on and support of the politico-economic status quo. Hundreds of thousands of such organized efforts go on day in and day out all over the country at every level. One has only to thumb through the telephone directory for the Washington, D.C., area to gain an impression of the amazing array of well-organized, well-funded, special-interest groups now working ceaselessly, in effect, to keep all attempts to restore liberty at bay and if possible to bind individuals down by additional legal restraints and obligations. Participatory fascism in the contemporary USA and other advanced Western countries is an arrangement so vast and far-reaching that it defies the grasp of any single researcher. Specialists can easily work full-time in simply trying to understand the workings of one tentacle among the thousands that the beast possesses.

To suppose that an overnight ideological conversion or “tipping” can remove all of these organizations from the scene or lead them to alter their objectives and modus operandi is fanciful beyond imagination. To borrow from the vernacular, it just ain’t gonna happen. For it to do so would amount to the most preposterous instance of the tail wagging the dog in human history. Communist regimes could be (seemingly) tipped because Communism was widely recognized as a failure, as a recipe for societal backwardness and a low level of living. After its initial revolutionary surge of support, its ideological underpinnings grew weaker and weaker with each passing year and, by the 1980s, not many true believers remained.

Such is not at all the case in the West today. Here nearly everybody is held tightly in the system by countless seemly beneficial ties that few people can imagine doing without: Who’ll send grandma a monthly check to keep her in groceries? Who’ll provide medical care for the scores of millions of lower-income people whose care now comes via Medicaid? Who’ll cover the huge medical bills the elderly now expect Medicare to pay? Who’ll subsidize the college loans on which millions of students rely? And so on and on. One has only to wade through the Code of Federal Regulations and ask on each page: if this particular regulation were scrapped today, how would its corporate and union beneficiaries react? Can one really imagine that these powerful institutions would simply shrug their shoulders if liberty should break out, after having fought for more than a century to forge the fetters that now bind the populace in the service of almost innumerable special interests?

One who maintains, as I do, that the existing system may crumble little by little, having heedlessly sowed thousands of poisonous seeds of its own destruction, but almost certainly will never just roll over and admit defeat, may seem to be a defeatist. But nothing is gained by entertaining an unrealistic view of what liberty lovers are up against. Even if one believes, as I do, that the existing system is not viable in the very long run, it may last in episodically patched-up forms for a long, long time. There are no magic bullets, such as abolishing the Fed. The state can use other means in the highly unlikely event that it should no longer have the Fed in its arsenal. The same can be said about most of the system’s other key elements.

In truth, the time for liberty lovers to make a stand that had a fighting chance of success was a century ago. But that chance was squandered, if indeed it ever packed much punch. Powerful economic, institutional, and ideological currents were working against it even then, and by now those currents, swelled by the self-interested efforts of several generations of statists in positions of great power and influence, have grown into a mighty river. This fascistic Rome wasn’t built in a day, and it wasn’t built by accident, either. It is not so flimsy that it will collapse because someone gives a libertarian-sounding speech in the Senate, because thousands of powerless college students turn out to hear Ron Paul speak, or because a writer embeds a libertarian sentiment in a film script. These things, however much they may cheer the libertarian heart, are the equivalent of the proverbial sparrow pecking at a pyramid. Wishful thinking about the impending triumph of liberty may be uplifting for libertarians, but it avails neither them nor the world anything of real importance.

Margaret Thatcher’s death caught up with me in the worst of places: a speech in Argentina. What to do? Should I follow my conscience and say a few words in memory of her—and risk offending an audience sensitive to the legacy of the Falklands War—or should I keep silent? I opted for saying a couple of words, asking them not to take offense and expressing respect for their feelings. Some disapproving noises came back from the audience. After I finished speaking, I faced some aggressive reproaches.

In death, as in life, Thatcher is a polarizing figure. There are classical liberals who object to her excessive conservatism and conservatives who judge her to have been too libertarian; the left hates everything about her and Argentines consider her a war criminal. I spent a few years in London during her time in office. There are some things everyone, left or right, should value.

First, she transformed the British right, which was an oligarchic club, into a association in which merit rather than origin, and effort rather than lineage, became the dominant features. When she took over the leadership of the Conservative Party in 1975, being a grocer’s daughter from Grantham was a stigma among Tories; self-made success and social mobility were anathema to them. By 1990, those were emblems of a new Tory Party.

Thatcher brought back ideas into politics. Neither the left, which had been dominant since the end of WWII and accelerated Britain’s decadence, nor the right, which had accepted the fundamentals of a socioeconomic model imposed by the left, believed in ideas anymore. We can debate whether she went as far as she could in applying hers, but there is no debating her love of ideas. The ones she absorbed at the Institute of Economic Affairs and the ones she learned reading everything from Edmund Burke to Friedrich Hayek shaped her discourse and many, many of her actions.

Because her mission was not to do away with the state, she did not do so. In some areas, such as defense, she enlarged it. But she launched a process that devolved the responsibility for wealth creation and the pursuit of happiness from the state to civil society. In so doing, she transformed the right and the left. She instilled idealism and a reformist zeal into the political right; she helped modernize part of the left. Although Tony Blair’s Labor Party made government somewhat bigger, on the whole he maintained her legacy and reaped the benefits. This fostered the rebirth of the left under the banner of the “third way”, which impacted Europe, the United States (under Bill Clinton) and Latin America (with Brazil’s Lula da Silva).

Contributing to the implosion of Soviet communism, something that is often attributed to her, was no small feat. It required going up against vested interests and widespread perceptions in a democratic Europe that had lost all hope of change on the other side of the Iron Curtain. She was accused of being blinded by ideology; but when she understood that Mikhail Gorbachev was seriously interested in reform, she declared that the West could “do business with him” (and caused whispers among the American right). Thatcher was not an ideological animal, but a political animal with ideas. Both the right and the left owe much to what she did, in peaceful combat, to tear down the Berlin Wall. The right defeated an enemy, of course, but the moderate left shook off a dead weight.

Thatcher mistrusted European integration. Many of us thought she did so primarily for nationalistic reasons (and later a discomfort with a unified Germany) rather than because she feared the bureaucratic aspects. Time has shown she was right about some of what she said. The European construct has many flaws; the crisis of 2007/8 brought them into the open.

She was a rare politician. It will be decades before Europe produces anything like her. Rest in peace, Maggie.

Senior citizens are major losers in health reform. More than half the cost of the reform will be paid for by $523 billion of cuts in Medicare spending over the next ten years.[1] Although there are some new benefits for seniors (mainly new drug coverage), the costs exceed the benefits by a factor of more than ten to one.

Cuts in Medicare Fees to Providers and in Advantage Plans

Medicare actuaries have made several ominous predictions.[2]

• By 2020, Medicare nationwide will pay doctors and hospitals less than what Medicaid pays.[3]

• By 2019, one in seven facilities will become unprofitable and will probably be forced to leave the Medicare program.

• That number will grow to 25 percent of all facilities by 2030 and to 40 percent by 2050.

Moreover, in the not-too-distant future, Medicare patients could find themselves in the same position as Medicaid enrollees—who often are forced to get all their care at community health centers and safety net hospitals.[4] Ultimately, if Medicare spending grows at a lower rate than the healthcare system as a whole, the elderly and the disabled will end up in a completely different healthcare system. They will not be able to see the same doctors, enter the same hospitals, or get the same quality of care other Americans have access to.

In defense of its plan, the Obama administration claims that it will target Medicare cuts to eliminate waste—to encourage low-cost, high-quality care and discourage high-cost, low-quality practices. Yet, the cuts in Medicare Advantage subsidies, for example, appear to be based on special interest politics alone, not on any lofty goals.[5] Moreover, the plans that are being defunded are ostensibly doing everything President Obama says he wants to accomplish with health reform.[6]

• They provide subsidized coverage to low- and moderate-income people who could otherwise not afford it.

• They control costs better than conventional insurance by eliminating unnecessary care.

• They provide higher quality care.

• They have no pre-existing condition limitations, and some plans actually specialize in attracting and caring for patients with multiple illnesses.

• They provide an annual choice of plans.

• They even compete against a public plan (traditional Medicare).

A Better Solution: Reform Medicare the Right Way

Many of the cuts to Medicare will have to be restored. However, Medicare cost increases can be slowed by empowering patients and doctors to find efficiencies and eliminate waste.

On the demand side, seniors should be able to have Health Savings Accounts. In this way, those who avoid unnecessary or wasteful spending would be able to use those same dollars for other consumption spending. Patients, in other words, would have a financial self-interest in keeping costs down.

On the supply side, doctors, hospital administrators, and other providers should be able to approach Medicare and request to be paid in more efficient ways. The ground rules are: the change cannot increase Medicare’s costs, and the quality of care for the patients cannot go down. With this opportunity in place, providers would find it in their self-interest to find ways to eliminate inefficiencies and waste.

For more ideas on what most needs repealing and replacing in the new healthcare law, please consult my Independent Institute book, Priceless: Curing the Healthcare Crisis.

Notes:

1. Douglas W. Elmendorf, “Letter to Speaker Nancy Pelosi,” Congressional Budget Office, March 20, 2010, http://www.ncpa.org/pdfs/Managers-Amendment-to-Reconciliation-Proposal.pdf.

2. John D. Shatto and M. Kent Clements, “Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers,” Center for Medicaid & Medicare Services, August 5, 2010, https://www.cms.gov/ReportsTrustFunds/downloads/2010TRAlternativeScenario.pdf.

3. Joseph P. Newhouse, “Assessing Health Reform’s Impact on Four Key Groups of Americans,” Health Affairs 29 (2010): 1714–1724, doi: 10.1377/hlthaff.2010.0595.

4. For example see: Robert A. Berenson, “From Politics To Policy: A New Payment Approach In Medicare Advantage,” Health Affairs 27, No. 2 (2008): w156–w164. doi: 10.1377/hlthaff.27.2.w156.

5. Robert A. Berenson, “From Politics To Policy: A New Payment Approach In Medicare Advantage,” Health Affairs 27, No. 2 (2008): w156–w164 (Published online ) doi:10.1377/hlthaff.27.2.w156. Also see Lisa Wangsness, “Democrats Seek Cuts in Medicare Advantage: Citing Perks, GOP says Obama Misled,” Boston Globe, September 24, 2009.

6. John C. Goodman, “The Puzzling War on the Elderly,” John ­Goodman’s Health­ Policy­ Blog, August 24, 2009, http://healthblog.ncpa.org/the-puzzling-war-on-the-elderly/.

[Cross-posted at Psychology Today]

Finally, some sanity, and from a somewhat unexpected source. The ACLU is concerned about the civil liberties implications of the new Harry Reid Senate bill to establish so-called “universal background checks” for firearms purchases. The organization has tended toward silence on gun rights, but at least now it recognizes aspects of the problem with this terrible proposal.

Ever since Sandy Hook, the Obama administration and its progressive choir have demanded a new Assault Weapons Ban (AWB). Now it looks like that plan is toast. California Senator Dianne Feinstein blames gun owners and the NRA, and in a sense we should have expected all along that this proposal would get nowhere. Such a ban would mostly target “semi-automatic” rifles—which, despite all the hysterics, simply refers to any standard rifle that fires one round each time the trigger is pulled—that happen to have esthetic elements like the pistol grip that do not in fact add to the weapons’ lethality. This is the nonsensical standard used to ban some classes of weapons instrumentally identical to the ones banned in 1994.

The first AWB devastated the Democrats politically, and probably contributed as much as anything to the Republicans’ crushing victory in the 1994 congressional elections after forty years in the legislative minority. It also hurt Al Gore in his run against George W. Bush in 2000. The ban generally prohibited ordinary but scary looking rifles, which are used in about two percent of violent crimes committed with firearms. The law did not apply to, say, most of the weapons used at the Columbine school massacre in 1999. But it did interfere with Americans’ basic right to own what we can fairly call the modern version of the musket. Millions of Americans own such weapons like the AR-15, the most popular rifle and one targeted by the Democrats’ proposal for a new, robust AWB. These weapons are used for hunting, sport, and self-defense. They are not, despite all the misinformation to the contrary, repeating, military-style rifles.

In any event, the unpopularity of an AWB always doomed this proposal, especially under a Democratic president as distrusted on the right as Obama. The Republicans have the House and too many Democrats in the Senate are loyal to their gun-owning constituents.

So this whole time, the real threat to our firearms freedom has been these less debated, peripheral proposals—proposals that strip people the state deems “mentally ill” of the right to bear arms, proposals that violate the civil rights of released convicts, proposals to increase penalties for violations of current law, and, as disturbing as anything, proposals to institute “universal background checks.”

The gun restrictionists have pointed to polls showing more than 90% approval of such background checks, including among a vast majority of conservatives, Republicans, and gunowners. Liberty is always attacked on the margins, and most Americans don’t go to gun shows and so don’t see the big deal. Surely the state should know who is armed. Surely we don’t want people buying and selling guns freely.

But, in fact, universal background checks are arguably even more tyrannical than banning whole classes of weapons. Why should the government know who is armed? Why shouldn’t people be allowed to freely buy and sell private property without government permission? Half of Americans see background checks as the first step toward full registration then confiscation. Many fear that the new law would create records of these deals that would not immediately be destroyed, which could form databases or enable government in further nefarious purposes. The progressives have tended to regard any of these worries as paranoia, but it looks like the ACLU is now among the paranoid.

There is no need to discuss pure hypotheticals. There have been gun confiscations in the United States. After the Civil War, officials conducted confiscations to disarm American Indians and blacks became the target in the Jim Crow South. Confiscations followed Hurricane Katrina, along with the rest of the government’s martial law response. Since many gun controllers openly say they want a total ban of certain kinds of firearms, or all firearms, why wouldn’t gunowners fear that registration will lead to confiscation? The U.S. president promised that he would not take away Americans’ rifles, then went ahead and proceeded to propose to do just that. Add all of this to the database growth, the warrantless wiretapping, the domestic surveillance drones, the frightening executive power grabs concerning detention, interrogation, and executions, and the overall militarization of policing that has unfolded thanks to the wars on drugs and terror, and it seems fairly appropriate that in the age of Bush and Obama, civil libertarians of all stripes would resist the drive toward universal background checks or anything with such an Orwellian name as that.

This whole matter should also remind us of the interlocking nature of personal liberties. Abolishing the Second Amendment necessarily means abolishing the Fourth as well. Just ask the millions of black and Hispanic young men stopped and frisked in New York City in the name of gun control and with the purpose, as the police commissioner reportedly put it, to “instill fear” of police in these demographic groups. It is the violations of privacy that concern the ACLU, but anyone jealous of her security in her papers, persons, and effects should recoil at the thought of the state collecting these records.

Of course, it should go without saying that when it comes to criminal enterprise, universal background checks are unenforceable. In a country with as many guns as there are people, criminals and the state will always get the weapons they want. Firearms are easier to manufacture than many illegal drugs, and we see how well the state has stamped those out. The rapid developments in 3-D printing makes it even crazier that we’d still be talking about gun control as anything but a threat to the liberty of the law abiding.

The AWB looks defeated for now, but perhaps that was always known to be inevitable by our cynical civilian disarmament fetishists in Washington, DC. Perhaps the real goal was to get what could be gotten now—the beginnings of a national database of every lawful gun owner. The so-called gun show loophole—the freedom of owners to sell firearms to one another with few encumbrances—is a pocket of liberty. Closing this loophole would be a tragedy. We can only hope that civil libertarians across the spectrum ban together to challenge this march to erode these core freedoms.

In January I left Suffolk University to start the new Free Market Institute at Texas Tech University. I remain affiliated as a Senior Fellow with the Independent Institute and plan to continue my productive relationship with them well into the future. Since I’ve continued to write commentary for Independent some of you might have already noticed my change of academic affiliation in my columns. To learn more about what we’ll be doing at the Free Market Institute check out our new webpage or follow us on Facebook. Particularly, if you are interested in doing graduate work in free market economics be sure to contact us.

One of the most oft-repeated arguments for health reform is to reduce costly and delayed trips to the emergency room by uninsured patients. But will that happen? The heaviest users of the ER (in proportion to their numbers) are Medicaid patients (perhaps because many doctors won’t accept them), and more than half of the people who gain insurance under the Affordable Car Act will enroll in Medicaid.

What to Expect Under ACA

While the increased demand for services may turn some people to concierge doctors, many more are likely to turn to the emergency room when they cannot get their needs met at doctors’ offices.[1] If, say, only one-third of those newly insured turn to the emergency room because of inadequate primary care supply, that would equal between­ 39 ­million ­and­ 41­ million ­additional­ emergency­ room­ visits­ every­ year.

A Better Approach

To protect the institutions that deliver care to our most vulnerable populations, we need a dedicated flow of funds that rises and falls with the objective need. One source of funds is the money represented by unclaimed tax credits. These funds could be redirected to the safety net institutions in the areas where the uninsured live to provide a source of funds in case they cannot pay their own medical bills.

For details, please see my Independent Institute book, Priceless: Curing the Healthcare Crisis.

Notes:

1. John C. Goodman, “Emergency Room Visits Likely to Increase under ACA,” National Center for Policy Analysis, Brief Analysis No. 709, June 18, 2010, http://www.ncpa.org/pdfs/ba709.pdf.

[Cross-posted at Psychology Today]

The term crony capitalism has appeared frequently in the popular press of late, but rarely has it been used—let alone defined—in the academic literature. Independent Institute Research Fellow Randall G. Holcombe, a frequent contributor to The Beacon, helps remedy this deficiency in an article published in the Spring 2013 issue of The Independent Review. “Crony capitalism,” he writes, “is an economic system in which the profitability of business depends on political connections.”

Holcombe’s definition makes no claims about the causes, effects, or moral status of “crony capitalism.” But by cutting to the heart of the matter—by identifying the phenomenon’s fundamental difference from other economic systems—it opens new avenues of understanding. One way it does so is by implying that we should look at a broad range of examples in which political connections shape the profitability of businesses. Holcombe’s article examines four types: rent-seeking, regulatory capture, political entrepreneurship, and interest-group politics.

The academic literature abounds with studies of these components of “crony capitalism,” but I don’t believe that a comprehensive theory of the phenomenon has ever been offered—although Holcombe’s piece makes important contributions.

What would a valid theory reveal? One key finding that it would elucidate, an aspect emphasized by Holcombe, is that “crony capitalism” grows as the profitability of businesses comes to depend on how well businesses can secure government subsidies, tax breaks, and regulations that work in their favor.

“Crony capitalism,” in other words, is a by-product of big government.

[A different version of this post first appeared in the April 2, 2013, issue of The Lighthouse. To receive this weekly newsletter, please enter your email address here. For information about The Independent Review, including a free book offer with new subscriptions or renewals, please click here.]