It’s been ten years. Federal government intervention into America’s local-and-state-run public schools has spent a lot of money, but not resulted in much good, down at the student level:
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Category: too much government
Inflationism is the ideology of increasing the money supply to spur economic activity and “growth.” In the 19th century, economists were generally against it, though certain “innovators” (cranks) thought that increasing the supply of money would “increase aggregate demand” with no bad repercussions. “Cross of gold” kind of nonsense; “free silver” idiocy.
In the 20th century, alas, inflationism went mainstream.
Today, a few respectable economists — high-profilers like the New York Times’s Paul Krugman and U.C. Berkeley’s Brad DeLong, for example — embrace inflationism. Occasionally their arguments sound sophisticated, but all are just warmed-over rehashes of very old errors.
It’s the economic equivalent of the “perpetual motion machine”: the eternal quest to get something for nothing, progress on the cheap. It inevitably fails — but only after fooling people by “working” for a while.
Reason’s Tim Cavanaugh, discussing declining housing prices, notes that “it’s becoming harder for the Fed, HUD, the Treasury Department and the National Association of Realtors to pretend the 25-year real estate inflation was anything but a $15 trillion rip-off.” He welcomes the deflation of housing prices. The idea that one’s house should increase in value by always increasing in price — that’s really just a recipe for social disaster. It endured as long as it did only “through government subsidized debt.”
Thank Congress; thank their Fannie and their Freddie; thank the inflationist Fed.
“Creating” money and loosening credit tends to nudge up prices . . . but not all prices equally. It signals people to over-invest in certain sectors, often real estate. This creates a sector boom . . . that then must “bust.”
The alternative? The honesty of sound money.
This is Common Sense. I’m Paul Jacob.
Siobhan Reynolds died last weekend in a plane crash. I learned about this from Radley Balko, who reviewed Ms. Reynolds’s crusade at The Agitator. Her story is worth remembering.
Sean Greenwood, her former husband, suffered from chronic headaches and a connective tissue disorder. Unfortunately, pain management was not taken very seriously by doctors in those days, and the federal government made matters far worse by treating doctors who prescribed pain medication as “pushers” rather than legitimate healers. In The Chilling Effect, a movie Ms. Reynolds produced about pain and policy regarding it, she details Greenwood’s travails, and other’s. It’s a harrowing story, and the government doesn’t come out looking very good.
Ms. Reynolds’s main effort centered on the Pain Relief Network, which she organized. Her mission was to defend those doctors whom she thought were being unjustly harassed by the drug warriors. Specifically, she defended doctors who engaged in high-dose opioid therapy, a course Mr. Greenwood and other patients found to offer some relief. As Balko puts it, she was not without success, getting “some sentences overturned, and hooked accused doctors up with attorneys who know the issue. ” Unfortunately, that’s likely why prosecutors went after her, and in another horrible misuse of sealed court proceedings, suppressed her organization and brought her close to ruin.
There’s an old phrase, “doctor knows best.” That’s obviously not always true, but it’s certainly the case that government does not know best. Especially about pain.
Though it surely causes a lot, adding to our suffering.
This is Common Sense. I’m Paul Jacob.
Twenty years ago yesterday, Mikhail Gorbachev resigned his position as head of the Soviet Union. It was a momentous occasion. It was also slightly comic, since he was resigning from a government that didn’t quite exist any longer.
December 25, 1991, was the last day of the Union of Soviet Socialist Republics.
It was the end of an age. The republics that had allied to form the original empire withdrew their support and formed a new union, the Commonwealth of Independent States.
This was one of history’s most momentous developments — or “undevelopments”?
The abandonment of Marxian communism — indeed, of state socialism — marked a turning point in ideological thought, too. Total government control of economic life had been a joke — a miserable, bitter joke — within the Soviet Union during its heyday. The news of its demonstrated unfeasibility shocked the protected sensibilities of the West’s intelligentsia, even eliciting startling confessions from professional socialist rah-rah boys like Robert Heilbroner, who publicly admitted that “Mises was right” about the unworkability of socialism.
For my first 30 years of life, the Cold War with the Soviet Union dominated the newspapers and our imaginations. And then it collapsed. Surprisingly quickly.
As Russians take to the streets to protest Putin’s revealed corruption, and as the United States of America itself buckles under the weight of its own “internal contradictions” — that is, the attempt to live on debt alone — the lesson becomes clear: The mighty can fall.
Radical change becomes possible, even where impregnability was previously assumed.
This is Common Sense. I’m Paul Jacob.
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Video: What If?
Judge Andrew Napolitano has a few questions:
It’s a dam shame.
There are plenty of private sector dams in the U.S., but the biggest are federal government projects, like those on the Columbia and Colorado rivers. These government-run outfits aren’t “free,” though. Indeed, they often prove to be good examples of typical government operations, providing special favors to some people at the expense of others.
Take the Hoover Dam, cherished as the nation’s highest symbol by MSNBC’s Rachel Maddow. The dam supplies water and electricity to Las Vegas, Nevada — at cut rate prices. A typical family in Las Vegas pays half for water what the same family would pay in Atlanta, Georgia, despite the fact that Atlanta gets 13 times more precipitation. These cheap rates have predictable consequences — overuse, for one. Which then leads local water authorities to foist on consumers some heavily intrusive conservation rules.
Andrew Wilson, in a report for the Property & Environment Research Center, writes that “A market-ready solution for Las Vegas water,” though not often talked about, would have far fewer negative consequences. And it’s not a difficult idea as such: “discard the historic cost-based pricing model and move instead to a pricing system that recognizes the scarcity value of water.”
Raising the prices for water and electricity to Las Vegas (and, for that matter, electricity to favored Bonneville Power Administration customers in the Pacific Northwest — along with many other federal government “business” products) would not only help forestall shortages and draconian lawmaking, it would be equitable. There’s no reason for the rest of the country to be, in effect, subsidizing Sin City.
Or any other city.
This is Common Sense. I’m Paul Jacob.
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Killing Them Softly
You probably associate methadone with heroin recovery clinics. Now it’s associated with state-run medicine. And iatrogenic fatalities.
Washington State’s “Washington Rx” is a medical assistance program that’s been in operation less than a decade, providing a drug discount card to those with low incomes and regulating prescriptions for Medicaid patients. The biggest challenge? Rising prescription drug prices — which places many drugs out of reach of poor and non-insured folks, and jeopardizes state finances with a financial hole to suck up ever-increasing amounts of money.
How to economize?
The board responsible for Washington Rx policy has pushed cheaper drugs. For pain medication, effective but expensive drugs like Oxycodone were swapped out for that old synthetic opioid, methadone, which is ultra-cheap. This saved the state millions.
Reasonable, eh?
Well, the problem with methadone is that it’s hard to control dose. The drug lingers in the body, builds up. It turns out to be rather easy to pass away during sleep of an accidental overdose. “Doctors,” a fascinating Seattle Times report informs us, “call it the silent death.”
Methadone overdose rates have radically increased in the Evergreen State, especially in poorer communities. Since Washington Rx set up shop, 2,173 Washingtonians have died of methadone overdose; an overwhelming majority of all overdose cases are from this one drug.
Programs in other states also list methadone as a preferred drug, and methadone overdoses are on the rise nationwide.
We are often told of the horrors of private insurers and their dastardly cost-cutting practices. But here’s a bureaucracy cutting costs. And effectively, too.
With a side-effect: killing people.
That’s hardly Common Sense. I’m Paul Jacob.
In Suffolk County, Massachusetts, a new wrinkle on the old Producers-like scam hit the spotlight as a grand jury indicted Daniel Adams, a film impresario with several films under his belt, on ten counts larceny and false claims to the state in the financing of two movies set in the Cape Cod area, The Golden Boys (2008) and The Lightkeepers (2009).
According to Boston.com, Adams is charged with taking “advantage of a state incentive that allows film makers to apply for a tax credit equal to 25 percent of eligible production expenses. But prosecutors said he deceived the state about his expenses, claiming, for instance, that he paid [actor Richard] Dreyfuss $2.5 million, when in fact he paid him only $400,000.”
Adams has pleaded not guilty, and his legal standing is for a jury to decide.
More important is the general policy — funding movies is just not a legitimate use of tax money.
The only possibly legitimate argument for taxation is that the forcibly extracted money serves all the people it’s extracted from, by fulfilling very general, truly public interests. Making movies is not that.
One wag notes that “[t]he real crime is that a movie starring Richard Dreyfuss ever qualified for taxpayer funds in the first place.” That sounds almost like a criticism of Dreyfuss. Hey, I like the actor.
The point is that no film, either starring the greatest of greats or the least of unknowns, should be financed with conscripted money.
This is Common Sense. I’m Paul Jacob.
Some “unintended consequences” aren’t.
The order of the market is an unintended consequence of market participation. By buying and selling, we’re just trying to get what we want. But we also send signals that help other folks accommodate our values and plans, which then allows markets to form some semblance of orderliness.
In government, on the other hand, laws get advanced to help this person or that, or whole groups of people. But economists often note that the actual consequences of many policies are at great variance with their advertised benefits. These often negative outcomes we term (following F.A. Hayek) the “unintended consequences.”
It’s worth noting that sometimes politicians do intend those hidden, bad consequences.
Economist David Henderson brings up an instance of this:
One insurance agent I spoke to speculated that politicians and other government officials who support these regulations not only understand these effects, but also like them. Why? Because they cause more people to go without insurance and thus create a demand for government-provided insurance.
Henderson then cites a provision of Obamacare, now kicking in: Regulations mandating medical insurance companies to spend a prescribed percentage of premiums “on actual medical care.” The result will be, almost certainly, the demise of whole hunks of the health insurance industry.
Thereby increasing political demands for government-provided insurance.
Some of the folks who concocted this regulation, and some who voted for it, certainly knew the likely result. And welcomed it.
Politicians are not equally clueless.
This is Common Sense. I’m Paul Jacob.
The seeds of disaster can often be found in good intentions — a simple regulatory requirement designed to avoid disaster — as explained by economist Lawrence White: