The Independent Institute


Bill of Rights Day: Opportunities Missed

9670599 - closeup of a replica of u.s. constitution documentThursday, December 15, is Bill of Rights Day, a time when citizens are told to celebrate the first ten amendments to the Constitution. Scholars such as Yale’s Akhil Amar describe the Bill of Rights as “the high temple of our constitutional order—America’s Parthenon.” Most of the public buys into this and believes that the Bill of Rights was a great gift from the Founders to posterity.

What we know as the Bill of Rights was nothing but window dressing meant to quiet critics of the Constitution without altering the structure of the document. Writing to Edmund Randolph, James Madison, the main architect of the Bill of Rights, indicated that his goal was to leave “[t]he structure & stamina of the Govt. . . . as little touched as possible.” George Clymer, a member of the first Congress elected from Pennsylvania, described Madison as “a sensible physician” giving his “malades imaginaires bread pills powder of paste & neutral mixtures to keep them in play.”

The state conventions that ratified the Constitution suggested over 200 amendments to the Constitution to cure structural problems. For example, Virginia offered a lengthy amendment on the judicial power. The proposal, in the main, would have limited the federal judiciary to the Supreme Court and various admiralty courts established by Congress. State courts would serve as the trial courts of the Union with the possibility of appeal to the Supreme Court. Virginians rightly feared that the federal judiciary would become an engine of consolidated government and sought to limit its power.

More Good News for Health Reform: HSAs Continue to Grow

60527092 - paper with words weekly health savings account (hsa) on a table.One of Donald Trump’s campaign promises was to make Health Savings Accounts more widely used. The purpose of HSAs is to give patients greater control over health spending and to reduce the share of spending controlled by insurers. Unfortunately, the 2003 law that established HSAs requires they be linked with a highly regulated type of health insurance policy.

These policies, like all health insurance today, give insurers power to dictate prices instead of allowing prices to be formed through interactions between patients and providers (that is, a normal market process). Consequently, these health insurance policies are not as popular as truly consumer-driven plans should be.

Nevertheless, HSAs (which are bank accounts, not health insurance policies) are growing like gangbusters, according to new research from the Employee Benefits Research Institute (EBRI). As I wrote previously, EBRI is a rock-solid member of the health-benefits establishment.

If Trump wants to expand the use of HSAs, EBRI’s evidence suggests he is pushing on an open door. EBRI indicates that at the end of 2015 there were 20 million HSAs, with assets totaling about $30 billion. Over four in five HSAs were opened since the beginning of 2011. Indeed, over half of HSAs were opened in just 2014 and 2015.

The Season of Giving and the Economic System that Fosters Great Generosity

50646104_mlChristmas will soon be here, and preparations for this holiday are proceeding apace. People are buying gifts for family members and friends and making preparations for great feasts at which family, friends, and other loved ones will gather to share the joy and love of the occasion. Notice how much effort and expense are going into giving to and bringing joy to others. Notice, too, how much of the spending people do during this season would be impossible except for the affluence made possible by the remaining elements of the market society that the government, to date, has failed to destroy completely.

The free-market society is often criticized or condemned root and branch for its alleged dependence on the unsavory human trait of greed. Socialists have always claimed that their system would replace one dependent on greed with one based on compassion and caring for the unfortunate. Both theory and history have shown, however, that socialism cannot produce the wealth that makes possible the highly effective expression of compassion and caring. Before one can be very generous, one must have. something to be very generous with.

In any event, the idea that the free-market system rests on greed has always been mistaken, if not an outright lie. The system rests on allowing people to pursue their self-interest, to be sure, but self-interest is quite different from greed and indeed often consists of the very opposite. People in general have an interest in, for example, earning more income, and a major reason for this desire is that they wish to have the wherewithal to give to or take care of others more effectively—their own families first of all in most cases, but hardly their own families exclusively. The amounts of money, time, and effort that people devote to making others happier or better off—amounts vividly on display during the holiday season—belie the slander of a free market’s dependence on greed. But such transfers also occur throughout the year and amount to an enormous proportion of all the uses to which people in free-market societies put their wealth.

Trump’s Pick for Labor Secretary Another Win for Health Reform

34778261_mlSoon after announcing his intention to nominate Rep. Tom Price, MD, for Secretary of Health & Human Services, Donald Trump announced his intention to nominate Andrew Puzder for Secretary of Labor. This is yet another good sign for the repeal of Obamacare.

Since the election, the media have asserted that repealing Obamacare will yank health insurance from over 20 million people. This estimate refers to Obamacare’s having increased welfare dependency (via expanding Medicaid) and insurance coverage via the expensive individual policies offered in its exchanges, subsidized by tax credits.

This claim has sucked oxygen out of another important part of the debate, which is Obamacare’s effects on employment. The Congressional Budget Office projects that Obamacare will shrink the workforce by 2 million full-time equivalent (FTE) jobs in 2025.

Loving Exposes Dark Side of Legislating Morality

loving_2016_film-1A small but important film is making its way through U.S. theaters this season, and its message will resonate powerfully with those favoring individual liberty and freedom. Loving has earned just $6.5 million at the box office, but the film tells a poignant story about an all too recent dark period in American history. The dangers inherent in giving government the authority to enforce moral codes like the ones addressed in this film are relevant today.

Loving follows the persecution and legal odyssey of Richard and Mildred Loving, the mixed-race couple that challenged Virginia’s miscegenation laws preventing whites and non-whites from marrying. The U.S. Supreme Court ruled in June 1967 that Virginia’s laws prohibiting marriage between races, and by extension all state laws, were unconstitutional. The state courts upheld the law on moral and religious grounds, claiming in its written judgement against the Lovings, “Almighty God created the races white, black, yellow, malay and red, and he placed them on separate continents.... The fact that he separated the races shows that he did not intend for the races to mix.” The U.S. Supreme Court struck down the law, arguing marriage is one of the “basic civil rights of man,” fundamental to human existence, and no government should prevent a man or woman from exercising this basic right.

Most U.S. states adopted laws banning interracial marriage at some point in our nation’s sordid history of race relations. Just nine states never adopted prohibitions: New Hampshire, Vermont, Connecticut, New York, New Jersey, Wisconsin, Minnesota, Alaska and Hawai’i. Pennsylvania was the first state to repeal its miscegenation laws, in 1780. The eugenics movement—the idea that public policy should be used to promote “superior” human characteristics—gave the movement a powerful boost in the late 19th and early 20th centuries, prompting states like Virginia to adopt even stricter laws. One legacy of these laws, of course, is the continued popular resistance to legal marriage by members of the LGBTQ communities. (Notably, 40 percent of Alabama citizens voted against taking the state’s miscegenation laws out of its state constitution when it went to a general vote in 2000, even though the U.S. Supreme Court made the provision unenforceable.)

Artistically, Loving represents a few interesting choices. Writer-director Jeff Nichols and the producers chose to make a small, intimate movie that eschews moralizing and platitudes to focus on the dignity of the relationship between the Lovings and their close relatives and friends. Even the attorneys that took their case to the Supreme Court are outsiders, in temperament as well as social acceptance. The film could easily have become a courtroom drama, a legal procedural, or at least courtroom centered. Instead, Nichols focuses almost exclusively on the courtship and then marriage of Richard (Joel Edgerton) and Mildred (Ruth Negga), using their innate stoicism and quite resolve as a dramatic foil to aggressive law enforcement and patently unjust state and local laws.


Mildred Jeter Loving and Richard Loving

The movie’s pace is slow and its soap boxes small and narrow, much in keeping with the humility of the Lovings and the rural areas in which they grew up and fell in love. The tone and aesthetic reinforces the point that the Lovings were ordinary people. They were not revolutionaries or rabble-rousers. Richard was a mason, laying bricks and concrete blocks on construction jobs during the day and tinkering with his cars in the back shed at night. Mildred stayed home and raised their three children. The dialogue is minimal, allowing their relationship to be shown through subtle, intimate action and expression. Richard and Mildred are a couple of few words despite an obvious commitment to each other. They internalize their sadness, anger, frustration and resentment; they don’t act out, allowing the setting and context to tell the story.

The film picks up in 1958. Richard and Mildred are already in love despite the disdain of local whites and the trepidation of relatives and friends. Knowing that interracial marriage was illegal in Virginia, Richard and Mildred elope to the District of Columbia. But they return to Virginia to live near friends and family. Mildred is pregnant with their first child when their home is raided by the local sheriff, tipped off by a local snitch. Both are jailed for cohabitation, although Richard is bailed out within hours because he is white while the pregnant Mildred is forced to wait until a judge is available the next week. At trial, the judge finds them guilty, sentencing them to a year in jail, but suspends their sentence if they agree to live outside of Virginia for 25 years. They agree, and move to Washington, D.C.

Nichols artfully orchestrates a series of scenes that highlight the catch-22 faced by families running afoul of these laws. When the Lovings are arrested, the local sheriff (Marton Csokas) challenges Richard about why he is sleeping with a black woman. Richard points to his Washington, D.C. marriage certificate, prompting the law enforcement officer to remind him that Virginia doesn’t recognize the license. Thus, they are not legally married, and therefore are cohabitating, breaking state law. Later in the film, their attorney reminds them that their children are legally considered bastards because their marriage is not recognized by the state. Since their children were born out of wedlock under Virginia law, the specter of the the state removing the Lovings’ children for morals justifications becomes all too real.

The Lovings’ case started to move forward after Mildred wrote a letter to Attorney General Robert Kennedy, who forwarded their case to the ACLU. The ACLU assigned Bernard Cohen (Nick Kroll) and Philip Hirschkop (Jon Bass) to the case. While the film suggests that the ACLU single-handedly pursued the case to the Supreme Court, the Lovings were also supported by NAACP Legal Defense Fund, Japanese American Citizen League, and a coalition of Catholic bishops.

Loving is an artistic and cinematic tribute to the quiet heroism, faith, and virtue of the Lovings and common resistance to injustice. When Bernie Cohen asks if he would like to say anything to the U.S. Supreme Court justices hearing his case, Richard turns to him and uses a simple line that conveys the essence of the story and the fundamental injustice of their situation: “Tell the judge that I love my wife.”

Loving is also a welcome respite from the hard-driving action films that fill up the Holiday Season, and a fitting tribute to the importance of human dignity. The film, however, has a current relevance that should not be dismissed. Loving drives home the dangers of ceding moral authority to the state. Virginia’s legislators, law enforcement personnel, and judiciary justified the ban on interracial marriage on a misreading of Christianity that justified the prejudices of the times. Once these prejudices were ensconced in law, the police, courts and others could and did use these laws to terrorize citizens and further limit the rights and property of minorities.

Even now, most people in the United States don’t need to travel deep into their social circles to find friends and family who have been impacted by similar laws more recently. Members of the LGBTQ communities can testify to the indignity these laws reap, and how the fear of legal retrogression continues to cast shadows over their relationships, families, and hopes. This film serves as a stark reminder that these fears may not be irrational and, in fact, are grounded in reality and history.

Try Parental Choice to Reverse Poor Global Rankings

43145979 - father walking to school with childrenBy the year 2000, American “students must be first in the world in math and science achievement.” That’s what President George H. W. Bush insisted in his 1990 State of the Union address.

Two leading international exams confirm we’re still not even close.

Results from the Trends in International Mathematics and Science Study (TIMSS) show that eighth grade math performance has improved slightly from 2011 (p. 8). However, there has been no statistical improvement in average fourth grade math and science performance or average eighth grade science performance since 2011 (pp. 7, 16 and 17).

That’s the good news. By the time American students approach the end of high school, they rank in the lower half of developed countries.

Sorry, Vegan Eatery—Good Intentions Don’t Absolve Your Economic Sins

44666558 - group of young friends gathered at thanksgiving dinner tableI frequently teach economics principles courses, offering many college students their first exposure to the subject. While we cover all the basics—supply and demand, elasticity (consumer and producer sensitivity to price changes), taxation, trade, and externalities—I’m under no illusion that most of them will remember a lot of the material come a year from now, much less longer.

But there is one thing I hope all my students remember forever—the role of prices and private property. In particular, I want them to remember how these mechanisms are vital for a free and prosperous society. I make it clear to them that I think this material is of the utmost importance. In fact, prior to beginning our discussion of prices, I tell them I will be thrilled if the price system is one thing they remember from the class fifteen years from now.

Prices and private property rights are fundamentally important. Failure to grasp how these forces work leads to positively detrimental outcomes.

A recent example of what happens when one fails to understand these core economic principles occurred in Grand Rapids, Michigan. The Garden Diner and Café, formerly known as the Butchertown Diner, announced it would close its doors at the end of last month despite a pleasing menu and offering hip vegan food options.

Banning Human Organ Sales in Free Countries Encourages Coercive Organ Harvesting in Unfree Ones

45062374_ml-1Two new films, one a documentary and one a drama based on the same facts, expose one of the most horrific markets operating today: Communist China’s selling of organs harvested from prisoners of conscience.

Ten thousand “transplant tourists” travel annually to communist China, where they pay top dollar to get organs transplanted on demand. The Boston Globe’s Jeff Jacoby summarizes how China became the go-to destination for desperate patients on waiting lists:

China was killing enormous numbers of imprisoned men and women by strapping them down to operating tables, still conscious, and forcibly extracting their organs—and then delivering those organs to the hospital transplant centers that have become a major source of revenue. Chinese officials claim that organs come from violent criminals on death row. But “Human Harvest” makes it clear that most of those killed are peaceful citizens persecuted for their beliefs: Tibetans, Uighurs, Christians—and, above all, practitioners of Falun Gong, a Buddhist-style spiritual movement of peaceful meditation and ethical commitment.

Free countries may not be able to stop this horrific practice, but they could reduce the demand for these organs by allowing free people to exercise the choice to sell their organs. Currently, free countries rely only on altruism, which has resulted in severe shortages of organs and black markets.

We Should Pay Teachers More

43346097_ml-1I’ve heard the argument many times: teachers should be paid more. According to the slightly out-of-date figures on the NEA website, the average starting pay for teachers in the 2012-13 school year was $36,141. At least part of the argument is that we could have a better educational system if we paid teachers more.

Why would we get better educational outcomes if we paid teachers more? The most obvious answer is: we could hire better teachers. The teachers we have now are the best we can get at the salaries we now pay. If we’re happy with the quality of the teachers we now have, we don’t have to pay more.

The pay-teachers-more argument seems to say that our educational system suffers because we pay teachers so little that we can’t get good ones to take teaching jobs. The argument is a knock against the quality of current teachers.

It may be that if we made some institutional changes, such as eliminating tenure, we could get better teachers for the money. And of course, if we retain tenure and increase teacher pay, current teachers would take the pay raise and keep their jobs. So given that we have tenure, paying teachers more money would do little to increase the quality of teachers anyway.

Would the teachers we have now do a better job if we just paid them more? Maybe, but even that argument is a knock against teachers, if they’re slacking on the job because of low pay.

The strongest argument that higher teacher pay would improve education is that it would allow us to replace our current crop of teachers with better ones. The argument is a direct criticism of the quality of our current crop of teachers.

Cuba, What Next?

14914702_mOne would think there is no doubt in anybody’s mind about Fidel Castro’s horrific legacy. And yet we have heard important leaders say some outrageous things.

What is Castro’s real political legacy? The last free election in Cuba was in 1948; Fidel Castro turned the island into a more ruthless police state than the one he inherited from the Batista regime. The guerrillas he exported to Latin America gave rise to savage right-wing military dictatorships in the 1970s. Today no country in Latin America, with the pathetic exception of Venezuela, models itself on Cuba. The few left-wing populists who were allies of Cuba have been defeated at the polls (Argentina), constitutionally removed from power (Brazil), or forced to give up their hopes of another unconstitutional re-election (Ecuador, Bolivia), while Nicaragua’s Daniel Ortega has metamorphosed into a right-wing despot.

Soon after he took over from Fidel (first on an interim basis, then formally), Raúl Castro, who would like to copy the Vietnamese formula (state capitalism and one-party rule), began to renounce some basic tenets of Cuba’s socialist economic model. He did not go far, but some of his measures—those relaxing the draconian emigration rules, allowing small businesses to operate privately, and re-establishing diplomatic relations with the United States without the precondition of lifting the embargo—have a counterrevolutionary whiff.