Thursday, October 31, 2013

What My Arguments Mean, and What They Do Not

Let us imagine you have a friend, and he has had repeated problems with neighborhood children running over his lawn, destroying plants and so on. One day, while speaking to him, he tells you that he plans to resolve the problem by buying several Bengal tigers to release in the yard. A bit surprised, you suggest that perhaps this may not be the best approach, that perhaps releasing wild animals will be both dangerous to him and his family and a potential legal problem should they harm someone else. Much to your surprise, he does not accept your comments, but instead becomes quite irate and accuses you of favoring badly behaved children, of having a permissive attitude which would allow anyone to destroy the yards of another without consequence. You try to explain, but every time you object to the tiger plan, immediately he turns on you and blames all his problems on "people like you". Finally, confused and frustrated, you leave, not sure how you can help your friend, but certain he is likely to come to some harm from his current course of action.

In a slightly less melodramatic way, this imaginary friend reminds me of some of those to whom I try to explain my belief in minimal government. For example, when I suggest that outlawing prostitution is a misuse of government power, or that prosecuting those who use drugs establishes risky precedents and exceeds the proper role of the state, it is almost inevitable that some will claim I favor drug use or prostitution, or, at the very least, imagine that eliminating government from the equation will result in rampant prostitution and drug use. Like the fictional friend, they are so attached to a single solution, they cannot imagine anything else could work, no matter how risky or unworkable the plan might be.

First, allow me to make clear my argument. When I say the state should not make these things illegal, I do not for a moment suggest that means they are good, or that we all must happily accept them. All I mean is what I say, very precisely, the state should not ban them. That does not mean we cannot do anything. In a truly minimal government, we would have broad freedom to show our displeasure with individuals. We could refuse them all manner of services, with no justification other than our disapproval. We could voice our displeasure. We could do the same for those who frequent prostitutes and buy or sell drugs. If the public is truly unhappy with these practices, they have many means to show it, and to apply pressure to convince others to change their behaviors. And I support them in their rights to do so. Thus, when I say the state should not be involved, that is all I mean.

Second, though we often forget it, before our very intrusive society came into existence, there was one with fewer laws, at least in many areas, a society which -- despite the claims of some that the world of a century ago was "too different" -- was much like ours. And yet, somehow, without many of our laws, they still managed to function, and even to avoid some of the ills of today.

For example, before Prohibition, many states had few or no laws about alcohol sale or consumption. Yes, there were dry counties, and some that came very close, with quite restrictive rules, but they were the exception, not the rule. And, yes, public drunkenness could land you in jail overnight, maybe even a little longer, but that had much more to do with your behavior than whether or not you drank -- if you could "hold your liquor" and behave civilly, for the most part drinking was not an issue. However, beyond these rules, alcohol was largely unregulated, without the modern "drinking age" rules, and yet, somehow, there was no plague of pre-teen tipplers. So, how did this happen?

Some will claim "it was a different world", and in that they are right, but not in the way they mean. They seem to suggest it was more innocent, law abiding and the like, and that simply is not so. Late 19th century cities were, if anything, a bit more lawless than many cities today. Machine politics was much more open and explicit, allowing for much more corruption. Poverty was greater in most cities than today, and crowding was worse. So, it was hardly some bucolic utopia to which we cannot compare the present day. And yet, with no laws to defend them from a wave of youthful alcoholics, they managed to survive. How?

Well, much as it might shock some, they used solutions other than the law. For example, without our modern fear of lawsuits for any sort of "unequal treatment", and with a real legal right to refuse service, the owners of liquor stores and bars would simply refuse to sell to those they felt "too young". Of course, there were doubtless, then as now, a few less scrupulous sorts who might have been tempted to sell to youngsters, but there were two other pressures keeping this from happening. First, the community would have brought quite a bit of pressure, economic and social, upon those who were known to sell liquor to those who were clearly too young. Second, parents, family, and in many cases even unrelated strangers, would take a role in watching out for the behavior of children, and, unlike our age which claims "it takes a village" but does little but ask for a bureaucrat to rear our children, these individuals actually would step in and try to stop these children from doing things they should not.

Well, there is even more to the argument than what I just wrote, but it would take much more time than I have to lay out the whole argument here. In at least part, as you can infer from my last argument, I believe our tendency to turn to government first, in fact to turn to government to the exclusion of all else, has made us, in large part, abdicate our individual responsibilities, in favor of allowing the state to do it for us, and thus, not only do such laws exceed the proper scope of government, the philosophy behind them ends up making us passive participants in society and exacerbates the very problems we supposedly resolve through government.

But that is a topic for another time. For now, all I want to make clear is that, when I argue for limiting government to the protection of individual rights, when I suggest laws intended to stop "bad behavior" or to "protect us from ourselves" or our bad decisions, are not the proper role of government, I do not mean that I endorse any of these behaviors, or that we should never criticize or attempt to change those engage din such activities. All I suggest is that a single solution is wrong, and that, if we wish to change these situations, we should look to other answers.


I made some similar arguments before in "In Loco Parentis", which may have actually provided a more thorough justification than I did here. Then again, my point here was simply to make clear what my positions mean. As I wrote before, if you say you are going to your auto mechanic to set your broken arm and I stop you, it does not mean I favor broken arms, just that I recognize a doctor may be a better answer than an auto mechanic.

Monday, October 28, 2013

Government Funding and the Creation of Strife

I have written several times on the belief, sadly shared by many on the right as well as the left, that it is the proper role of government to fund research, as well as arts. Of course, the sides differ as to who and what should be funded, but, inevitably, when I mention eliminating all such funding, comments about Medicis and the space race and all the supposed benefits will be mentioned, with the clear implication that government funding is the sole reason for most human progress. (Ignoring for the moment that the Medicis, and many other Renaissance patrons were actually private patrons who happened to also hold government posts, though under some aristocratic systems the distinction is a bit hard to determine with precision.)

As I have already written about the many ills caused to artists by the patronage system1, I will look today at two other other problems, closely related to one another. First, I shall look at the very simple question of how funding should be allocated between the many competing priorities, and, second, I shall look at how that question -- assumed by so many to be quite easily solved -- results in tremendous civil strife, while producing little or no obvious benefit. Along the way, I suppose I will need to address a third issue as well, the problems caused by comparing obvious, realized benefits, with lost potential gains, as it will be hard to make my case without discussing it.

Actually, as it will do nothing but break up the flow later on, let us quickly cover that secondary topic now, so we can return to our primary point. It is a point that should be familiar to anyone who has read even a little writing by free market economists, most often introduced with a reference to, or quote from, the writings of Frederic Bastiat -- either attributed or not -- especially his writing about the dubious benefits of broken windows. The basic concept is this, while we can often see the benefits brought about by government spending, but what we do not see is how that money would have been spent otherwise. The most famous example being a window, broken by some malefactor. Looking at the window, one could think the damage a blessing. After all, it created work for the glazier, allowing him to spend more on food and clothes, helping the merchants selling those, and so on. However, what is not seen is how the money would have been spent had the window not been broken, all the benefit that would have brought, and at the same time leaving us ahead one window2. In short, while it may seem through very simple analysis that breaking windows makes work and brings prosperity, the truth is, that money would have been spent had the window not been broken, bringing just as much, or more, benefits, and we also would have one additional window.

A similar problem often arises when discussing government funding of the sciences (and to a lesser degree the arts), though it takes two slightly different, but closely related, forms.

First, there is the argument from historical evidence, that is, pointing out the discoveries supposedly attributable to government funding, such as velcro or the internet (well, DARPAnet). This argument is problematic for several reasons. Mostly, because we cannot look at counterfactual histories. That is, we cannot say "were there no government funding, researchers would still have followed those same lines." Or "velcro might not have been discovered, but this wonderful other discovery would have been made, which we now do not have." Thus, it is impossible to say whether or not a given discovery would have come about without the government being involved. We can say that government funding probably did push research into certain channels it would not have otherwise followed and thus likely hastened some discoveries. On the other hand, if funding were determined by private funding, most money would have been put into areas more urgently desired by consumers and thus the potential discoveries would probably have been more satisfactory to the public in general. However, that is also speculative, and in some cases it is possible private research would have produced little or nothing while the state funding produced much. The point here is not that government funding is worse than private, just that there is no way to tell (1) what to credit to government funding and (2) what other discoveries, if any, were not made because of that funding. Thus, it is foolish to point to government funded discoveries and treat them as cost-free triumphs, as they may have happened anyway, and they may also have cost more than we will ever know.

The second problem with discussion of government funding is that proponents often imagine that a world without government funding would look almost identical to the present, save for the elimination of government subsidies. For example, they will ague that, were government funds not provided for disease research, we would have very little progress, as current private funding is scant, and mostly focused on handful of disease where medication brings high profits. The problem with such arguments is that they forget that government funding has changed the world, and its elimination would cause other changes. To draw an example from another field, when I discuss changing from public welfare to private charity, many think private donation would remain at present levels. But this ignores two factors  -- or probably more. First, that present donation is reduced by the amount of income which is taxed away to support welfare. Were this available for private use, donations could easily rise. Second, individuals now can reassure themselves that, because of welfare, the impoverished will always have food and shelter. Were welfare gone, they would feel a greater urgency to give, and would have more money with which to dos so. In short, our present behavior is shaped by welfare's existence (or by government funding) and to eliminate either would change the world as well. And that is why I think it absurd to look at present research funding and imagine it is the model that would continue to exist were funding from the state eliminated. Not only would more money be available, but individuals who had a strong interest in any area of research would feel the need to help fund it, as the researched, unless commercially viable, would not have the state as a safety net, making private donation a more pressing need, and inspiring potential donors to give in larger amounts.

As you can see, this case is not identical to Bastiat's broken window. In that case, there was a clear net loss, in terms of the broken window at the very least, while in this case I cannot conclusively show that public funding is inferior. But then again, I do not have to. I can make some persuasive arguments based on the likelihood of private research following lines of research more likely to fill the public's most urgently felt needs, the tendency of bureaucratized government to waste more resources, the ability of private firms to avoid political orthodoxies likely to lead to false starts and dead ends, and so on. However, such persuasive arguments are not proof. But we do not need proof here. What I intend to show is, while the supposed benefits of public funding are impossible to prove, and possibly imaginary, there are some very real downsides, and, at the same time, there is no foundation to many of the claims made in favor of government involvement -- such as the ability to more efficiently direct research -- and thus, as it brings little or not clear benefit, yet clearly does considerable harm, there is little justification for pursuing this course of action. (Of course, I can't resist closing with a few asides along the lines of those "persuasive" arguments I mentioned, which hopefully will serve to make my case that much more convincing.)

So, having set forth my argument, and having shown the impossibility of proving the benefit of government subsidy, let us move along to the next point, and the main focus of my essay, or should I say two points, as we will need to look at a pair of related points. First, the troubles caused by attempts to choose how to allocate our resources, and then, second, and even more important, the impossibility of finding any means to rationally choose that allocations.

I suppose it would make more sense, at least from some perspectives, to start by asking how one should allocate the funds available to the various choices. But in this case, I think the method itself, though it shall be of interest later, is of less immediate interest than the consequences of making such a decision. That is, from the political perspective, it is less interesting to ask how funds will be allocated than to examine how much strife comes about from deciding such questions.

This topic came to mind today when I was considering how politicized the questions of funding research into certain diseases has become. Or not just funding, but anything to do with certain ailments. The two most obvious being breast cancer and AIDS, diseases which have ceased being simple illnesses and have become causes. But it is not just funding for diseases attached to political agendas. At various times, public or government attention can make other topics become "hot button" issues. Thimerosal, autism, depression, Alar, global warming and so on. All of these have gone from being academic questions to becoming political debates, and have turned the question of government funding into a means by which we announce our political identities, or measure the worthiness of others.

What is interesting is that there are many equally contentious issues in our private lives, and yet we rarely see such acrimony over these topics. We accept that others choose religious beliefs, select schools for their children (if they can afford private schooling), select their own books, films and so on, yet we do not get into shouting matches over such things. For example, what films are shown in schools can often create hard feelings, sometimes to the point that we need to forcibly separate parents. On the other hand, what films you show your own children rarely rankles other parents3. Perhaps they will raise an eyebrow, or say you're a dolt, but that's it. Private choices are generally treated as just that, private choices, and rarely bring about any hard feelings or public disorder.

So, why does this change when we talk about government money? When the money is being spent on public schools? Or, more to our topic, when it is being used to fund public research?

Let us look at a hypothetical example. Were some researcher to find private funds to sponsor a study into the effects of beer and garlic on the appetite of leeches, most of us would have no objection. We might still chuckle about it, or about a study on the walking behavior of snakes4, but we would not begrudge the sponsor the right to spend his money, nor the researcher's right to ask for it. However, once it becomes a government funded project, suddenly we are quite upset by the stupidity of the topic, and for a number of reasons. First, because it is, at least in part, OUR money they are wasting, and without asking us. Second, because we recognize that government money is limited, that government funding is a zero sum game, and every dollar taken from research to give to stupid projects is money that will not go to valid research. And, since taxes and overhead takes away a lot of available research funding, government funds are a considerable part of any project. That is, government funds give you a big leg up over those looking for private funds5, and to give such an advantage to something we find absurd or offensive upsets us.

Or, to turn to a more prosaic example, we often hear complaints about how little money is going to study breast cancer or AIDS (inevitably meaning, of course, government money), or the opposite, complaints that funding for politicized ailments such as AIDS and breast cancer detract from diseases such as heart disease that kill far more. In both cases, the resentment is not precisely that money is being spent, we would not begrudge someone spending every last dime to cure her own case of breast caner or fight his AIDS, what we resent is the choice made with government funds, with funds that we are told are collective, shared, are, in essence, OUR money. Since the funds come from the public, the public feels a right to decide where those funds go, and, since "the public" is made up of millions of souls with millions of different perspectives, any solution is going to lead to nothing but conflict. Every individual will have his own priorities and reasons he finds perfectly reasonable to support those priorities, and, as a result, no matter what the choice made, many souls will find it not just objectionable, but irrational, and feel very angry that such a foolish plan was embraced.

Some may ask at this point how private funding would be any better. And, in one sense, it won't. No system will ever match the ideal system envisioned by each of us. But, as I have pointed out, we tend to only become so angry when we discuss public funds, not private contributions. In addition, when funding is private, there is no single target, no one source of irritation as there is with government. You could be upset with each contributor, I suppose, but each will argue he has the right to give as he sees fit, and will have his reasons for his donation, and, in the end, we tend to accept those arguments from individuals, just not form the state. And thus, in the long run, private funding will just not create the situations which create such strife when public funding is used.

And private funds have one other advantage. As private funding tends to be allocated either by private donors or profit seeking enterprises, it tends to follow closely the pattern which produces the greatest satisfaction for the most individuals. After all, those with money to donate tend to be those who are best at meeting public wants. Thus, they tend to be good bellwethers of the public mood, and their giving will inevitably follow much the same pattern. This is especially true of the for profit companies, which will donate primarily to those ventures likely to be profitable, which means, those likely to satisfy a strongly felt public want in a reasonable amount of time. This tends to make the funding follow closely upon the needs most urgently felt, and thus has the least probability of producing those heated emotions politicized government funding does.

Of course, there is the one objection we hear most often, or rather two related objections. First, that there simply will not be sufficient public funding if the state did not fund research. Second, that there may be funding, but it would be haphazard and not go to where it is "really needed". But both suffer from the same problem, that is, confusing the prejudice of the speaker with objective reality.

Who is to say what is "enough" research? If an individual would give $10 if allowed the choice, but is forced by the state to contribute $20, which is "right"? Why is the government official better able to determine what is the "proper" amount of research? What makes a politician expert in all fields and more capable of spending money than those who produce and earn it?

And that is the true problem with most arguments for public funding. They rest upon the idea that there is some optimal, objective best amount of research, and in truth, there is none, there are simply a host of individual opinions, some of which are granted government power to confiscate wealth. In the end, the "right" amount, at least if we are looking to produce the solution which provides the greatest overall satisfaction, is the one which each individual would set with his own money. It may not please others, but in the long run, just like the free market in all other aspects of commerce, allowing a free market in contributions toward research will produce the most satisfactory result for the greatest number. It may not be perfect, it may sometimes make false starts, but that is true of all systems.

And, unlike public funding, it will not produce the angry, contentious circumstances we so often see around us concerning public financing of science, medicine and the arts.


1. As is the case with most of my writing, the majority of these older posts are not currently available, as has taken down its blog pages and has not provided me with an export I can move to a new site. I do have manually saved copies, but it is tedious to remove the formatting and then reformat them, add tags and fix links addresses, so they will work on a new site. Especially as I have about 4000 posts to process. However, I do have a few essays on this topic that are posted on this blog, but to flesh out the subject, I also ported over a handful of old articles to this blog, so I wouldn't be left with a lack of citations. So I can now direct interested readers to "Patronage", "The Inherent Disappointment of Authoritarianism", "Missionary Zeal and Human Discord", "Harming Society", "In Loco Parentis", "The Danger Inherent in Banning "Bad Ideas"", "A Question for Artists of the Left" , "My Censorship is Your Discretion" and "Moral For Me, But Not For Thee".

2. The most common version of this silliness is the idea that war stimulates and economy, or that was brings us out of depressions. In truth, war destroys massive amounts of wealth and leaves us much poorer. We may be more busy, as we need to replace all that was destroyed, but we are busy because we are impoverished, it does not make us rich. As I wrote in an article currently unavailable, if anyone believes this theory, let him burn down his house. He will be quite busy working and saving to buy a new one and replace the contents, but is he wealthier because of it? If not, then how do we think a similar situation benefits a nation?

3. In a few cases social conservatives will decide a given film is destroying society, or their mirror image among the PC liberals will decide it is offensive to some minority group, and these professionally aggrieved individuals will take to the streets demanding no one be allowed to be offended by this film. However, they are a relatively small minority, and, for the most part, on the political fringe. Most Americans seem to believe their fellows are capable of making individual decisions about private matters, even those involving their children.

4. Both of these studies actually existed. The leech one was used for quite some time as an example of absurd research by those objecting to government waste. The other, the "walking behavior of snakes" was a research project conducted by a professor I knew through my ex.

5. Because government funds are reliable and generally generous (at least as generous is defined in the world of research funds -- well, especially after the dot-com, telecomm and biotech booms ended), the advantage gained by those who are good at getting government grants cannot be overstated. It is one of many reasons why it seems so unfair for funds to be given for ludicrous projects, as it not only wastes those funds, but also helps establish the author of such absurdities for success in future projects.

Friday, October 25, 2013


I am sorry I have not written much recently, but events have kept me busier than expected. When I wrote earlier that I intended to start on my FairTax series, I did not realize that I was going to be studying for a certification test for work. In addition, an extended family member has suffered from some health problems and that has taken some time too, as well as my own on and off illness. Thus, while I did manage to post some old essays, which I think may be quite useful, I haven't written anything new in a while.

I hope this weekend to finish at least one or two essays, maybe post a few other old essays I cite frequently. However, things are still not that settled, so I have to warn that the next week or even two may not see all that many new posts. I will try to fill the gap with reposts of my more frequently cited old essays, as well as those that are my favorites, but new content will probably be limited.

I hope, in two weeks, maybe three, I will get back to something approaching a regular schedule, and begin on my FairTax series.

Sunday, October 20, 2013

Luxury and Necessity

NOTE: The seven articles prefaced with this note were all originally posted on my blog. Since TH closed their blog pages, they have not been accessible to readers. As they seem especially relevant to the essay on which I was working tonight, I decided to post these articles on my current blog. This does not mean I have given up plans to eventually post all of my old TH content on a new blog, it is simply a transitional measure, to allow readers to refer to my old writing while waiting for me to finish moving my old blog contents. (Also note that the tags appended to these articles are far from comprehensive, and were added quickly to place the essays in some context, but should not be assumed to be anywhere close to exhaustive descriptions.)

I have previously quoted an interesting line from Gibbons' Decline in Fall, using it to demonstrate that, unlike the supposed sages of the present day, men two centuries ago understood that inherited wealth, even when used in simple consumption, still benefits all mankind. It is an interesting enough quote that I will reproduce it once again here:
Such refinements, under the odious name of luxury, have been severely arraigned by the moralists of every age; and it might perhaps be more conducive to the virtue, as well as happiness, of mankind, if all possess the necessities, and none of the superfluities, of life. But in the present imperfect condition of society, luxury, though it may proceed from vice or folly, seems to be the only means that can correct the unequal distribution of property. The diligent mechanic, and the skillful artist, who have obtained no share in the division of the earth, receive a voluntary tax from the possessors of land; and the latter are prompted, by a sense of interest, to improve their estates, with whose produce they may purchase additional pleasures.
However, this time, unlike its original use in my essay "A Great Quote", I want to make use of it to illustrate another concept, one I touched upon in my earlier essay "The Most Misleading Word", the difficulty of defining the term "need". Or, to be more precise, the take Gibbons' opening sentence as a starting point, and look at the twin concepts of "necessities" and "luxuries", as these two concepts have often been used to justify a host of government actions, as well as to impugn the concept of economic freedom, and classical liberalism itself. And since the dichotomous pair are so useful to such a range of arguments, providing justification for a host of interventions, it seems that such an inquiry may provide insight into some arguments for or against such intervention. (A similar argument, about "needs" versus "wants" can be found mentioned in "Liberalism, Its Origins and Consequences - Introduction".)

I suppose the best place to begin is at the very beginning, with the term "necessity". Some would suggest we should define both "necessity" and "luxury", but since "luxury" is effectively defined as anything one wants which is not a "necessity" defining one should be enough. As they form a true dichotomy, covering the entire spectrum of possibilities, we can define one and, by that definition alone, know the other as well.

So, what is a necessity? Most people seem to think they know the meaning of this word intuitively, but, when pressed, have a very hard time defining it, or even specifying if a given good or service falls under it. And should you try to ask more than one person for a definition, it gets even worse, as the "self-evident" meaning of one, if he is even able to give it, very rarely matches with that of another. Despite the fact that the term is one that "everyone knows", which everyone thinks he can define with ease, like its root "need", it is a term without a clear meaning.

It may be slightly bad form, but let me begin by quoting myself, from my essay "The Most Misleading Word":

The problem is simple, it is inherent in the very word itself, the word "need". You see, to use "need" properly, you really need an explicit or implicit clause following it, to explain for what purpose it is needed. For example, "You need an oven to bake a cake." Or, as an example of an implicit clause, if you were discussing driving to the store, "you need to put gas in your car [to drive to the store]." It is only with this modifier that "need" is meaningful, as "need" has meaning only in context.

In "Absolute Values" I discussed the way using absolute terms can make a mess of thought, well "need" is not exception. When we deprive "need" of a context, there is only one way to read it, that is an absolute need, a need one will feel regardless of circumstance. But such needs do not exist. Even the bare minimum I used above, "need to survive" assumes one wishes to survive, and so is wrong in a few aberrant contexts. But, outside of that single case, "need" is only meaningful when we use it as a means to an end. Without the end, "need" is meaningless, and quite misleading.
That argument applies just as well to our current question. A "necessity" is a necessity" only in terms of a specific goal. One can try to give it a more general definition, say "necessary for preserving life", but then "necessities" are pretty low, as a bare minimum of food and water is all that can be considered "necessary", and I have yet to see a definition of "necessity" which contemplates anything beyond bread and water as being a luxury.

No, when people speak of "necessities" in economic terms, they are not talking about anything definable, instead they are smuggling in a value judgment, saying "everyone should have X", and "no one should have more than X". In other words, they are applying some sort of floor to allowable poverty. But, they are in no way defining "necessity", they are simply telling us what they wish everyone had. (See "The Inherent Disappointment of Authoritarianism", for a similar process in the thinking of those promoting socialism. Also see  "Can We Ban the Word "Scarce"?", "Bad Economics Part 17" and "Protean Terminology", for discussions of such ill-defined terms.)

And you can see this in the shifting definition of necessity, even among reformers. What wa sonce a luxury, a car, a television, a single family home, often becomes a necessity in a generation or two. A decade ago we heard about the plight of children without internet access, now we hear sob stories about those without high speed connections. Necessity is not a meaningful phrase, it simply represents the current assumption among a given group of reformers about what everyone should have. It is, in all senses, a meaningless phrase.

But even if it somehow had meaning, even if there were some sort of necessities that everyone really should have to have a fulfilling life, that does not argue against luxuries. It is the mistake of the left (and some on the right) to imagine that luxuries impoverish the poor, that the economy is a zero sum game. We see this every day, but it is always wrong.

Let me give an example. Often, to "soak the rich", the government will enact "luxury taxes", arguing they only hurt the rich, and so they should be popular with the poor. But the truth is they hurt the poor much more than the rich, who they often fail to touch. For example, let us suppose there is a massive new tax on boat sales. The truly rich, if they want to, can buy their new boats overseas, thus avoiding the tax entirely. Instead, the tax hits the upper middle class, who cannot go overseas, and so either must pay more for their one luxury expenditure or do without. As a result of these lost sales, those who sell boats, often middle class men, and those who make them, middle and lower class, lose work and either find themselves unemployed or at least less well paid. Similarly, those provide services, at berths, at marinas, at restaurants and gas stations and other businesses catering to boaters, all see a decline in business as well. And so, as a consequence, a few rich people, and many upper middle class, do without boats, while the middle and lower class workers who depend on boats for their livelihood all suffer in a "soak the rich" scheme. (And this doesn't even consider businesses which rely on boats, such as tours and fishing charters, whose middle and lower class workers will suffer as well.)

And that is the problem with criticizing luxuries. Luxuries do not impoverish the poor, they make jobs for the poor. The rich do not make their toys, or sell or service them, the poor and middle class do. And in that way, the rich, even the "idle rich" make the middle class and poor wealthier. In addition, those bright fellows in the lower and middle classes who come up with goods and services but lack the funds to create them also can appeal to the rich for funds, and with their new "luxuries" create new jobs and lift even more out of poverty.

And finally, one day's luxury often becomes the commonplace of the next generation. Plumbing was once a rich man's toy, as was electric light. Medicine was once a luxury of the rich. So were cars. And radios and televisions and computers. Air travel was, actually a two week vacation every year was a swell. But what starts out as a luxury, through progress spurred by the wealth to be made, eventually becomes within the grasp of all. And so "luxuries" make us all richer with time.

And that is the true harm of this false split between luxuries and necessities, it makes us malign luxuries which are actually quite beneficial, driving progress and improving the lot of future generations, while at the same time providing employment and opportunities for the poor of today. I know many will not believe it, but the "greed' of those peddling luxuries have done more to better mankind than all the philanthropists who ever lived. Henry Ford brought more material wealth, progress and real freedom to individual Americans than every soup kitchen, job training center, welfare check, social worker, community center and shelter ever opened.


An interesting parallel to my argument for luxuries can be found in "Government Efficiency" when discussing how medical advances go from being available only to the rich to being common. It is also interesting to see how government "help" has short circuited that process and made advances more costly rather than less. I also discussed these issues in "Greed Versus Evil", but as that is such a lengthy, discursive essay, I discussed most topics in it.

Update (05/19/2010): I wrote something very similar in my post "The Benefits of Inequalities of Wealth" as well.

Originally posted in Random Notes on 2010/05/18.

The Most Misleading Word

NOTE: The seven articles prefaced with this note were all originally posted on my blog. Since TH closed their blog pages, they have not been accessible to readers. As they seem especially relevant to the essay on which I was working tonight, I decided to post these articles on my current blog. This does not mean I have given up plans to eventually post all of my old TH content on a new blog, it is simply a transitional measure, to allow readers to refer to my old writing while waiting for me to finish moving my old blog contents. (Also note that the tags appended to these articles are far from comprehensive, and were added quickly to place the essays in some context, but should not be assumed to be anywhere close to exhaustive descriptions.)

There are many words that serve to confuse more than elucidate. And most of them, unfortunately, are words that the average man on the street imagine to have a clear meaning. "Fair", for example, is one of those words which can mean almost anything ("Protean Terminology"),  and yet everyone who uses, or almost everyone, thinks not only that it has a single, clear meaning, but that everyone else agrees upon that meaning. (A handful recognize the confusing nature of the word, but most of them use that knowledge to exploit it, rather than to avoid adding to the confusion.)It is inevitable, whenever a debate comes to rely upon the term "fair", the debate will degenerate into confusion and anger, as each participant wonders how the others cannot see "the obvious", as each wonders how anyone could fail to see the plainly "fair" resolution.

And there are a number of such words. "Fair", "just" "equitable" and all the other synonyms and near synonyms are popular. "Good", "bad", "evil" and related terms of judgment are popular as well, though more people seem to recognize the differences in individual definitions with these terms. Other terms also fall into the same category, with many thinking they have a single, clear meaning, while others recognize the varying meanings ascribed to them. These include favorites such as "legal", "constitutional" and do on. And the list goes on. The range of terms varies, depending on how much confusion one is willing to accept. Some words are defined uniquely by every individual, yet everyone imagines they have but a single definition agreed upon by everyone, fitting our definition perfectly. Others have more widespread definitions, or the confusion is more well known, but however far you stretch the definition, there are quite a few words which are ill defined, yet believed to be clear and certain.

However, the worst of the lot, the word most poorly defined, and yet believed to have a single, certain definition, is one no one recognizes as such. It is a word which, as the definition states, is imagined to have almost technical precision, and yet is defined in such idiosyncratic ways that it is almost meaningless.

That word is "need".

This word has come to my attention twice. First, when discussing drug legailization ("Drug Legalization", "Required Waste"), and the argument arose several times that "no one needs to use drugs", I began to consider the meaning of the word, in order to examine the validity of that argument. Second, when looking at the free market ("Greed Versus Evil") and authoritarian alternatives ("The Inherent Disappointment of Authoritarianism",  "Moral For Me, But Not For Thee", "Bad Economics Part 10"), especially when considering alternatives to the price system ("The Inevitability of Bureaucratic Management in Government Enterprises", "Bureaucracy Revisited"), the term popped up again, as many argued that the free market favored "wants" over "needs", and that allowing people freedom often resulted in them not obtaining what they needed.

Both cases sounds sensible until you being to ask what the arguments truly mean. For example, when we say "no one needs to take drugs", what does that mean? That drugs are not necessary for survival? Very little is. To argue drugs can be banned as unnecessary for survival would also allow you to argue against art, literature, religion, education, anything except a minimal amount of food, water and perhaps shelter absolutely essential for survival. ("It Doesn't Matter to ME...", "Who Does It Harm?") Somehow I doubt that is what those offering this argument mean.

More likely they mean one can live a fulfilling life without using drugs, that one can live a life of which they would approve without drugs. But that is not the meaning of "need" most people have in mind. Especially as we do not know how this given individual defines a worthwhile life, the statement is effectively meaningless. All they are saying, in effect, is "I see no reason to use drugs." But as they use the term "need", they are making their own value judgment sounds like an objective, universal rule, rather than a statement of personal preference.

And the same holds for those who deride the free market for supplying "wants not needs". When they say the market should provide what people need, or that prices need to reflect the "true value" based on "needs", again, they are not talking about the bare minimum of survival. As they are talking about books, films, research, education and so on, what they mean is that the market should reflect their values, prices should force others to behave as they would. In short, "need" has only become a shorthand used to smuggle in covert value judgments. They are saying the valuations of other people, which they call "wants", are less important than their own valuations, which they call "needs". It is, as above, a convenient way to make one's prejudice sound like scientific certainties. ("The Limits of "Scientific" Management", "Bad Economics Part 16")

The problem is simple, it is inherent in the very word itself, the word "need". You see, to use "need" properly, you really need an explicit or implicit clause following it, to explain for what purpose it is needed. For example, "You need an oven to bake a cake." Or, as an example of an implicit clause, if you were discussing driving to the store, "you need to put gas in your car [to drive to the store]." It is only with this modifier that "need" is meaningful, as "need" has meaning only in context. 

In "Absolute Values" I discussed the way using absolute terms can make a mess of thought, well "need" is not exception. When we deprive "need" of a context, there is only one way to read it*, that is an absolute need, a need one will feel regardless of circumstance. But such needs do not exist. Even the bare minimum I used above, "need to survive" assumes one wishes to survive, and so is wrong in a few aberrant contexts. But, outside of that single case, "need" is only meaningful when we use it as a means to an end. Without the end, "need" is meaningless, and quite misleading.

Which is why I would prefer to see "need" disappear from argument, or at least disappear when not clearly qualified. As with the word "scarce" ( "Can We Ban the Word "Scarce"?"), it is a word politicians and pundits abuse, and one which the general public thinks they understand, but which leads to endless confusion. We would be much better off were the word to be avoided entirely and a new, more clear term take its place.


* I am ignoring the one other way in which "need" is used, the teenage hyperbole usage. The way a teen uses "I hate you" to mean "I am slightly upset" or "he's the greatest" to mean "I feel a passing fondness", they use "need" to mean "want". And as our society has become ever more juvenile ("Frightened for our Future", "The Adoration of Youth", "I Blame the Romantics", "Revisiting an Old Topic", "Changing Incentives", "In Defense of Standards", "Addenda to "In Defense of Standards"", "Bad Economics Part 9", "How Fast Things Change", "Deadly Cynicism", "Self-Serving Cynicism and Our Cultural Immaturity", "Hoist By Your Own Petard") more and more of us confuse the two words in speech as well. Fortunately, that usage has yet to become common in political discourse, as adults still manage to recognize how immature it sounds, and so the use of "need" in political debate is almost always the more common, but misleading, usage I mention elsewhere in this post.



I can't believe I forgot the most recent abuse of the word "need". When arguing for ObamaCare, or when "Conservative Lite" types argues for their "conservative" public option, the argument offered for ignoring the market was that medicine is "not like other goods and services", because "you need medicine". This is akin to the arguments offered for farm price supports ("Bad Economics Part 6") and is just as invalid. We do not "need" medicine in any meaningful sense. Yes, it prolongs life and makes it better, but almost any product makes life better, that is why we buy them. To increase enjoyment is the purpose of all trade. Medicine is no different. But "need" makes it sound so reasonable and filled with common sense that many bought into the absurd argument.

Originally posted in Random Notes on 2010/04/25.

Moral For Me, But Not For Thee

NOTE: The seven articles prefaced with this note were all originally posted on my blog. Since TH closed their blog pages, they have not been accessible to readers. As they seem especially relevant to the essay on which I was working tonight, I decided to post these articles on my current blog. This does not mean I have given up plans to eventually post all of my old TH content on a new blog, it is simply a transitional measure, to allow readers to refer to my old writing while waiting for me to finish moving my old blog contents. (Also note that the tags appended to these articles are far from comprehensive, and were added quickly to place the essays in some context, but should not be assumed to be anywhere close to exhaustive descriptions.)

I have written on this topic before ("Symmetry and Greed", for example), but it is one which comes up so often that I feel the need to repeat the argument again and again. Mainly because, even for those who support the free market, there are many who feel it is somehow "immoral", that running an economy based entirely on individual choices will somehow lead to unethical people having a field day. And, sadly, this is mostly due to the fact that, despite being nominal conservatives, and supporting the free market, many still believe in the left's characterization of trade as "exploitation" ( "Exploiting Workers?", "Fairness and the Free Market", "Capital Investment", "Exploited Labor"), still hold on to their fear of "big business" and "corporate greed" ("Beware Populist Deception", "Fear of the "Big""), worry about "greed" of any sort ("Greed", "Greed Part 2", "Greed Versus Evil"), and generally imagine running an economy this way will lead to disaster ("Bad Economics Part 16"). While many do not openly support government intervention, their attitudes and fear lead them to tacitly support such measures ("Inescapable Logic", "Don't Blame the Politicians", "What We Deserve", "Who Is To Blame?", "What is Wrong with Us", "The Single Greatest Weakness", "Why We Lose"), and, as a result, we end up with both conservatives and liberals adopting positions which not only oppose business freedom ("Bad Economics Part 2", "Bad Economics Part 3", "Bad Economics Part 5", "Bad Economics Part 12"), but end up curtailing individual freedom as well ("How the Government Corrupts Relationships",  "Deadly Cynicism", "The Citizen Dichotomy", "In A Nutshell", "Cognitive Dissonance Part 2", "The Right Way", "The Danger Inherent in Banning "Bad Ideas"", "Contradictory World Views" )

What we need more than anything is to understand that the free market, properly understood ("Bad Economics Part 17") is nothing but a policy of respecting individual freedom in all things ("In Praise of Contracts "). The free market is not a system allowing exploitation, it does not make money the measure of all things, it does not turn all human relationships into commercial matters, or any of the other absurd claims that too many of us believe. What the free market truly is, is a system which respects the individual, which assumes he knows best what he needs to be satisfied in life, and that he is competent enough to be trusted in the pursuit of those goals. The free market does no more than that, or does very little more. Yes, it establishes policy and armies to protect our rights against forces domestic and foreign, and it creates civil courts to provide a binding, peaceful means for arbitrating disputes, but that is it. Beyond that, the free market thinks it best to allow individuals to establish their own rules, to create their own relationships with one another, and to set the terms under which they will interact. The free market is all about trusting men to run their own affairs better than a handful of government "experts", or perhaps politicians, can run the lives of the nation.

But, some will complain, while that sounds good, the very act of giving free rein to big business allows them to exploit workers, or to harm consumers. Freedom sounds good, but thanks to disparate economic power, freedom tends to inordinately benefit the rich, and so all this talk is meaningless, as the high sounding ideals still end up in nothing but handing corporate powers the keys to the kingdom.

The problem with this explanation is obvious. The situation described, where established, wealthy firms have an unfair advantage, actually better describes a regulated market than a free one ("The Inevitability of Bureaucratic Management in Government Enterprises", "Bureaucracy Revisited", "The Inherent Disappointment of Authoritarianism", "Anti-Business Businesses", "Transparency, Corruption and Reform", "Who Does It Harm?"), for many reasons. First, politicians fear change, especially change which could seem negative. And so, they dread the closing of large firms. As we have seen, they will go to great lengths to "save jobs" or "rescue major employers", including bailing out firms which are no longer viable. The free market provides no such safety net. Second, the government gives both an easy point of entry, an excess of power and an arbitrary set of rules justifying anything. In the free market the laws are clear and narrowly defined, giving little (though not no) scope for abuse. And without government regulation, no single individual, or even group, possesses the power to provide an economic advantage to a large firm. On the other hand, thanks to the discretion many regulators have, the vague laws, and the great amount of power, it is very tempting for certain firms to forgo competition in the marketplace for competition for political patronage. As a result, government regulated economies tend to be quite static, with the established big firms exercising the sort of power supporters of intervention claim to fear from the free market.

Some will argue, while that may be true, at least intervention protects the worker, while the free market does nothing. I have argued this point as well, showing that many supposed government reforms were actually the result of free market changes ("Child Labor and the Industrial Revolution"), for example. However, as I have written so much ("Exploiting Workers?", "Fairness and the Free Market", "Capital Investment", "Exploited Labor"), perhaps it would be better to simply try a new approach, to hopefully show that morality and business are not antithetical, and, while many think otherwise, the forces of the free market tend to press individuals to treat one another with scrupulous fairness (or suffer serious consequences).

First, let us imagine you are looking for a flat screen TV, a very nice one. You see it at various stores of everything from $5900 to $7000. At the end of the week, having found nothing better, you plan to go Monday and buy the one costing $5900. Why that one? Because, as a sensible individual, you would clearly pay the lowest possible price for the same product. (Were they different in some way, then you would need to balance features and quality against savings.) However, on Sunday, you find an advertisement in a local paper, offering the same television for $4200. Obviously, on Monday, that is the one you will buy, and, having saved $1700, you will be overjoyed, and think yourself quite a savvy shopper.

My question is, did you do anything immoral?

So, let us now imagine you are employing workers. You interview those qualified, and from among them you pick the one whose qualifications and state price works out to the best balance of price per skill, or else, if you need only limited skills, pick all those with those minimal skills and then select the cheapest. However, having done so, you will likely then make an offer somewhat below the price you want to pay. You may not do so if there is a high demand for workers of that type, or if you need to fill the position quickly, but if you have the time, and the market does not favor the worker, then you will try to bid down the salary in order to keep your costs low.

And now, the question, is this employer acting ethically?

Sadly, many will say, while the shopper was blameless, the employer was not, as he was trying to pay as little as possible. They will argue something along the lines of "but it is his livelihood, you can't put financial concerns ahead of people." But the counter argument is that the television is also someone's livelihood, by refusing to buy the most expensive version, the shopper is reducing the overall market price, driving marginal producers out of business, lowering wages, and perhaps closing firms*. Yes, it is not as direct as the employer's role, but every purchase also relates to someone's livelihood.

Then again, this whole argument overlooks one other factor, one which makes these hypotheticals unlikely to be found in real life (Or found often), thanks to the rest of the market, prices tend to be well established within very narrow ranges. Similar products tend to sell for similar prices at most shops. Likewise, employees tend to be paid the same when they possess the same skills**. Were this not the case, competitors would take advantage of the disparity and make a fortune for themselves. Overpriced goods would find themselves competing with a glut of market priced competition. Underpaid employees would be snatched up by eager employers, who could offer them a raise, while still paying less than they were worth.

Which is why it is so absurd to worry about the free market making the world into a brutal, exploitative environment. If anything, the influence peddling of the interventionist market, the competition for advantage in various zero-sum games ("The Irrationality of Government Redistribution"), along with the uncertainty of the interventionist laws ("The Problem With Evolving Standards",  "In Praise of Slow Changes", "Predictability", "Conservatism, Incremental Change and Federalism", "Empathy" Threatens not "Justice" but Predictability", "Sotomayor and Empathy", "Interpretation and Activism", "Why Judicial Activism Hurts",  "The Problem With Tort Reform", "Red Herring", "A True Conservative Platform", "A Perfect Example", "Analogies For Political Consistency") tend to make government run economies much less secure than a free market. In a free market, competition tends to keep competitors honest, they cannot afford to play favorites or pay too little. In addition, a completely free price mechanism, along with cost accounting, gives a very good tool for measuring performance. And so, though far from perfect, the free market is better than the alternatives, and gives us a system which is, in most meaningful ways, more ethical than the interventionist system many imagine to have a corner on compassion ("The Cycle of Compassion").


* I do not argue this is bad, and in fact think those marginal firms which shut down tend to see their resources allocated to other, more productive uses. And while I say paying the lowest price "lowers wages" I say that only because paying above market would artificially raise wages, making a return to market seem a relative drop. Still, if one is concerned only with subsidizing workers, paying the highest price seems a moral obligation.

** Despite the simplistic picture often painted by economists, workers are not paid solely by their contribution to production. As with all decisions, uncertainty plays a part, as do expectations. Those without work history, obviously, will be paid less, as their output and reliability are unknown. Similarly, those with a work history will see their salary change due to the impression that work history creates. There are other factors as well (eg. my mention in "Pay Disparities" that the possibility of sexual harassment suits by bringing women into all male offices makes them worth very slightly less), but we need not go into those. My point is, while I will treat the question as based purely on productivity, as do most economists, I realize it is a simplification, and other issues come into play.

Originally posted in Random Notes on 2010/04/05.

My Censorship is Your Discretion

NOTE: The seven articles prefaced with this note were all originally posted on my blog. Since TH closed their blog pages, they have not been accessible to readers. As they seem especially relevant to the essay on which I was working tonight, I decided to post these articles on my current blog. This does not mean I have given up plans to eventually post all of my old TH content on a new blog, it is simply a transitional measure, to allow readers to refer to my old writing while waiting for me to finish moving my old blog contents. (Also note that the tags appended to these articles are far from comprehensive, and were added quickly to place the essays in some context, but should not be assumed to be anywhere close to exhaustive descriptions.)

It seems recently I have written quite a lot about the topic of government financing of arts and sciences. It started almost a year go ago with "The Inherent Disappointment of Authoritarianism", but I then largely ignored the subject until the last two weeks, when in just eight days I wrote "Subsidies and Censorship", "Patronage Versus Choice" and "Asking the Wrong Question". One would think, having covered the subject so obsessively, I would have little more to say, but strangely I find that I have overlooked one of the most basic arguments, and one that will have broader appeal than talk of rights, and the proper function of government.

That argument is the inevitability that any patronage will lead to what can be described as either patronage or censorship, that government funding will always lead to the imposition of select opinions upon the field funded, and thus will create bias, maybe even force art and science into erroneous directions.

This occurred to me because of talk of "science becoming politicized", especially during the Bush administration. What made this particularly telling was not so much what the administration did, but what the critics called "banning" research. Bush never prohibited any research, it was perfectly legal to study stem cells. What he did we prohibit the expenditure of government funds on research using new lines of stem cells. However, as so much research relies upon government funding, in one sense the critics were right. For many researchers, the closing off of government funds is tantamount to censorship.

Admittedly, some areas of research are better funded than others, and with all the biotech money available at one time, it seems a bit hyperbolic to claim Bush banned research. On the other hand, as government money is such a significant source of funds, many researchers both lack the connections to seek private funds and also conduct research in fields without any possibility of private funding. However, that seems to me more an argument against government funding than for unrestricted funding. But we will explain that a little later.

Let us look at the basic proponent of government funding, be he an artist or scientist. He is a sincere researcher, or is in the best case. And let us stick with the best cases, rather than consider the grant monger who exploits the system. As I wish my criticism to be fair, we will consider the best case, a truly skilled scientist or artist who wants nothing more than to advance his field.

This individual sees three means of conducting his work. He can fund it himself, which is a very unlikely course for almost all individuals. He can seek private funds. Or he can seek government funds. In the minds of many private funds are less desirable, as one must "limit himself" to matters of interest to the funding party, and the research usually must have some commercial application. So, rather than "sell out", many would favor government funding, seeing it as a way to conduct "pure research" or "follow their muse", without being "tainted" by commercial concerns.

Normally at this point I would ask the propriety of expropriating wealth from the masses for science without practical application or art that no one wants, essentially funding a handful of dilettantes on the public dime, but I said this was an argument seeking a broader appeal, so I will ignore questions of propriety, of fairness, and the role of government. Instead I will point out the fatal flaw in this theory.

You see, the problem is that the government does not, and cannot, give money to all comers. They cannot even give all money to every "valid" research project. Why not? First, because if they gave to all comers, they would go bankrupt. And in the second, because there is no consensus on what is "valid". Despite the beliefs of those who promote government funding, there is no single opinion among artists and scientists about what is valid and invalid in the field. Instead, there are many opinions.

However, those supporting funding often forget this. Like those who promote socialist theories, the proponents of government funding imagine their own beliefs are so self-evidently true that everyone shares them, and so they would find funding available for themselves and all their favorites. However, the truth is that quite likely funding decisions would follow the pattern of most government decisions, with some money shelled out to select individuals from each district, more shelled out to favorites of select powerful politicians, and the rest assigned by the whims of those on the governing body. In other words, the whims of politicians and bureaucrats would rule.

What is amusing is that those promoting government funding are the first to denounce censorship whenever the government intervenes, and yet they would happily assign funding by the equally arbitrary whims of some government board. 

Actually, not only are funds assigned arbitrarily, but as we discussed above, this can easily grow into actual censorship. No, it does not require that the government nationalize the area of interest, as happened with some state film boards and similar. Even outside of government control, with funding being sufficiently concentrated in government hands, as we saw with the Bush edict, the degree of reliance on government money makes government decisions tantamount to censorship.

But, some will object, the same is true of private funds. They also decide who to fund and who to deny.

Again, I will not point out the difference of making such decisions with private funds and public funds. Instead, I will make the even more obvious point. No private source of funding can ban a whole topic the way the government can. A private source of finance, no matter how big, is not the sole source, and so there is always an alternative. Yes, in some cases you may still find no one, but it will not be because of a single decision. In the government's case, however, a single decisions does cut off all funds. One bad choice has universal scope. Private funds are government by a host of individual decisions, leaving open many more possibilities for one to find a source of funds. Public funding is controlled by a single decision.(Unless you have the political clout to get it overturned.)

And that is what truly troubles me about government funding, and puzzles me about the left's love of it. They denounce nepotism and favoritism in business, but seek a system designed on the same principles in the government. They denounce censorship, but want the government to decide using arbitrary criteria who will and will not receive public funds. It seems they would be opposed to government funding on the basis of their principles, but, because they tend to imagine that everyone shares their own prejudices, they fail to see the potential for censorship and favoritism and imagine government funding is completely free of controversy, at least outside of a few knuckle dragging conservative neanderthals. Oddly enough, the fact that this is not true in practice also passes them by.

Originally posted in Random Notes on 2010/05/15.

NOTE: This essay was accidentally posted twice, once on October 20, 2013 and once on September 15, 2014.