Monthly Archives: June 2007

The One Minute Case Against Socialized Healthcare

There is no right to healthcare

The United States was founded with the declaration that all men have the right to “life, liberty, and the pursuit of happiness.” The Founders recognized that all men have a moral right to be free from the coercion of others, as long as they allow others the same freedom. They believed that rights do not impose a positive obligation on others, but only the negative obligation to restrain from the initiation of force.

The claim that there is a “right to healthcare” violates the principle of individual rights because it requires that the liberty of doctors and the property of taxpayers be violated to provide for others.

The myth of “free” healthcare

It is a common belief that when government provides something, it is free or cheap. But politicians cannot create wealth – they can only redistribute it. Money for all government spending comes from business – whether by entrepreneurial investment, the wages of patients, or taxes.

Whether by price controls of outright nationalization, when governments make prices artificially low, demand skyrockets, and shortages result. Politicians respond by passing ever more regulations to control costs. These regulations stifle innovation, drive up costs, and force healthcare providers out of business. The end result is to replace capitalism, the greatest wealth-generating system known to man, with an onerous system of central planning.

Capitalism cannot guarantee that all our medical needs will be provided for – no system can do that. But it does give entrepreneurs the incentive to compete to provide the best possible service they can. Centralized socialized systems have no incentive to improve service or to try bold new techniques. Politicians can force prices to be artificially low, but they cannot lower costs – they can only drive doctors, hospitals, and drug companies out of business.

The victims of “universal” healthcare

The waiting time for treatment in Canada varies from 14 to 30 weeks. Waiting lists for diagnostic procedures range from two to 24 weeks. Some patients die while waiting for treatment. To stop sick people from circumventing the “free” system, the government of British Columbia enacted Bill 82 in 2003, which makes it illegal to pay for private surgery. Patients waiting for critical procedures are now forced to seek procedures in the U.S. and doctors are abandoning Canada in droves. Cleveland, Ohio is now Canada’s hip-replacement center. Ontario is turning nurses into doctors to replace some of the 10,000 doctors who left Canada in the 1990’s. 1 2

What will patients do when it is illegal to seek private medical treatment in the U.S.? Politicians are already working towards that goal. State and federal regulation impose onerous regulations which forbid insurance companies from offering services such as basic coverage for emergencies by requiring coverage of many types of procedures. Medicare forces doctors to follow 130,000 pages of regulations. Critics often attack the “capitalist” nature of American health care system. The reality is that the government now pays for 50% of health care, and closely regulates the rest.

Healthcare is only affordable under capitalism

If a society is not wealthy enough to afford healthcare, health socialism will not make it richer. Cuba, a poster child of socialist healthcare schemes, spends $229 on healthcare per person each year, while the U.S. spends $ 6,096.3 Premium services are available only to paying foreigners, while natives must bribe doctors for timely treatment and bring their own towels, bed sheets, soap, food, and even sutures.4

A government can decide to replace individual choice with state-mandated decisions of what goods and services are more important for the “common good.” But it can only spend on one area at the expense of another. If Cubans are not totally deprived of medical treatment, it can only be at the expense of all other goods. A doctor’s salary in Cuba is 1.5 times the median at $15-20 per month. 5 A telling sign of their deprivation is the Cuban suicide rate, which is the highest in Latin America and among the highest in world. Cubans in Miami on the other hand, kill themselves less often than other Miamians.6 When they risk their lives in leaky boats to escape to the U.S., the right to make their own decisions regarding their health is among the freedoms they hope to gain.

References:

  1. “Free Health Care in Canada” by Walter Williams
  2. “Do We Want Socialized Medicine?” by Walter Williams
  3. Reuters: Health care in Cuba more complicated than on SiCKO
  4. BBC: Keeping Cuba Healthy by John Harris
  5. “An Evaluation of Four Decades of Cuban Healthcare” by Felipe Eduardo Sixto (PDF)
  6. Miami Herald: “Study: Suicide epidemic exists under Castro” by Juan O. Tamayo

Further reading:

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The One Minute Case Against Affirmative Action

Affirmative Action is racism

Affirmative action refers to a collection of policies intended to promote access to education and employment for minorities and women. In an attempt to guarantee such opportunities, government enforced and voluntary programs impose an assortment of racial criteria on businesses, public offices and universities. Compliance with these programs can often cost hundreds of thousands of dollars in legal and consultant fees as well as significant opportunity costs when organizations are forced make decisions based on race and gender instead of merit.

The underlying evil of all affirmative action programs is that individuals are categorized by their race. This principle inevitably prolongs racism. This is why an anxiety of appearing racist amongst white males is very common in the United States compared to their European counterparts, and why corporations desperately seek to present themselves as non-discriminating and careers are shattered by unjust accusations of racism.

Affirmative Action hurts employers

There are two kinds of jobs affected by affirmative action policies. The first are employment opportunities which seek individuals who possess a minimum set of skills. Some examples include factory workers, cashiers and food service workers. Such affirmative action policies make it more difficult for individuals from non-protected groups to be considered for a position.

Another kind of employment opportunity seeks the best possible candidate for the job. This category includes professorships, managerial and engineering jobs. In order to avoid the appearance of racism, consultancy groups may reluctantly employ an analyst who they know will not produce as many great ideas, hospitals may reluctantly employ a surgeon who they know will not be as effective in the ER, and universities will admit students who they know will not be as diligent.

Affirmative Action hurts employees

Because employment opportunities are given to less qualified, there will be less remaining opportunities awarded to the most qualified. Thus, applicants who don’t belong to a legally protected “under-represented” group compete for fewer positions and therefore face more exclusive standards for selection. As many high school graduates know, SAT scores and GPA requirements for admission to the most competitive of universities are seemingly higher for students of East Asian or East Indian descent. 1

Affirmative Action hurts minorities

A high school student with a below average academic record is likely to be a below average college student. Thus, students admitted through minority recruiting programs often end up in remedial classes with mediocre academic performance. Through simple cause and effect, affirmative action programs prolong the stereotype of minority students finishing near the bottom of their class by encouraging enrollment in universities beyond an appropriate level of difficulty. According to a federal study, just 39% of enrolled black students finish their degrees compared to 54% of white students. 2 Attending a university where the pace of learning is too difficult is just as counterproductive as attempting to lift too much weight at the gym.
The insistence on relaxed admission standards for minority students insinuates that such students are incapable of succeeding without such programs. This insult casts a permanent doubt on the real achievements of high-achieving minorities.

Affirmative Action must end

Dr. Martin Luther King Jr. dreamed that one day we would live in a society where individuals would be judged by their character and not the color of their skin. The affirmative action policies of today are both unnecessary and detrimental to minority success. Moreover, they are significant barriers to the establishment of a racially-blind meritocratic society. Justice for all requires the end of affirmative action.

References:

  1. Syracuse University – Office of Multicultural Affairs
  2. MSNBC: U.S. college drop-out rate sparks concer

Further reading:

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The One Minute Case Against Software Patents

The cost of software patents

One prominent form of patent abuse is “submarine patents” – patents which lie dormant until someone discovers their similarity to a popular technology. The patent on the GIF image format surfaced a decade after its widespread adoption on the web. The Eolas patent on web browser plug-ins cost Microsoft $521 million and forced tens of millions of web pages to be crippled or redesigned. The RIM patent cost Blackberry $612.5 million and nearly shut down service to millions of people despite the patent itself being invalidated.

Software patents are becoming a major threat to the software industry. The risk of software patent lawsuits forces software companies to obtain defensive patents in order to obtain cross-licensing agreements and discourage patent lawsuits through the threat of counter- suits. An entire industry of patent trolls extorts businesses with bogus patents by taking advantage of the fact that many businesses prefer to pay licensing fees than go to court.

The problem of software patent enforcement

A software algorithm is an abstract description of a general way to solve a problem, such as a mathematical formula. Many algorithms are popular because programmers have found them to be useful in different fields. Algorithms, such as sorting lists and organizing shopping carts are widely recognized as non-patentable. But how can one distinguish obvious ideas from patentable ones? Does the application of an existing algorithm to a new field deserve a patent?

Software patents cripple software development

Software patents make software development risky because it is so difficult to know whether an idea has been implemented before. Over the years, millions of software programs have been written using billions of algorithms. Is it not feasible to have to study thousands of patents to make sure one does not violate the rights of others, while at the same time designing an integrated product. As a consequence, innovative companies are faced with the constant threat of discontinuing products or paying enormous amounts.

The success of companies such as Microsoft, Oracle, SAP, and Apple was not due to monopolizing certain features, but on continually improving on each other’s innovations. In a 1991 memo, Bill Gates wrote

If people had understood how patents would be granted when most of today’s ideas were invented and had taken out patents, the industry would be at a complete standstill today…The solution is patenting as much as we can. A future startup with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high. Established companies have an interest in excluding future competitors.

Copyrights are a superior alternative to software patents

The same legal principle that protects a book, song, or painting, automatically protects computer programs by forbidding copying or close paraphrasing of the code. Copyrights are straightforward to enforce because it is easy to identify what is being protected: a particular implementation of a set of algorithms to solve a problem, rather than the algorithm itself. They have the advantage of being automatic, free, and only useful against criminals. Copyrights allow the abstract ideas behind a software problem to be created by anyone, but protect an implementation of those ideas in concrete form, so developers who implement their own ideas do not have to worry that someone will put them out of business.

The protection of property rights requires standards that can be objectively enforced. Attempts to protect rights without the guideline of objective criteria will only violate real rights and nullify the benefit of protection.

Further reading:

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The One Minute Case Against “Net Neutrality”

What is “net neutrality?”

To borrow Senator Ted Stevens’s infamous analogy of the Internet to a series of tubes, imagine a network of pipes connected by switching stations. The width of a pipe (bandwidth) determines the volume of messages (packets) than can be sent through it. Packets arriving at a switching station wait in a queue until they can be forwarded to their destination. The pipe’s diameter and the volume of traffic determines the total time (latency) that messages take to reach their destination.

Advocates of “net neutrality” argue against the right of the owners of the pipes (Internet Service Providers) to discriminate between different messages or to charge recipients of messages. So for example, an ISP would not be able to favor telephone calls sent over the net over movie downloads, or charge Google extra for the traffic sent their way, or to block a business if it competes with their own services, or to block malicious or illegal websites. Implementation of such regulations would require government surveillance of Internet traffic and FCC approval of new technologies and services which might violate “neutrality.”

Regulation stifles innovation

The limitations of the original Internet protocols became apparent as it transitioned from a monopoly network designed for government use to a competitive and decentralized marketplace. One limitation is the lack of ability to prioritize certain kinds of traffic. Different kinds of communications have different bandwidth requirements. Watching movies over the web is bandwidth-intensive, but not time-critical. Teleconferences are both bandwidth intensive and time critical. Some applications like remote surgery and other time-critical services are simply impossible over the public Internet with current technology.

Advances in technology are beginning to allow traffic to be analyzed in the process of transmission, so certain traffic, such as real-time video can be prioritized, while other traffic such as file sharing or spam can be given a lower priority or dropped. Along with dramatic increases in speed and performance, technological innovation is making entirely new kinds of services possible.

Net neutrality advocates want the government to regulate how ISP’s may and may not route traffic. Pressure groups such as consumer activist groups, major websites, small ISPs, and Internet backbone providers are fighting for controls that favor them. Once the precedent of regulation is established, competition will shift to passing the most favorable legislation rather than providing the best technology and service.

Regulations breed more regulations

While communications technology has experienced exponential growth, heavily regulated and monopolized consumer phone and cable providers have been slower to improve services. Consumers fed up with expensive cable and DSL services are demanding more government controls over the pricing and behavior of their ISP’s. They argue that regulations are necessary because telecommunications companies receive monopoly privileges and other benefits from the government. But the lesson they should learn is the opposite – regulations create the need for more regulations. The solution is to abolish coercive monopolies for cable and phone service providers and allow free and open competition.

The Internet is possible because many private networks find it in their mutual self-interest to cooperate and share traffic loads. When inequalities arise, networks compensate each other for the extra load. “Neutrality” regulations force companies to act against their self-interest, inevitably leading them to complain to Congress to impose ever more detailed controls to maintain “fairness.”

The Internet is private property

The Internet is not public property. Telecommunications companies have spent billions of dollars on network infrastructure all over the world. They did so in the hope of selling communications services to customers willing to pay for them. The government has no right to effectively nationalize ISP’s by telling them how run their networks.

Proponents of a mixed economy like to invent hypothetical scenarios of ways companies could abuse customers. It is true that a free society gives people the freedom to be stupid, wrong, and malicious. The great thing about capitalism is that it also gives people the freedom for the most consumer-friendly business to win.  A regulated Internet takes away that freedom and turn it over to politicians and lobbyists.   History shows that most attempts to improve outcomes by regulating markets worsen the very problems they were intended to solve.    That is how the USA ended up with the current overpriced, monopolistic oligopoly providers.  Why do “net neutrality” advocates ridicule politicians for comparing the Internet to a “series of tubes,” and then trust them to regulate it?

Real solutions to a better Internet 

  • End local Internet monopolies which prevent small ISPs from being successful
  • Remove local and federal (FCC) regulations which prevent all but the most powerful corporations from providing telecom services
  • Allow ISPs to innovate in by forcing cities to open up their infrastructure  without the threat that their business model will be nationalized or regulated out of existence.
  • Give capitalism and free markets a chance – America has already tried everything else

Further reading:

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The One Minute Case For Privatizing Education

Public schools are immoral

The title “public schools” is misleading. In almost all cases, these schools are run by the government, taught with government mandated curricula and run in a top-down fashion from state and local bureaucrats. “Government schools” is a more appropriate title.

All citizens are forced to contribute thousands of dollars towards government education through taxation regardless of their usage. Parents who home school or send their children to a private institution must pay for education twice. Because the government maintains a coercive monopoly in the education market, it is extraordinarily difficult for private institutions to compete when children can be enrolled at a government school at no marginal cost.

Furthermore, parents have the right to choose a school based on its overarching philosophy and its academic focus. Instead, parents must contribute to institutions that teach sexual harassment to primary school children, present creationism alongside with evolution or pledge to leave “no child left behind” even if it stunts the education of the more motivated children.

Government schools don’t work

By financially crippling their competition, government schools can afford to offer a lackadaisical education. A shocking number of high school graduates are illiterate and an embarrassing number struggle to write complete, coherent sentences. Worst of all, students do not learn how to think. Graduates typically have strong opinions on political and moral issues but are unable to offer a cogent argument for their convictions.

Government schools can’t hire quality teachers

Government schools can also afford to maintain a sub-standard workforce. Tenure is a system that rewards teachers who have seniority and play office politics. Tenured educators have an enormous amount of job security regardless of their competence. Terminating a tenured teacher’s contract is an elaborate, costly process as teachers’ unions invariably litigate the decision. Not only does this encourage retention of mediocre teachers but this also removes the incentive for educators to continue to develop new skills.

Moreover, the current near monopoly also cripples employment opportunities for educators. Not only are positions limited, but salaries are also dictated by bureaucrats and lobbyists, not the market. Public schools cannot offer merit-based salaries to attract more qualified professionals.

Government schools can’t compete with private school

Because they are immune from market pressures, government schools can also afford to allow costs to balloon to inexcusable proportions as costs of education are included in taxes and inflation. Washington DC spends over $12,000 per student each year – the highest cost in the nation. It also happens to have the lowest public school test scores of any state in the nation. A good private school will start at $8,000- $10,000 per year – so the median income DC resident would have to pay $22,000 to send one child to private school. Nationwide, public school teachers are almost twice as likely as other parents to choose private schools for their own children, a study by the Thomas B. Fordham Institute found.

Privatizing education benefits everyone

A common misconception is that privatizing education will only benefit the wealthy. This is wrong. Removing government controls on schools will raise the standard of education for everyone.

Even if one insists on government subsidized education, children from impoverished backgrounds will be immeasurably better off if given a voucher to attend a private academy of their choice. This is portended by the successful programs in Milwuakee, Cleveland and Washington D.C. Although vouchers are an improvement, a direct tax credit for education would be far superior as it requires even less interference on the economy.

Further reading:

  • Market Education: The Unknown History by Andrew Coulson
  • Leonard Peikoff. “The American School: Why Johnny Can’t Think” in The Voice of Reason: Essays in Objectivist Thought. (Also on CD)
  • Tax Credits for Education by Ayn Rand, The Voice of Reason: Essays in Objectivist Thought.
  • Inside American Education by Thomas Sowell

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The One Minute Case Against Environmentalism

Environmentalism versus humanity

The premise behind the environmentalist movement is the belief that nature untouched by human influence has inherent moral value independently of its benefit to mankind, and therefore the influence of man, and especially that of industrial civilization, is immoral. What leading environmentalists oppose is not the threat to human life posed by environmental destruction, but man’s exploitation of nature to improve its ability to sustain human life.

In the words of popular environmentalist Bill McKibben, “The problem is that nature, the independent force that has surrounded us since our earliest days, cannot coexist with our numbers and our habits. We may well be able to create a world that can support our numbers and our habits, but it will be an artificial world. . . .” The environmentalist attack on the “artificial” extends to all human manipulation of the environment. While few advocates of environmentalism recognize it as such, the ultimate goal of the environmentalist movement is the total destruction of industrial civilization, and the vast majority of the human race whose existence is made possible by it.

Environmentalism versus the mind

Human beings have evolved over millions of years to survive by using their reasoning mind. There is nothing “unnatural” about this. It is human nature to think and use technology to enrich our lives. We are as much a part of the “natural world” as any other creature. Instead of claws, fangs, or the heightened senses of animals, we have our minds and hands.The difference between our comfortable lives and the short, dangerous, and miserable existence that our ancestors eked out in trees, caves, and caverns is continually made possible by application of reason to the problem of survival.

Shackling man’s mind by preventing him from applying it to improve his condition would ultimately lead to our extinction. The genetic and biochemical tools which made the Green Revolution possible feed billions of people today. Farming machinery feeds billions more. Undoing the industrial revolution would eliminate the vast majority of productivity improvements in agricultural production and distribution. To the extent that we cripple technology, we cripple our ability to exist as human beings.

Capitalism is the solution to environmental destruction

The usual response to environmental destruction is a call for more government controls of industry. However it is the lack of property rights, not capitalism which is responsible for environmental destruction, as the history of socialist states aptly demonstrates.1

According to Roy Cordato2,

Environmental problems occur because property rights, a requirement of free markets, are not being identified or enforced. Problems of air, river, and ocean pollution are all due to a lack of private property rights and/or protection. Since clarifying and enforcing property rights is the basic function of government in a free society, environmental problems are an example of government failure, not market failure.

In a free society, environmental problems should be viewed in terms of how they impinge on human liberty. Questions should focus on how and why one person’s use of resources might interfere with the planning and the decision making abilities of others. Since, legitimately, people can only make plans and decisions with respect to resources that they have “rights” to, environmentalism that has human wellbeing as the focus of its analysis, must center on property rights.

Even if some environmental dangers are real, we would be much better equipped to deal with them by embracing prosperity and technological progress than surrendering to the indisputable danger of nature to those who give up their primary means of survival. As Ayn Rand put it,3

City smog and filthy rivers are not good for men (though they are not the kind of danger that the ecological panic-mongers proclaim them to be). This is a scientific, technological problem—not a political one—and it can be solved only by technology. Even if smog were a risk to human life, we must remember that life in nature, without technology, is whole-sale death.

If a court can make a definitive causal connection between an injured party and a party responsible for a pollutant, it should demand compensation of harms. If it cannot find a responsible party guilty, but punishes an innocent party, it punishes man for his nature as a productive, industrial being and thus makes human life impossible.

References:

  1. Thomas J. DiLorenzo. “Why Socialism Causes Pollution” The Freeman: Ideas on Liberty, March 1992.
  2. Roy E. Cordato. “Market Based Environmentalism vs. the Free Market” June 4, 1999
  3. Ayn Rand. “The Anti-Industrial Revolution,” Return of the Primitive, 282. 1971

Further reading:

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The One Minute Case For “Price Gouging”

“Price gouging” is a derogatory term for “unfair” prices on goods, typically in an emergency.The problem is that the perception of “unfairness” is totally arbitrary and stems from an ignorance of basic economics.Rather than create “fair” outcomes, “price gouging” regulations create the very problems they are supposed to solve.

What are prices?

A price is the value demanded by a seller in exchange for a good.The money paid for goods makes production of more goods possible.When the demand for a good suddenly goes up or the supply goes down, sellers raise prices to avoid a shortage.Higher prices cause consumers to limit their consumption.Higher profits pay for money to be invested in expanding production, and encourage other producers to redirect production from other uses to the goods most urgently demanded.

The disastrous effects of price controls during disasters

Consider what happens when politicians attempt to control a run on gas precipitated by an imminent hurricane:

When price controls are imposed, the market’s ability to respond to an emergency is paralyzed  Rather than distributing gas to those who value it the most, products are distributed to those who buy it first. This encourages those with time to wait in endless lines, or the most panicky individuals to rush to fill up their cars at the first sign of trouble. Runs begun whenever a minority of people expects a rapid increases in demand, and the entire stock is quickly consumed by a few.

Whereas a free market would quickly respond to higher prices by shifting supply to the stricken area, outside sellers have no incentive to make an effort to bring additional supplies to the stricken area when prices are fixed. To recoup the higher costs of delivering gas in emergencies and offset the risk of a run, gas stations keep prices at a higher overall level for a longer time.

Price gouging saves lives

Absent price controls, gas stations raise prices in an emergency to a level where everyone who is willing to pay the new price is able to buy gas.Badly needed resources are delivered to those who need them most.Rather than buying out stocks, consumers ration usage of expensive goods.Those in the most vulnerable areas are able to pay a higher price for the gas they desperately need, while individuals who are less vulnerable wait until stocks are replenished.

Price gouging remedies shortages

In addition to distributing existing stocks more efficiently, high profits pay for the higher cost of delivering supplies to a dangerous area.They also encourage stocks in other locations to be redirected to where they are most needed.The market’s natural response to shortages is far superior to government planning of how much of everything is needed and where. This was aptly demonstrated after Hurricane Katrina, when FEMA paid truckers exorbitant amounts to ship thousands of tons of badly-needed ice around the country before finally throwing it out.

Price gouging is the best solution to price gouging

A rapid price increase in anticipation of an emergency reassures buyers that supplies will be available if necessary, resolving the problem of runs caused by false alarms. In the long run, a high price on gas during an emergency encourages consumers to be better prepared for emergencies and find alternate means of transportation and encourages and pays for suppliers to increase production.Rather than face dry pumps during emergencies, consumers in vulnerable regions will pay a slightly higher price for fuel stations and stores to maintain higher reserves.Ultimately, the market’s natural response to shortages dampens price increases and shortens waiting lines.

Further reading:

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