In a November 3 article, the Wall Street Journal reports that corporate cash holdings have reached extraordinary levels:

Stung by the financial crisis, companies are holding more cash — and a greater percentage of assets in cash — than at any time in the past 40 years.

In the second quarter, the 500 largest nonfinancial U.S. firms, by total assets, held about $994 billion in cash and short-term investments, or 9.8% of their assets, according a Wall Street Journal analysis of corporate filings. That is up from $846 billion, or 7.9% of assets, a year earlier.

The trend appears to have continued in the third quarter, despite an improving economy. Of those 500 companies, 248 have reported third-quarter results. Their cash increased to 11.1% of assets, from 10.1% in the second quarter. Companies as diverse as Alcoa Inc., Google Inc., PepsiCo Inc. and Texas Instruments Inc. all reported big third-quarter increases in cash holdings.

“Everyone is hoarding cash,” says Carsten Stendevad, head of Citigroup Inc.’s financial-strategy group.

The article attributes the extraordinary cash holdings to long-term trends and to apprehension left over from last year’s so-called credit crunch.

The large cash holdings may also reflect presently prevailing regime uncertainty — the inability to confidently forecast how the government will treat private property rights in the future. When such uncertainty attained great heights during the years from 1935 to 1940, entrepreneurs reacted by declining to make many long-term investments, putting what investments funds they did commit overwhelmingly into short-term and intermediate-term projects, such as purchases of tools and equipment and additions to  inventory. The shortest-term investment of all, of course, is to hold cash.

At present, interest rates are so low that a firm sacrifices little by holding cash, rather than, say, securities or other assets promising payoffs within the next few years. The longer term remains clouded by uncertainties associated with the government’s pending initiatives in energy, environmental policy, health care, financial regulation, taxation, warfare, monetary policy, and other key areas. The possibility exists that policies will be adopted that spell ruin for thousands of firms, especially those that hold illiquid, long-term assets whose values will be adversely affected by the new policies.

It comes as no surprise, then, that firms are clinging to huge hoards of cash. True, it’s only fiat money, and the Fed may destroy a great chunk of its value before long, but with cash one has the ability to move quickly to shift investments and cut the losses, whereas longer-term assets may lock  firms into positions from which they will find it difficult to bail out without great losses when the next government-spawned crisis hits.

As an addendum to an earlier post citing the Obamas’ and various politicos’ (including Treasury Secretary Geithner and Tom Daschle) problems either understanding or adhering to the nation’s tax law, former Socialist Congressman Ron Dellums has apparently also decided that taxes are for the “little people.” He and his wife Cynthia owe at least $239,000 in back income taxes, according to the Internal Revenue Service.

Now serving as mayor of Oakland—where he’s established a reputation for being largely AWOL from City Hall—Dellums and his wife appear to be living well beyond their official means, including renting a large house in one of the city’s most exclusive areas.

The Dellumses also are well known for their expensive tastes. The mayor dresses in exquisitely tailored suits, and his official mayoral calendar reveals that they eat out often, usually in upscale restaurants.

An investigation last year, “Ron Dellums Living Large While Oakland Budget Bleeds,” disclosed his practice of at least partially supporting such lifestyle choices at taxpayer expense:

The expenses include stays at 5-star hotels in Washington D.C. such as the Four Seasons and Ritz Carlton, on his many travels away from Oakland, although Dellums owns a luxurious home in the nearby exclusive enclave of Georgetown.

All this while proposing unpaid furloughs for city employees, severely cutting back services, and sharply raising taxes to cover the city’s projected $14.5 million deficit.

Just another case study of a Socialist for whom equality is an ideal not to be contemplated as a personal lifestyle.

I’ve subscribed to Newsweek for more than 30 years.  I started subscribing in the 1970s, partly because I wanted a magazine that summarized the week’s news (plenty of choices there) and partly because Newsweek ran a monthly column by Milton Friedman.

When I started subscribing I didn’t notice what some might call a liberal bias in Newsweek, though I do recall in the early 1980s thinking that often the magazine’s reporting didn’t appear to have a sound grasp of economics.  Shortly after Reagan was elected, for example, I recall a cover story claiming that energy prices were going to go sky-high due to Reagan’s deregulation.

As the years went by, I became increasingly aware of a liberal bias in Newsweek’s reporting, maybe because the bias grew, maybe because I’ve become more perceptive, or maybe because I’m one of those right-wing wackos who tend to see liberal biases where they don’t really exist.  Even perceiving a liberal bias, I still liked reading Newsweek because it gave me some insights into the thinking of people who didn’t have the same views I did.  Understanding a bit about other people’s views isn’t a bad thing.

Recently, Newsweek quit reporting the news.  They claimed that by the time the magazine arrived, everybody already knew it anyway, so they’re now focused on commentary, and their liberal bias appears to show through even more.  This week’s issue, which showed up in my mailbox yesterday, takes the magazine’s liberal bias out of the closet and puts it right on the cover.

The cover shows a photo of Al Gore with an apple falling on his head, apparently to draw a parallel between Gore and Sir Isaac Newton, although the parallel falls short because while Sir Isaac was a great scientist, he never won a Nobel Prize.

The caption on the cover reads, “THE THINKING MAN’S THINKING MAN: AL GORE’S NEW PLAN FOR THE PLANET.”

I can’t tell you how many ways I am offended by this.  First of all, as a skeptic of central planning, I am automatically suspicious of any “plan for the planet.”  Beyond that, why would Newsweek think that Al Gore would have any standing to undertake global planning?  Yes, yes, I know he’s won a Nobel Prize, but outside of that, isn’t he just one of the billions of citizens of Planet Earth, with no more standing to concoct a plan for the rest of us than anyone else?  And then, to be told he’s “the thinking man’s thinking man” causes me to stop and consider whether, in that case, I want to be included in the category of thinking men.

Some of you might be thinking that my rant here is just a case of sour grapes, and that I have Al Gore envy.  I will admit to some of that.  Al Gore lives in a big mansion and flies a private jet to his various speaking engagements.  I confess that for a while now one of my ambitions in life has been to have a carbon footprint as big as Al Gore’s, although I don’t think I’ll ever manage that.  Al Gore is a famous author, and while I’ve written some books, nobody knows about them.  More envy.  And then there’s that Nobel Prize.  Despite the fact that there’s one awarded in my field of economics, I realize it’s out of my reach.  Yes, maybe part of my reaction to this week’s Newsweek cover story is due to envy.

In years past the media’s liberal bias would have been presented under the guise of presenting the news.  Here’s a new book by Al Gore.  We’re going to report to you what it says.  Clearly, Newsweek knows Gore is a controversial figure, yet the cover proclaims him “the thinking man’s thinking man,” and the title of the story about his book is “The Evolution of an Eco-Prophet.”  Rather than presenting itself as doing objective reporting, Newsweek is clearly broadcasting its liberal bias to its readers.  “Yes, we have a liberal bias, and we’re proud of it!”

Newsweek doesn’t report the news anymore, and hasn’t run Milton Friedman’s column in decades.  I suppose I can let my subscription lapse.

John Stossel (who’s leaving ABC to join the Fox Business Network) gave a well-received talk at my university yesterday titled “Freedom and Its Enemies.”  Several times during the talk he referred to himself as a libertarian.

Sometimes the libertarian label seems like a liability for people who are both (1) serious about substantially reducing the scope of government, and (2) actually are in a position to have enough influence to do so.

At times there is little distinction, as far as public perception goes, between libertarians and libertines, who just want the government to quit harassing people who want to live non-traditional lifestyles.  So self-proclaimed libertarians get lumped in with the dope smokers and gay rights groups.  Not that there’s anything wrong with that… but it can be a distraction from the broader goal of limiting the scope of government.

Sometimes libertarianism is associated with anarchism.  One question asked to Mr. Stossel after his talk addressed exactly that point.  This is another distraction.  Government is not going to be eliminated in my lifetime, or in my childrens’ lifetimes, so arguing why government should be abolished isn’t going to do anything to make today’s government smaller.  (It may make limited government advocates look more moderate, though!)  Mr. Stossel answered that he’s not an anarchist, but again, dealing with the issue is a distraction from the libertarian message he was trying to present.

And then, libertarians are often associated with Libertarians; that is, members of the Libertarian Party.  All Libertarians would claim to be libertarians, but the reverse definitely is not true.  Many libertarians refuse to participate in politics on principle, and argue that Libertarians can’t be libertarians and participate in the political process as they are.  At the other end of the spectrum is the Republican Liberty Caucus (RLC) whose members claim to be libertarian Republicans.  A few RLC members I know who are converts from the Libertarian Party say they’ve given up hope that the Libertarian Party can have any influence, and believe their best hope to actually implement a more limited government is to make the Republican Party more libertarian.

Lots of people have libertarian views.  They want lower taxes, less government spending, reduced regulation of commercial activity, and less government interference in their personal lives.  But the libertarian label seems to carry with it a lot of baggage.

If asked directly, I will tell people I am a libertarian, but (with the obvious exception of this blog post) I will never volunteer the information.  Why?  My answer is in the paragraphs above.

With the Democrats now in charge of the White House and Congress, we are seeing a considerable backlash against their policies, including health care reform, energy policy and cap and trade, and the continuing addition of spending proposals to a budget that, even with their advocated tax increases, they forecast to be running trillion dollar deficits as far out as the forecasts go.

For those alarmed at what the Democrats are implementing, the alternative is offered by the Republicans.  In the court of public opinion, this alternative falls short because of the eight failed Bush-McCain years.  Whether that’s a proper assessment of Bush’s presidency can be debated (though I think there is a strong argument to be made), but my point is, that’s what President Obama campaigned on, and won.  So, in the court of popular opinion, the alternative is to replace the undesirable policies of the Democrats with the failed policies of the Republicans who controlled our government prior to the Democrats.  No wonder the Republican opposition can get so little traction.

There is another alternative lurking in the shadows.  There is a mass of people who do not support the obscene expansion of government proposed by the Democrats, but who didn’t support the earlier Republican agenda either.  There is a mass of people who want substantially smaller government in all areas of their lives.  They want lower taxes, they want government programs curtailed or eliminated, they want substantial spending reductions and a balanced budget, they want freer movement of people and goods across our borders, and they want the government to allow them the freedom to make personal choices for themselves, even if many of their fellow citizens judge that they are making poor choices.

Rather than opposing these government initiatives one at a time — health care, tax increases, energy policy, etc. — it might be more effective to put them all under the umbrella of a single term that describes the political inclinations of those who want smaller government.  One label that might work is “libertarian.”

I began by noting the baggage carried by the libertarian label, but one reason it carries this baggage is because it’s not mainstream, and many people don’t have a clear idea what the term means.  So, they associate it with anarchists, or libertines, or a fringe political party.  I like the fact that John Stossel describes his own political philosophy as libertarian, and when he becomes a regular on Fox Business Channel, he will be reaching tens of millions of viewers, many of whom think of themselves as Republicans because, well, they are against the Democrats, so that must make them Republicans.

Stossel is an excellent representative for libertarian ideas because he is thoughtful, sensible, and persuasive.  If he keeps using the term to describe his views, many of his viewers will discover that they, too, are libertarians.  Maybe that will push them toward the RLC, or maybe to the Libertarian Party.  But I hope more people will see that the alternative to Democrat isn’t just Republican, and that the libertarian alternative fits many people better.

I have a tendency to want to avoid simplistic labels, and I began by giving some reasons for avoiding the libertarian label.  But in political debate, sometimes a simple label that describes an underlying principle  can help win the debate.

If the libertarian label becomes more recognized in mainstream politics, it can become a powerful tool.  It has become more recognized over the decades, and if people like John Stossel use it regularly, it will become more mainstream.  I would love to see the label become mainstream enough that a winning argument in a political debate could be, “That violates the libertarian principles on which this country is founded.”

The White House is shrugging off the Republican electoral victories. But we know what the elections mean: The people are fed up with the march toward nationalization and socialism. Just like the 2006 elections were a repudiation of Bush’s war policy, yesterday marked public discontent with the Democrats’ war on the economy. This is all to the good, and in the short term, it means Obamacare is in trouble. It would be great to see this awful proposal go down in flames, like HillaryCare in Bill’s first term. On the other hand, our health care system is indeed in crisis with skyrocketing costs, thanks to the government, and over the years we will continue hearing it all blamed on the market. Since the Republicans have never done anything to advance medical liberty — the only counterexamples I can think of are such minor exceptions so as to prove the rule — we need a revolution in public consciousness if we are to actually address the many problems with American health care and forestall the determined efforts of interventionists to destroy what’s left of the private sector in medicine.

If we’re going to have a Democratic president, the more Republicans in Congress the better, probably. This is no a priori formula for liberty — gridlock is no panacea — but at least we can see the politicians spend more of their time fighting each other and less time conspiring to strip away our freedoms.

Yes, that’s right. Our own government, by expanding its power to unprecedented heights, presents a greater threat to our liberty than some guy hiding in a cave in Waziristan. Why is that controversial? The irony, of course, is that this common-sense statement comes from a member of the same party that has worked overtime in the last eight years to undermine our freedom by fostering wartime hysteria.

In a recent commentary titled “Diagnostics and Therapeutics in Political Economy,” I endeavored to show that an analytical understanding of past growth in the government’s size, scope, and power does not permit us to prescribe effective means of stopping or slowing this growth, particularly any simple “silver bullet” remedy, and I specifically disclaimed any personal knowledge of “what is to be done” toward this end. Responses to this commentary, some of them from keenly intelligent friends of mine who insist that diagnostics and therapeutics must be firmly linked, lead me to believe that I did not make myself sufficiently clear.

One respondent wrote, “Higgs must be speaking with tongue in cheek, for a man of his intellect simply must have a few solutions at least.”  Well, yes, on one level, I have many “solutions” to propose. The problem comes when we ponder why I’ve just put quotation marks around the word solutions. The reason pertains to the links that connect my understanding of why government has grown with measures that might be taken to stop or slow its ongoing growth.

My understanding of the process by which government has grown in the United States and many other countries since the late nineteenth century is not easy for me to summarize briefly. It involves (1) a structural-ideological-political process operating in a persistent manner to produce long-term trends, (2) a crisis-ideological-political process operating during a series of discrete episodes of “national emergency,” and (3) interactions between these two processes, which should not be understood as independent of one another, but as identifiable aspects of the single herky-jerky historical evolution ― sometimes regular, sometimes erratic ― of a politico-economic order. One upshot of this complex process might be seen if we were to examine a series of “snapshots” at, say, thirty-year intervals. Each snapshot would show us a society with a different composition of economic activities, production techniques, occupations, demographic attributes, and so forth, a different composition of ideological identifications, understandings, and loyalties, and a different configuration of political leanings, organizations, and institutions reflecting these structural and ideological differences. To oversimplify, we might say that the overall process creates ― usually gradually, but occasionally abruptly ― a changing set of “vested interests” among the population, but in this characterization we would have to interpret the idea of vested interests more broadly than usual, so that it includes not only people’s interests in pecuniary payoffs, but also their interests in ideological outcomes of various sorts. (My views in this area have been developed in a series of personal engagements [as a teacher, consultant in regulatory proceedings, and expert witness in legal proceedings] and in a series of research efforts, the most prominent results of which are reported in my books Crisis and Leviathan, Against Leviathan, Depression, War, and Cold War, and Neither Liberty Nor Safety, to which the reader is referred for a more detailed account of my views on this matter, among others.)

Now, with this rather desperately compressed vision of the complex process by which the government has grown as our background, let us return to my “solutions,” that is, to my proposals for stopping or slowing further growth of government. In doing so, however, we must recognize that political “solutions” that clash strongly with the currently prevailing array of vested interests (broadly construed) probably cannot be implemented. For me to suppose otherwise would be inconsistent, because doing so would be tantamount to rejection of my own interpretation of how those interests came into being in the course of the historical process just outlined. At least within somewhat flexible limits, a society’s socio-economic structure, ideological postures, and political institutions must cohere. At a particular point in time, many conceivable (and in my view desirable) political reforms are not feasible.

At the moment, many people are enamored of the solution that calls for abolition of the Federal Reserve System. I certainly agree that the Fed has played an integral (but not an indispensable) role in the growth of government in the United States since 1913. But once one has demanded “abolish the Fed” and subsequently found that it is still in operation, what does one do?

Various next steps might be suggested, such as sponsoring lecturers who explain how the Fed has adversely affected economic prosperity, peaceful international relations, and liberty. From time to time, I have myself given such lectures to audiences that ranged from ordinary Americans to social scientists to Latin American bankers, and, of course, many other speakers have presented similar lectures. All right, we’ve given our lectures, and the Fed is still operating, so what should we do next? Give more lectures, in an attempt to influence the thinking of more people? Or perhaps mount a political movement aimed at abolition of the Fed?

If one chooses the direct political option, where does one get the financing for it? Who will organize it? Who will lead it? What actions will it take? Will it try to place sympathetic candidates on the ballot for election to Congress? Will it attempt to influence sitting members of Congress by bribing them with campaign contributions or by threatening to recruit constituents to vote against them in the next election? My point is that once we select a specific means of stopping or slowing the government’s growth, an endless series of follow-up questions presents itself, as we encounter one problem after another, each of which must be solved successfully if we are to make headway.

No doubt the greatest obstacle of all to any such effort is that thousands of organizations are currently working, directly or indirectly, to promote further growth of government. A 2005 article in the Washington Post placed the number of registered lobbyists in Washington, D.C., at more than 34,750 and reported that their business was booming, creating “a gold rush on K Street.” Many of them have well-equipped offices, large capable staffs, including legions of lawyers, and established connections with incumbents in Congress, regulatory agencies, and other government offices, not to mention their friends on the courts. They also have millions upon millions of dollars to pour into their efforts to win friends and influence people, including the same mass electorate that an anti-Fed or other anti-government-growth political movement presumably seeks to influence. At this point in the historical process, anti-Fed proponents face a fabulously wealthy, tightly connected, deeply entrenched conglomeration of opponents who would sooner confine you, me, and all our friends and relatives at Guantanamo for nonstop torture than give up the Fed, which has long served, and continues to serve, their interests exceedingly well. So, yes, we can try to mount a political movement to abolish the Fed, but, given what we are up against, what chance of success do we really have? One in a thousand? One in a million?

Given this reality, if I offer as a “solution” to the ongoing growth of government that we abolish the Fed, my proposal solves nothing. It only raises a series of other difficult questions, each one of which leads to another and another and another. No political realist was surprised when, according to an October 30 Bloomberg report, “Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been ‘gutted’ while moving toward a possible vote in the Democratic-controlled House.” If the powers that be are not even willing to permit a vote on a bill with 308 co-sponsors aimed at making the Fed’s decision-making more transparent, does anyone really believe that those same powers would stand idly by while the Fed was abolished?

Nor is abolition of the Fed unique in this regard. One might propose abolition of any number of government departments or agencies ― for example, the Department of Education, the Department of Energy, the Food and Drug Administration, the Securities and Exchange Commission, and countless other government bureaus ― and find that in each instance one runs up against another fabulously wealthy, tightly connected, deeply entrenched conglomeration of opponents.

One might alternatively propose simply to reduce government spending across the board, without trying to reconfigure the government’s organization chart. The obstacles here, however, are if anything even greater, because thousands of powerful interest groups are currently seeking to increase government spending. Of course, each wants mainly an increase in the portion of government spending that enriches its own members, but the budgetary process has evolved, along with the committee structure of Congress, to facilitate a gigantic logroll, so that each year nearly every predatory interest group of any consequence tacitly agrees to refrain from blocking the other predators if they will refrain from blocking its own raid on the Treasury. Committee chairmen and ranking minority members are paid off as required to achieve this massive predation. Hillary Clinton used to complain about a “vast rightwing conspiracy,” but if one wants to see a genuine mega-conspiracy, one need look no further than the nexus of members of Congress and the thousands of well-organized and well-financed special-interest groups that support these politicians’ perpetual reelection in exchange for their direct or indirect channeling of almost unimaginably huge amounts of the public’s wealth into these special interests’ coffers.

So, yes, one might propose, say, a balanced-budget amendment to the Constitution ― indeed, by now this proposal is hoary with age. Political realists understand, however, that getting support for such an amendment is diabolically difficult, and, even if one were to be ratified, the members of Congress would simply install the appropriate smoke and mirrors to conceal their violation of this constitutional restraint, as they installed such circumventions on previous occasions to violate their own rules for spending restraint. Does anyone still recall the Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Control Act of 1985?

It appears, then, that among the critical difficulties of restraining the growth of government is the obvious fact that even when restraints are enacted into law, the government will not obey that law. Needless to say at this point, constitutional amendments are not worth the parchment on which they are inscribed. After all, the Constitution still contains the Ninth and Tenth Amendments. With those amendments and three or four bucks, you can get a latté at Starbucks.

I trust that by this point I need not belabor my point at greater length. To recapitulate: “solutions” to the ongoing growth of government are available for a dime a dozen. I have a bag full of them myself, and every one of them is utterly worthless as a means of achieving the ultimate goal. Every genuine solution must be carried through, and any serious solution will require enough people and money to carry out the activities necessary to bring it about. Marshalling people and money may in turn require ideological conversions on a substantial scale, which themselves may require a great many people and a great deal of money, if such conversions are possible at all, given the existing configuration of vested interests (broadly construed).

Moreover, another potent constraint always lurks in the background. Although we need not spend much time at present in dwelling on this issue, the fact remains that if any truly effective measures were approved to rein in the government, the rulers in all likelihood would resort to whatever legal or illegal violence proved necessary to prevent those measures from taking effect. Thus, I am quite sure, for example, that if Ron Paul were ever, by a miracle of miracles, to be elected president, he would not live to take the oath of office. Opponents of the government’s ongoing growth must bear in mind that we are dealing with violent, heavily armed, utterly unscrupulous people who, if pushed to the brink, will stop at nothing to retain their power and privileges.

I welcome anyone’s proposed “solutions” to the ongoing growth of government, and I wish all such proposals success, however much I doubt the likelihood of their success. I do not believe, though, that a substantial prospect of success is necessary to justify one’s efforts in resisting the ongoing growth of what is at bottom a gigantic criminal enterprise. To resist its further growth is simply the decent thing to do, regardless of whether one expects to succeed.

And even those who believe, as I do, that the chances of success in such efforts are extremely small can take heart from the knowledge that ultimately this criminal enterprise will attain such bloated size and scope that its own survival will no longer be possible, and it will implode, as the Soviet Union and other similarly overreaching politico-economic orders have imploded. Governments that grow and grow ultimately find that their predation becomes greater than their prey can support, at which point such predators are doomed. Thus, the present system of government in this country and many others contains the seeds of its own destruction, even if those of us who abhor it cannot stop or slow its continued growth in the near term.

Some of the younger people among us may live long enough to help in picking up the pieces and beginning anew. One hopes that the new beginning will rest on a less coercive, more voluntary basis than the present system. Otherwise, it will be destined only to trace the same predatory rise that the present system has followed and to arrive at the same self-destruction that ultimately awaits our own politico-economic order.

Last week, I spoke to a class at Idlewild Presbyterian Church on the economics of drug prohibition. My notes are below.  Cross-posted at Division of Labour.

Independent Institute Senior Fellow Robert Higgs is interviewed here by Judge Andrew Napolitano on Fox News’ program, “Freedom Watch,” regarding the utter folly of the gigantic federal spending programs first started under George W. Bush and now enormously expanded by Barack Obama and the U.S. Congress. Prolonging the recovery amidst enormous economic confusion and new government mandates, the impact of such policies is rising unemployment and business and bank failures.

Also see the following key book:

Depression, War and Cold War: Challenging the Myths of Conflict and Prosperity, by Robert Higgs

When I was younger, we thought the line “I’m from the government and I’m here to help you,” the height of hilarity, invariably greeted with derisive hoots of laughter. Today it seems that any government official’s exhortation to “Trust me” is greeted as holy gospel, with nary more to be said. A case in point is the newly unveiled health plan from House Democrats, which despite taking up 1,990 pages, does not include the details of what the government’s own insurance plans would include or what they would cost or who would be forced to participate under them. Instead, a “Health Benefits Advisory Committee” of political appointees, headed by a new health czar (a/k/a a “health choices commissioner”)—are to be trusted with a blank check drawn against all of our lives and deaths, and given 18 months to decide the terms and restrictions on our future access to health care. They are empowered to define “all covered benefits and essential, enhanced, and premium plans,” and what the “cost-sharing”—i.e., insurance premium—will be for plan participants. In short, the health czar will have extraordinary powers to define what health care services insurance—public or private—will cover, at what cost, for whom. Those claiming that participation in government insurance plans is and will remain voluntary are also advised to have a little less trust and a little more skepticism: in short, read the bill.

There is little argument that the health insurance industry is not chronically in need for reform—mostly of the current government mandates that have broken it—and many more expert than I have put forth well-researched and presented proposals that effectively resolve the problems of insurance being too expensive and unavailable for some: allowing individuals to purchase insurance from any firm, anywhere (currently prohibited by law); and extending the tax-deductibility of health insurance premiums to individuals. This would arguably incent those risk-takers who currently choose to spend their money on something other than health insurance to purchase coverage for themselves, and make insurance affordable to those many for whom it is not currently. Of the remaining uncovered, as demonstrated throughout our history, ours is a nation of extremely generous individuals who time and again have provided voluntary assistance to those in need. (See, for example, our “Health Insurance Before the Welfare State: The Destruction of Self-Help by State Intervention.“) The anecdotal horror stories offered up as evidence of the dire need for a nationalized solution to health care gaps have been largely discredited upon further investigation, and there is better evidence to believe that the voluntary sector can and will pick up those others than blind faith that a centralized bureaucracy will do so.

Bay Area commuters have been learning first-hand the irrevocable consequences of going along on pure faith and little evidence. Following the damage done to the Bay Bridge by the 1989 earthquake, sound proposals were made for relatively simple reform for the bridge’s shortfalls by seismic retrofitting and repairing the existing bridge. Initial projections were that the bridge could be retrofitted for $150-200 million, in about four years. And then the big thinkers entered the fray: Rather than just the same old bridge, why not a whole new one? The bureaucrats duly studied the question, and decided that for $843 million a replacement bridge could be built that would be safer and last longer.

But soon, rather than simply providing a secure form of transportation between the East Bay and San Francisco, the bridge was completely repurposed. As Berkeley’s mayor put it, the bridge “should make a statement about the beauty of our side of the bay.” Oakland’s public works director likewise chimed in, calling for a “world-class design”—a bridge capable of “creating an inspirational identity for Oakland and the East Bay.”

Eventually, the story was a floated—and bought—that a new bridge could be built for $987 million, and take eight years, versus retrofitting for $909 million. Hardly a dime’s worth of difference! And thus began a saga in which a politically-appointed “Bay Bridge Design Task Force” eventually selected a design for a bridge never before built, protested by knowledgeable engineers as unsafe, especially for the seismically active Bay Area, and for which no bids matching projections could be obtained—none of which interfered with actually proceeding to build to a “signature design” rather than a functional mode of transportation.

The bridge is currently projected to be completed in 2013, at a cost of $6.3 billion, but no one now expects those dates or dollar figures to hold, any more than any of the previous ones did. Two months ago, while work was being done to tie-in one of the newly-built sections to the existing bridge, serious problems began manifesting themselves. A retrofit to get the bridge reopened nearly on schedule was hastily fabricated, which dramatically failed last week in the middle of Tuesday evening’s rush-hour. Meanwhile, the previous bridge has been being dismantled, removing any possibility of a fall-back. Thus, one of the nation’s busiest bridges, carrying an estimated 270,000 vehicles per day, was closed for five and a half days as engineers experimented with fixes for a “signature design” gone wrong.

Low-tech, low-cost reforms to resolve current problems do not make heroes of elected officials and do not provide opportunities to enure vast new budgets and powers to them; vast new “replacement” schemes do. The current, largely extremely well-functioning, health care industry does not need replacing by a federal plan any more than our utilitarian but slightly flawed Bay Bridge needed this new “world class” design, so beautiful in the eyes of its bureaucratic proponents. If Americans buy this health plan, they can expect to see spiraling costs and shrinking benefits, in line with the actual record of every other government program. If politicians can’t fix our schools or our bridges, why do we want to hand over our very lives?