Monday, September 28, 2009

"End the Fed!" Book hits NYT Bestseller List!

Congressman Ron Paul, whose run for the Republican Presidential nomination last year was one of the few refreshing things to happen to the Republican Party in decades, published his book, End The Fed, a few weeks ago and it has already come out in the top-10 new books on Amazon, as well as the NT Times and the WSJ bestseller lists -- quite a feat for a book of libertarian politics that advocates ending the Federal Reserve!

Paul writes, "Since 1913, the Fed has had it all its own way: booms and busts, dollar depreciation, redistribution to the government and the big banks from the middle and working classes. But just as Andrew Jackson abolished the predecessor of the Fed, we too can knock over this dangerous institution. End The Fed teaches all the fascinating history, and tells us what we can do for the future."

I've started reading it and it is indeed very readable and quite shocking. Paul's bill to force the Fed to open its books to Congress has received surprising support in Congress, from the Democratic left in particular -- the sense of the Fed's enormous power and secretive operations is creating fear and worry. I recommend this book; it may be the only economic-policy book you ever read, but it will be the most important.

Interested? You can order this slim but important volume from Amazon at this link:

Friday, September 25, 2009

"More Government Won't Help," Ron Paul

Ron Paul made this speech in the United States House of Representatives, September 23, 2009.

He begins, "Government has been mismanaging medical care for more than 45 years; for every problem it has created it has responded by exponentially expanding the role of government." He goes on to list 16 specific points, some examples of how the government has screwed up or set up for failure the medical care system, and other points suggesting better paths for us to follow to improve health care in the US.

The thing that amazes me in this debate is one simple example of the perversity of our political system: The government (including the president) assert that more competition is the key to a better healthcare system. They might be right. But one big reason we don't have more competition is government regulations forbidding it in some areas: Every state controls its own insurance companies, and forbids, by statute, selling insurance policies across state lines.

So you can't, as a Californian, decide that an insurance company operating in Arizona offers better coverage or better rates, and buy a policy there. It's against the law, in almost every state in the Union.

Recently, Republicans have suggested allowing cross-state-line competition in insurance, only to be roundly ignored. There are two reasons: First, state insurance commissions don't want to give up their regulatory power, which they can't exercise across state lines. And second, those who believe in government goodness are happy to list many reasons why it's better to exercise this control over insurance companies, who would otherwise do bad things. To control insurance-company abuse, they've set up 50 regulatory bodies, one in each state.

And when that doesn't work -- and insurance-company abuse of its customers is rampant, despite this supposedly noble political and bureaucratic control over them -- the solution offered is *never* to rethink the whole thing; no, it is to add more control. Always. There is, you see, no such thing as government failure that should lead to the government retreating from an area; only market failure that leads to government intervention.

Another level of irony is that the main forms of outrageous abuse insurance companies engage in could, in fact, easily be managed by the insurance commissioners doing their jobs better, and a few simple inexpensive laws being passed. Yes, laws.

For example: Insurance companies violate contract with customers by ending their coverage as soon as they catch an expensive disease. They do this by combing through the insurance application, which may have been filled out thirty years ago, to find apparent errors, to justify cancelling the policy. This is acting in bad faith, from a contract-law perspective, and a simple adjustment of contract law in each state would suffice to end this abuse. It's a contract-law issue, and shouldn't be used to justify government takeover of medical insurance. In most contract situations, simple rules say that if a contract is entered into in good faith, and a nonfraudulent error is not found within a reasonable time by the other party, then the error is considered nonmaterial and cannot be used to cancel the contract. For ordinary contracts, for example, if I make a spelling error in the name of my street or my house address, that is not fraudulently intended, then this cannot be made the basis for cancelling the contract twenty years later. Only in insurance contracts is this reasonable limitation not enforced. Our state insurance commissioners -- the ones whose campaigns for reelection are heavily funded by insurance companies -- should take care of this problem. They could. They won't. Their job isn't to solve problems; their job is to get reelected, which they do by demonizing their subjects and passing abusive laws that cause more problems.

How long will you continue to believe that this politicized system is a good way to solve social problems, in the teeth of the evidence to the contrary?

"Beware the Stalin in Progressive Hearts"

Columnist Mark Tapscott makes some good points about how power tempts even progressives to abuse power -- in the name of good, of course, always in the name of good.

It's the fundamental libertarian insight: Every one of us, with access to the levers of power, hates to simply accept situations in which we might not 'win.' If we give everyone else full control over their own lives -- but no forced control over the lives of others -- then some people won't Do the Right Thing. We can come up with rattling good examples, too, of the negative impact on the rest of us. We think these examples justify our seizing of power over the lives of others.

Us. Over them. Never them over us.

And that's the problem: If only you, and people who agree with you as to what The Right Thing is, exercise this power over others, all is well. But sooner or later, Bad People take charge, and they proceed to use the power you granted to Good People to do things the Bad People think are The Right Thing, but, as you and your likeminded colleagues know, are really Bad Things.

How can one guarantee that only the Good People have access to power?

The fundamental insight of the Founders of the U.S. was this: There is and can be no reliable way to guarantee that. It is impossible to build a system of righteous tyranny that will remain in the hands of the righteous. Not even religious regimes are immune, though they think themselves appointed by God.

The Founders finally came around to the understanding that, if this is the case, then the only good government is one that is strictly limited -- limited, limited, limited! -- in its authority and its power over everyone else. It will still abuse its powers, but those powers will do less damage than an unlimited government would do.

It was the most original idea in political economy since the Athenians. It still is.

And it's an idea that has been lost. The average American is very uncomfortable with the idea that the government should be limited in its power to do good. The problem -- that we have different ideas of what good is, and where to draw the line - they see as just a quibble, a detail, something that even if imperfectly resolved, is better than just letting people do what they want.

Thus we have a political system used primarily for the purpose of each of us using government power to extract behaviors and moneys from others, to authorize and pay for and force things that we think are really, really important -- but not so important that we want to pay for them ourselves.

We want public parks because we want parks and want somebody else to pay for them.

We want government health care because we want health care and want somebody else to pay for it.

We want everything and anything we want, and we don't want to pay for it, so we look for excuses to force others to pay for it. We demonize "the rich" (somebody who makes more than your ambitions) as a way of pretending that it's not only OK, but even righteous to steal money from them to pay for things we really, really want but we really, really don't want to pay for with our own money.

And we hire politicians to make speeches to justify our greed.

Take the University of California school system, currently in lockdown because students and staff are protesting having their funding cut back to where it was, oh, a couple of years ago, and protesting having their heavily subsidized fees raised to a level closer to a third of what a private, unsubsidized school would cost. The students are actually greedy because they don't even want to pay a third; they want to pay less, ideally nothing; they want somebody else to pay for it. Nobody blinks at this. Nobody thinks this is wrong in any way. They point to this or that student who is poor, or comes from a poor family, and asserts that without the taxpayer subsidy, they would be shut out of an education. And thus a chance to become middle class.

If this were true, the direction of a solution set would lie in, first, means testing for student fee subsidies, with only the poorest students getting subsidies, with attention paid to alternative funding such as student loans and parttime jobs. Second, the subsidizing entity - the government, that is - should have the right to approve specific majors and exclude specific other majors for subsidized students -- exclude the majors that do not lead to middle-class lifestyles. You won't be able to major in surfing or basketweaving -- or for that matter in French medieval history or, come to it, in journalism. There's no future in them, so if we are helping poor students become middle class, then -- here it comes! -- we can't just let them choose their own majors, their own life paths! Can we? Of course not!

Think that's silly? Many another politicized part of our lives are under bureaucratic control and laws justified on the grounds that taxpayers have to pay for things. You have to wear a seatbelt because if you get hurt, the taxpayer-subsidized cops and cleanup crews have to clean up after you, and the taxpayer-subsidized healthcare system might have to pay for your medical care and maybe your welfare if you're hurt badly enough. Many have called for controlling foods allowed to be sold to the public on the grounds that people's bad eating habits cause health problems that the taxpayers end up paying for.

First, we offer to give you something for free. Then we offer to help you make decisions about your life that affect that thing you're getting for free. Makes sense. Welcome to serfdom.