Monday, November 21, 2005

Libertarian Thoughts of the Day

  1. FDA -- drug safety could be ensured by competition among several 3rd party, reputation-driven providers like Consumer Reports, AMA, and CSPI. These are not seen because they are by law not allowed (you cannot make unapproved statements about drugs).

  2. Medicaid -- at the turn of the century, health care was privately provided by the workers themselves who participated in high rates in lodges and friendly societies. The emphasis was on avoiding destitution, and participation was in the 50% range (50% of everyone), but higher among the working poor. "Lodge practice evil", as it was known by the AMA, was strangled in the crib as the AMA sought to distance itself from the rest of society and establish themselves as a politically powerful craft guild. Given the advance of professional skills like finance and engineering, productivity advances in truly essential sectors like agriculture, and the general advance of income and therefore the affordability of housing and transport since 1900, we can only guess at how far advanced a truly free market medical would be by now. Instead, the capture of the regulatory body by the AMA, and then the distortion of the tax-driven third party payer system in the wake of WWII price controls, has led to measures designed to make health care an affordable right but which in reality have made health care markets distorted beyond belief. Successful low income health care measures like lodge practice are now unseen and impossible to establish under current laws.

  3. 97-98% of the workforce makes more than the minimum wage, now, with no laws requiring it. Of the few who make minimum, 2/3 are teenagers or non-household providers, and over 2/3 are advanced within a year with no laws requiring it. The unseen are those who have no skills and are unable to find work where they could develop them because they are prevented by law from doing so; they are counted among the "non-participants" and "unemployed" and are prevented by law from negotiating a mutually agreeable outcome.

  4. Private roads certainly existed before the creation of the DoT. See this collection of papers by Daniel Klein covering the era 1797-1860.

  5. My statement regarding the Department of Commerce was meant to be humorous. Many of the functions, such as NOAA and NIST comply with the Constitution's "Weights and Measures" clause and are largely public goods. I don't really have a problem with those. However, the recent attempt by Senator Rick Santorum, R-PA, to restrict free public access to data from the National Weather Service because it competes unfairly with private weather services serves as both a warning and an example. It is a warning about the potential for abuse that arises from the private-public nexus, in this case a Senator is going to bat for a constituent in order to make life easier for them (rent-seeking). It is also an example of that which is not seen and normally held to be impossible by those who claim that public goods are a market failure and should therefore always be provided by the government, in this case the actual existence of private weather forecasting in the shadow of competition from "free" public service.

  6. Electricity generation is considered to be a "natural monopoly": an industry in which it is actually less efficient and therefore impossible for true competition to arise. The telephone industry was treated the same way for 70 years: AT&T was granted a monopoly in 1914, it began to fall apart in 1984 when a judge ordered the breakup in the face of competition from MCI and McCaw Cellular, and what was left of AT&T was recently swallowed up by Cingular in their competition with Verizon, Nextel, and others – surprising outcome for a "natural monopoly". The first hydroelectric plant was built by the Aluminum Company of America (ALCOA), and Westinghouse, Edison, and Tesla were all actively building and competing long before we accepted the burden of the Department of Energy. Since the rise of the regulatory state and the Natural Monopoly theory, energy companies have largely worked hand-in-glove with the states and federal government to defend the status quo. What is not seen is what advantage a fragmented, decentralized system would hold for smaller generators like solar and windpower. FDR's Rural Electrification Administration saw to it that farmers got subsidized, high-cost electricity, leading to the demise of the nascent wind-generation industry.
Blatanly Stolen from: GrimReader – who you should be reading regularly anyway.

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