The One Minute Case

Recent studies have shown that in the U.S., 56% of middle school students and 70% of high school students have cheated.^[1] Why is cheating on the rise?  The best place to start analyzing this question is to look at the issue from the perspective of the individual student.  What reasons does he consider for and against cheating?

For most people, the decision to cheat or not is guided primarily by emotion.  Does the feeling of guilt exceed the feeling of satisfaction he will receive from getting an A?  But emotions are ultimately based on one’s values and ideas.  The predominant idea behind cheating is that morality is a conflict of self-interest versus self-sacrifice.  Cheating is the “selfish” thing to do, and confers an advantage in class and in life.  The “right” thing to, whether justified by promises of divine reward, utilitarian considerations, or a vague appeal to social harmony, requires an immediate personal sacrifice.  In such a conflict, the “moral” choice is understandably difficult for students to justify.  Without rational ideas to justify honesty and integrity, hard-working and “practical” students believe that morality only holds them back from success in life, and that they can “play by the rules” once they are out of school, and give lip-service to morality when it comes to more abstract and non-practical matters.

This is a grievous error is created by bad philosophy.  The lesson that students need to learn is that the choice between the practical and the moral is a false dichotomy.  Morality is the means to a successful life, not an impediment.  Teaching the practical, selfish value of honesty is the best way to discourage cheating.

The primary purpose of an education is to provide the practical knowledge and thinking skills that allow success in life and career. Cheating erodes both those goals. In a career, success of failure has material consequences on one’s work and the people it affects.  A grade on a biology exam is just a number, but a doctor who takes shortcuts with patients, or a construction engineer who takes shortcuts with buildings endangers both his career and other people’s lives.  The ultimate goal of education is not a piece of paper, but practical skills and knowledge, and cheating deprives oneself of that knowledge.  Whatever immediate benefit cheating provides is outweighed by the long-term harm.  Educators need to stress the practical value of their lessons, and the harm students do to themselves when they forfeit their education.

Even though it is an attempt to deceive others, cheating is a form of self-deception as well.  Cheating to get ahead will cause oneself to lose a grasp of what his skills actually are.  Someone who cheats on a quiz will find out that he is unprepared for the final.  Students who cheat in an entry-level class will find themselves helpless in higher-level classes. The more a student cheats, the more ignorant he becomes of his actual knowledge.  The more he gets ahead by his falsehoods, the harder he has to work to keep up his un-earned position.  Even if his dishonestly-obtained diploma gets his dream job, he will still be unqualified for it, and forced to continue his deception at work.  He will attempt to hide his inadequacy from co-workers and bosses just as he hid it from classmates and professors.  Cheating is an addictive habit that will surely destroy a career even if it does not (publicly) destroy an education.

Honest peers compete on the basis of their skill and hard work.  Their mutual excellence inspires and motivates each other to success.  Classmates and coworkers who cheat on the other hand, compete by the standard of who is the better liar.  They lose focus of the purpose of their education or career, and try to outdo the audacity of each other’s frauds.  Their peers do not inspire and motivate them, but present the constant threat of having their lies unmasked.  As they lose sight of their real goals, they will find themselves slipping behind.

The solution to the rise of cheating is not to attempt to instill a vague sense of moral guilt, but to explain and demonstrate that cheating is counter-productive and self-destructive.  Honesty does not require guilt or the threat of worldly or divine punishment.  Instead, ambition, integrity, and pride should guide one to success.

Sources

1. Wilfried Decoo, Crisis on Campus: Confronting Academic Misconduct (Cambridge, Mass.: MIT Press, 2002), 23.

What is the problem?

The growing use of non-lethal weapons such as tasers by the police has to calls to ban or restrict their use. The real issue being debated is the extent to which police officers should risk their safety to detain suspects. Should they only use force when someone’s life is in danger, or to avoid the risk of injury when attempting to tackle a suspect, or to avoid a sprain from having to run after someone? It is likely that further debate will result in a consensus enforced by the legislative and judicial branches of government. But what criteria should be used to determine the level of risk that police officers may be exposed to before using force?

Under the current system, police officers are only held responsible for injuring others only if found guilty of a miscarriage of justice, that is, willful malice or negligent behavior in the performance of their job. This provides an incentive for the judicial branch to minimize liability by maximizing the leeway officers have in deciding whether to use force. Furthermore, establishing standards for proper police procedure is a highly-non objective process, based on factors such as the public’s fear of police brutality, their desire for safety, the cost of lawsuits from police actions, and the political gain politicians find from pushing more or less draconian policies. One means of improving on this process is to establish a strict liability criteria for police actions.

What is strict liability?

Under a strict liability standard, it is not necessary to find a party guilty of malice or negligence, only of fault. Perpetrators of damages arising from inherently dangerous activities are responsible for damages regardless of whether they acted improperly. For instance, drivers at fault for damaging another car or injuring a driver are held financially responsible regardless of whether they acted maliciously or negligently. Under strict liability, a police agency would be held responsible for personal injury and property damage if an officer injures an innocent suspect, or unnecessarily injures a criminal — even if the officer acted properly in the performance of his duty. For example, an officer who fires at a guilty suspect who poses a real threat would not be liable, but an officer who fires at a suspect who does not pose a threat will be held liable for damages whether the officer is guilty of a miscarriage of duty or simply made an error in judgment. Furthermore, such a system would repay defendants who are exonerated at trial for their time and suffering.

Strict liability shifts incentives to the party best qualified to control costs

One objection to the strict liability standard is that it would greatly increase the financial risk faced by police departments and courts. However, by placing the burden of minimizing costs on the judicial agency, a strong incentive is created to minimize mistakes - and therefore costs. It is likely that police departments would attempt to insure themselves against risk, and the insurance agents would in turn establish guidelines that seek to minimize their risk. Such guidelines may ban tasers because of their health dangers - or they may require them in most situations where deadly weapons were formerly employed. Police agencies may prefer to hire men because they would find it easier to tackle suspects (and thus avoid a major incentive for taser use) or women because they are better at resolving conflicts peacefully. Because they would bear the cost of mistakes, police agencies would be motivated to experiment on the most effective way to perform their jobs, while the public they protect would be financially shielded from their mistakes by a strict liability standard.

Strict liability discourages prosecution of victimless crimes

Another objection to strict liability under the current legal framework is that it would make police agencies averse to enforcing laws that are prone to mistakes or unsuccessful prosecutions - namely, those known as “victimless crimes.” Adultery, gambling, homosexuality, and the trade of illicit substances and goods are areas where the lack of a victim makes errors in suspect identification and successful prosecutions especially likely. This is especially true of laws pushed by vocal voters on unwilling recipients - for example, communities that favor drug or alcohol prohibition on communities that tolerate drug and alcohol users. Yet this only illustrates the insulation of government policies (and by extension taxpayers) from the cost of economically expensive (and thus socially destructive) laws. If enforcement agencies are required to pay for their mistakes, they will favor laws that can be objectively enforced, and violations of which result in victims pushing for enforcement.

Further reading

• Civil Liability for Government Wrongdoing

The Austrian Business Cycle Theory was developed by the economist Ludwig von Mises to explain the phenomenon of business cycles. It provides crucial insight for understanding the cause of cyclical boom/bust cycles and their connection the government’s manipulation of the economy. To understand the Austrian Business Cycle Theory, an analogy is helpful:

Imagine an economy with just one actor: Robinson Crusoe on an island. Crusoe loves fish, so he spends half of each day fishing so he can enjoy fish in the evenings. Additionally, Crusoe spends Friday mornings maintaining his fishing dinghy and nets. In order to have fish on Friday, he must fish for an extra hour every other day of the week. In economic terms, Crusoe has a savings rate of one hour per day, or 22.5%. His savings rate is also his investment rate, or the percentage of present income he sets aside to maintain or increase future consumption.¹

Crusoe doesn’t have a fridge, so he preserves his catch by throwing it in a small, dark pond. He can’t see how many fish are in the pond, so he keeps a stack of small rocks near it. Every time he adds a fish, he adds a rock, and every time he eats one, he removes one. The rocks are his money supply.

Suppose that Crusoe shares the island with some mischievous monkeys, who see Crusoe adding rocks to his pile. They decide to imitate him, so every time Crusoe ads a rock, they sneak in and add one as well. The monkeys are inflating the money supply by injecting currency into Crusoe’s investment fund.²

One day, Crusoe suddenly notices that his “savings rate” of fish is double the usual. He decides to compensate by eating some of the fish he catches during the “savings hour.” This is the consumption-side of the boom phase of the business cycle. Crusoe also decides to take some extra time each day to start building himself a new hut. This is the investment-side of the boom phase of the business cycle.

Crusoe now believes that the cost of saving fish is half the usual, while in fact his savings rate is too low for the investments he is planning.

Before long, Friday comes around. When it comes time to eat his midday meal, Crusoe suddenly realizes that he’s out of fish - despite having a surplus of rocks. He’s exhausted his investment capital because the additional currency snuck into his money supply did not represent a real increase in his productivity or savings rate. He doesn’t have the capital (fish) to maintain his previous consumption rate, much less increase it. He is forced to cut his investment rate (he must spend some of his Friday fishing) just to have some fish for Friday’s dinner. He must also abandon his incomplete hut because he does not have the time to finish it. The abandoned hut is an extravagant expenditure that represents a loss of capital.³ This is the bust phase of the business cycle.

To review, here’s the overall impact of the monkey’s trickery: Sunday-Friday, Crusoe catches the same number of fish, but consumes more, and therefore saves less. That’s the boom period. Friday, Crusoe consumes less fish, and spends less time for maintaining his nets (capital). Some of his investment/consumption time must now be spent in production. That’s the bust period. If Crusoe’s initial savings rate allows him to just break even each week ⁴, his nets will gradually get worse and worse and he will eventually go hungry.⁵

Notes

1. Crusoe prefers to enjoy his fish sooner rather than later, but he is willing to put aside some of his catch to get more fish later. The discount he gives to eating a fish Friday is his time preference, or his originary interest rate. (To that, he adds the risk that the fish will spoil by Friday to get the market or “real” interest rate.)
2. As long as the monkeys keep contributing one stone for every fish, Crusoe can account for their trickery. But if the monkeys are unpredictable, it will be impossible for Crusoe to set the proper savings rate.In the real world, the originary interest rate reflects the average time preference of all savers. If someone starts monkeying around with the interest rates, it becomes impossible for investors (or the monkeys at the Fed) to know what the real rate of savings is even if they know that the rate is being manipulated.
3. That abandoned hut represents investments which exceed the ability of the actual savings rate to complete. The resources it takes to build compete with worthwhile investments (such as repairing the fishing nets) by raising the prices for all capital. Ridiculous business models and sky-high salaries during the dot-com boom, as well as over-extended sub-prime mortgages likewise compete with legitimate business models, salaries, and mortgages. Manipulating the money supply makes it difficult to distinguish bad investments from good ones, so no one can escape the inevitable crunch.
4. That is, zero net profit, an equilibrium rate of savings, or “the evenly rotating economy” in Mises’ terminology.
5. Suppose Crusoe decides to ignore his hunger and work on his nets all Friday. In other words, he trades current production (and therefore consumption) for higher future consumption (that is, economic growth). If he does so voluntarily, there’s nothing wrong with that. But there’s nothing inherently more desirable or efficient in spending some of one’s time starving just to increase future production (that is, in valuing economic growth over present consumption.) Note that the longer Crusoe delays the shift back to production, the more severe the miss-allocation of resources (and his hunger) becomes. The monkey’s trickery does not actually make Crusoe to become a better saver – he is more likely to start saving less because of uncertainty over the future.

Further reading

• Austrian Business Cycle Theory: A Brief Explanation
• The Austrian Business Cycle Theory at Mises.org

Why defend advertising?

While the abundance of advertising is usually viewed as a sign of the vitality of capitalism, it is nevertheless under a near-universal assault by intellectuals. Because advertising “blatantly and unapologetically appeals to the self interest of consumers for the blatant and selfish gain of capitalists”¹, attacks on advertising are an assault on capitalism and ethical egoism. Arguments against advertising usually take two forms: the argument is that advertising is economically inefficient and the argument that advertising is somehow coercive. ²

The myth of “perfect competition”

Most economic arguments against advertising derive from the theory of “perfect competition, ” which is an ideal state against which markets are to be judged. This state is characterized by homogeneous products, relatively small sellers without monopoly power, prices which approach the cost of goods, consumers who have perfect information about all products and prices, and no entry costs to markets.

Advertising violates all these conditions, mainstream economists argue. Advertising seeks to establish product loyalty, and therefore to make certain brands more valuable than others. This creates barriers to entry by giving companies monopoly privileges, and allows them to price goods above cost. Furthermore, advertising is an imperfect and biased way of communicating product information to consumers. Finally, advertising retards progress by making it more expensive for new producers to enter the market.

In the real world, markets work quite differently: the essential characteristic of capitalism is the entrepreneurs who invest capital in new services, products, technologies, and businesses models. When their predictions are right, they gain a temporary advantage over their competition and turn a profit; when they are wrong, they take a loss. Success in business requires continual insight into which investments will prove profitable.

Rather than being a barrier to entry, advertising makes competition possible. New businesses and products stimulate demand by announcing their benefits to consumers. Expanding demand makes goods cheaper by creating economies of scale. While advertising is often attacked for creating demand for shoddy goods, it is not sufficient to advertise to gain consumer loyalty - only positive customer experience and continued positive goodwill can do that. Advertising is what allows new market entrants to capitalize on consumer dissatisfaction and dislodge established firms, as Japanese auto makers did when they demonstrated the superior value and quality of their cars over American ones.

The perfect competition model assumes that competing companies automatically lower prices to match their competitors. In reality, no business wants to lower prices unless consumers expect them - and it is advertising which performs that role by educating consumers about the competition. Advertising itself is a check on high advertising budgets: as consumers become more educated, competitive pressure creates price wars which force businesses to minimize expenses. ³

Yet another criticism is that advertising is a biased method of consumer education. Yet the continued importance of advertising as an influence on buyers proves that the creator of a good is the party most qualified to communicate the value proposition it offers, whether directly or through an intermediary. While word-of-mouth reports and independent product testing organizations are essential sources of consumer education, competitive pressure through advertising provides the claims whose veracity they evaluate.

Advertising is non-coercive

Opponents of “consumerism” often claim that advertising creates its own demand. But a commercial cannot simply implant a desire in the viewer. Rather, advertising tells consumers how their existing values can be satisfied in a particular concrete form. Some advertisements seek to meet well-defined values: toothpaste for clean teeth. Others educate consumers about products which fill a specific need: sports drinks for athletes, or died colas for the health-conscious. Some advertising functions much like art, and present a concretization of highly abstract or subconscious values. For example, a sports car commercial may appeals to consumers who seek independence and efficiency, while a luxury sedan commercial might appeal to those who value comfort and elegance. Attacking advertising solely for appealing to emotions is as silly as criticizing a painting or a movie for appealing to the viewers’ emotion rather than presenting a dry, factual account.

Ultimately, advertising is a public appeal to the mutual self-interest of the seller and buyer. Movements to silence or limit advertising seek to regulate the freedom of the individual to voluntarily interact with others, and therefore are an assault on both freedom of speech and the right of association.

References:

1. Google Books: Jerry Kirkpatrick: In Defense of Advertising: Arguments from Reason, Ethical Egoism, and Laissez-Faire Capitalism.
2. The Five (Wrongheaded) Complaints against Advertising by Jerry Kirkpatrick
3. Persistently high advertising budgets are indications of high barriers to entry, usually due to government interference. For example, in the case of drug companies, the FDA forces drug makers to spend up to a billion dollars to deliver a single drug to market. This limits the drug market to all but the largest companies and most profitable medicines. Prescription drugs have large advertising budgets because the legal barriers to entry make it prohibitively expensive to compete on price or quality, or to appeal to smaller markets such as rare diseases.

Further reading:

• Advertising is Good Medicine by Wayne Dunn
• A philosophic defense of Advertising by Jerry Kirkpatrick
• The Concise Guide To Economics: Advertising

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. When the New Deal and Great Society programs forced doctors and taxpayers to become sacrificial offerings to the “common good”, the current “healthcare crisis” was born.

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:

• Moral Health Care vs. “Universal Health Care” by Lin Zinser and Dr. Paul Hsieh
• Health Care Is Not a Right by Leonard Peikoff, Ph.D.
• Health Care Is a Business—or Should Be by Richard E. Ralston
• Video: Unisured in America (Free Market Cure Documentary Series)
• Americans for Free Choice in Medicine
• FIRM: Freedom and Individual Rights in Medicine
• The “Cost” of Medical Care by Thomas Sowell
  
• Michael Moore’s Shticko by Michael C. Moynihan
• NY Times: “As Canada’s Slow-Motion Public Health System Falters, Private Medical Care Is Surging“
• The One Minute Case for Individual Rights

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:

• Microsoft takes on Linux
• Wikipedia: Arguments against software patents
• League for Programming Freedom: software patents
• The Letters of Thomas Jefferson: 1743-1826 No Patents on Ideas

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 net neutrality love 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 even malicious. The great thing about capitalism is that it also gives people the freedom to decide whom they want to do business with. A socialized Internet takes away that freedom and turn it over to politicians and lobbyists. Why do “net neutrality” advocates ridicule politicians for comparing the Internet to a “series of tubes,” and then trust them to regulate it?

Further reading:

• “A rational debate on Net Neutrality” by George Ou
• “Who Owns the Internet?” by Tim Swanson
• HandsOff.org: Hands Off the Internet
• NetCompetition: Debunking Net Neutrality Myths: A Series of One-Pagers

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.

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:

• The One Minute Case Against Global Warming Alarmism
• The Objectivism Wiki: Environmentalism
• The Ayn Rand Institute: Environmentalism and Animal Rights
• “Environmentalism as Religion” by Michael Crichton
• Earth4Man: Save The Earth From The Environmentalists
• JunkScience.com

“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 deleterious effects of price controls

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 hamstrung. Rather than distributing gas to those who value it the most, products are distributed to those who buy it first. This encourages those with political pull, the time to wait in endless lines, or simply the most cautious and 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. 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:

• Defining Gasoline Price ‘Gouging’ by Thomas Sowell
• Price Gouging Saves Lives by David M. Brown
• Real World Economics by Ed Lotterman
• The Myth of “Price-Gouging” by Alex Epstein
• Who Is Gouging Whom? by David Holcberg

What is technology?

Technology is the sum of material entities created by the application of mental and physical effort to nature in order to achieve some value. Technological progress is made possible by engineering, the field which applies scientific knowledge to solve practical problems by developing and applying new tools, machines, materials and processes.

The history of technology.

The evolution of technology has been a progression from reliance on physical effort to a growing role for the mind. The first tools, such as chisels and hammers, augmented raw muscle power. The creation of powered machines eliminated the reliance on muscle and allowed much more powerful mechanisms to be built than with human or animal power alone. The introduction of the automaton in the twentieth century embedded human knowledge in machinery. The trend continues as human beings improve their ability to exploit nature to meet their values through the use of automation and achieve more and more material values by mental effort.

Does technological progress cause unemployment?

In 1811, the Luddites became alarmed that technological innovations introduced by the Industrial Revolution threatened their livelihood. In a sense, they were right - most jobs that existed in 1811 have made superfluous by technology, and this process continues today. Yet outside of wage and price controls and other forms of interventionism, large-scale unemployment has never been a threat. Technology has not made most people permanently idle because it not only eliminates dreary, labor-intensive jobs, but also frees us to pursue more activities. The tremendous improvements in productivity that came with the Industrial and Information Revolutions gave us more free time and created opportunities to allow us to discover and pursue new passions. Highly repetitive agricultural and manufacturing jobs have been replaced by service industry and technical jobs. Entirely new institutions, such as professional and amateur sport leagues, museums, and online multiplayer clans have evolved as the public’s free time has grown.

Is technology good?

While the industrial revolution greatly improved the quality and longevity of human life, war and threat of nuclear annihilation have demonstrated the destructive power of technology. Rapid technological progress makes it likely that future inventions will increase both its creative and destructive potential. Yet there is reason to be optimistic that technology will be used for good.

While technology can be subverted and copied to serve evil, societies which enslave the human mind cannot sustain the capital stock or the intellectual base necessary for progress. Technological progress requires a society which values rationality, initiative, and voluntary cooperation. Most important is the need for freedom: inventors must be free to propose new ideas, and entrepreneurs must be free to turn them into reality. The failure of Fascism and Communism, and the success of the United States in the 20th century is a powerful testament to the power of a free society.

What is the future of technology?

Technological evolution follows two trends: the replacement of physical labor with more efficient mental labor, and the resulting greater degree of control over our natural environment, including our ability to transform raw materials into ever more complex and pliable products. This process culminates with man’s ability to achieve all of the material values technologically possible to him by mental effort. The growing importance of intellectual activity implies that intellectual property will become increasingly more important relative to material labor and physical goods. The current system of patent laws and copyrights will evolve dramatically as intellectual transactions evolve to meet the requirements of a civilization with rapid innovation on a global scale.

Further reading:

• Our Techno-Utopian Future: Fallacies and Predictions