Saturday, September 5, 2009



* The SEC's inspector general has released its report as to why the SEC missed the ball on Bernard Madoff's Ponzi scheme, even though private citizens were warning them for years that he was cooking the books. And it turns out--phew!--that the government wasn't corrupt, it just made an honest mistake (or twelve). Robert Wenzel notes that the IG released this report after 5pm EST on the Friday before Labor Day weekend. (I guess the IG's office wanted to knock it out and not have the final editing hanging over their heads while they went boating; I like to wrap up big projects before a 3-day weekend too.)

* Talk about regulatory arbitrage!!

* Will Wilkinson gives a very Kinsellian answer (in terms of his "Against Intellectual Property" article) to a thought experiment raised by Amartya Sen.

* This is a very provocative blog post in which Lew Rockwell calls the bankers' bluff and says that if there's going to be a Fed, Congress should have oversight. Somebody else noted on the LRC blog the strange inconsistency in the elites' position on this. After all, if we can't trust Congress with our money, why should we trust Congress with health care? Now some people here aren't being inconsistent; for example, my old classmate Mike Feroli (who works for JP Morgan and is quoted a lot in the WSJ) has publicly said that the Fed needs its independence, and I would be willing to bet a kidney that he is also against ObamaCare. But even so, it would be great if journalists asked Ben Bernanke or Timmy Geithner if doctors should be able to maintain their independence from Congress too, lest medical decisions become politicized. What could they say? Barney Frank knows about open heart surgery, but not open market operations?

* A reader has asked me to shred this NYT article, but unfortunately that one about the Civil War is going to take precedence. All I'll say is that this shows the danger of minarchism. This writer plausibly says:
In truth, despite the deeply ingrained American conviction that government is bumbling when it is not evil, government intervention has been a step up in some areas from the private sector.

Until the mid-19th century, firefighting was left mostly to a mishmash of volunteer crews and private fire insurance companies. In New York City, according to accounts in The New York Times in the 1850s and 1860s, firefighting often descended into chaos, with drunkenness and looting.

So almost every country moved to what today’s health insurance lobbyists might label “socialized firefighting.” In effect, we have a single-payer system of public fire departments.

We have the same for policing. If the security guard business were as powerful as the health insurance industry, then it would be denouncing “government takeovers” and “socialized police work.”
What do you say, minarchists? This guy's challenge poses no threat to me. I can say, "Yep, just like socialized medicine leads to death panels, socialized policing leads to widespread tasing and prison rape. Mar-kets! Mar-kets!"

Re: government firefighting. I've heard this analogy/argument several times. It fails on several levels.

Firefighting is provided locally, because that's where the potential externality is. It is funded by property taxes on homes, to provide a public good for those homes. Even if you disagree with the externality argument, the analogy to healthcare fails along these lines (is there a national externality if I break my arm?).

More importantly, the insurance portion of firefighting is still provided privately: you buy homeowners insurance, which covers the damages. The only major home insurance government provides is flood insurance, with predictable results.

If we really want to push the firefighting/healthcare analogy, at best the government would take over unforeseen, emergency services. For example, your arm gets cut off, the government emergency services sew it back on so you don't die from bleeding. Then private insurance takes over to cover the recovery costs.
The Blackadder Says:

I don't quite see the problem here.

If what the article says is true, and government does a far better job of providing firefighting or policing than if it was left to the market, then I'm not going to get the vapors over the government doing it. It would be silly to conclude that because the government should be in charge of policing, therefore it must also be in charge of health care.

Well, OK, but you can't object that we should oppose ObamaCare because it's "socialistic." Because you've just admitted you don't care about principles of government control; it's just a matter of which does a better job.

And then when you move on to give specific reasons why you think the government will screw up health care, you can't say generic stuff like, "Politicians aren't as savvy as private entrepreneurs."

In fact, just about every argument I've ever heard in the mainstream debate on health care, coming from the anti-ObamaCare side, would be ruled inadmissible.

That's what the writer's point was, and it's a good one.
The Blackadder Says:

In fact, just about every argument I've ever heard in the mainstream debate on health care, coming from the anti-ObamaCare side, would be ruled inadmissible.

Really? I read your blog pretty regularly. It's not simply an endless series of posts saying "taxation is theft; nuff said." When you present arguments against TARP or ObamaCare or whatever, they are typically the sorts of arguments that someone could accept even if they had no principled objection to "socialism" but was just interested in what works best.
I'm a minarchist, I guess. All I can say is that NO ONE argues about what to do with a fire in a home--you put it out as quickly as possible, period. Therefore, we can all agree what a public or private fire department should do and easily agree on measurements of its effectiveness. Same with water supply and sanitation--there are very distinct parameters of acceptability in these services. There are some things so no-brainer that even the government can do!

For health care, there are often many different opinions and treatments for any given illness. It's too complicated for efficient centralized control.

Hey, I think I'm following Mises here because I'm saying that the more complicated a product or service is, the more you need the free market to provide it.

So this would be exactly the opposite of what government officials do on their jobs. The right thing would be to release control as things get complicated, but they actually take more and more control. We need a little cognitive behavioral therapy for all our representatives--like they do for people who are afraid to fly in airplanes or get their cavities filled--lol!
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