Milton Friedman, gridlock, term limits, federalism, & making politicians behave

Milton Friedman explained that politicians “are in a business… competing with one another to get elected.”  Electing the “right” people, said the renowned economist, “isn’t the way you solve things. The way you solve things is by making it politically profitable for the wrong people to do the right things.”  Or at least make it unprofitable to do the wrong things.

Term limits are one step toward this goal. Term-limited legislators tend to seek office to address issues rather than personal goals, and are more independent of party politics and rent-seeking interest groups. Term limits would create a legislature of, by, and for the people rather than ruling class of career politicians detached from the private sector.  Several states limit legislators’ terms. The 22nd Amendment term-limited the President. U.S. Senators and Representatives should have similar term limits.

Another step is to restrain federal power by restoring state legislators’ influence on the federal government.  For example, repealing the 17th Amendment would allow state legislatures to once again elect Senators.

James Madison noted that having different constituencies electing the House and Senate provides an “additional impediment … against improper acts of legislation.”  As law professor Todd Zywicki notes, the 17th Amendment ushered in the era of legislation benefiting national special-interests at the expense of the people. For example, ObamaCare’s Medicaid expansion threatens to bankrupt states.

Law professor Randy Barnett‘s “Repeal Amendment” is another way to restore checks and balances. It would empower two-thirds of states to repeal any federal law or regulation.

This originally was printed in the Boulder Daily Camera on August 13, 2011.

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Thanks to Amanda Teresi of Liberty on the Rocks for bringing the Friedman quote to my attention. Check out their video, above.

If I had a higher word limit, I would have mentioned making elections more competitive by removing ballot access restrictions and using a type of range or approval voting system.

John Stossel on health care

I posted the following on the health care blog at Bell Policy Center, a left-leaning think tank in Colorado. I look forward to their comments.

This week’s 20/20 will be about health care in the United States. The story on the ABC News website reads:

Healthy in Cuba, Sick in America?
John Stossel Takes on Michael Moore, Examines Government-Run Health Care

Based on John Stossel’s recent columns about health care, I expect he will also discuss several other topics, which I list below. My guess is that many people reading this blog both know of John Stossel and that he is outspoken about his free-market libertarian views. (No, he’s not a conservative.) And if you’ve been reading any of my posts, you’d be right to guess I share these views. In fact, I can unabashedly say that John Stossel is a hero of mine.

That said, and knowing about cogntive biases, I may not be as critical of what Stossel says about health care reform than someone who is predisposed to an anti-market bias or, lacking bias (if possible), favors government controls over individual choices. So, if you’re one of those people prone to be more critical of Stossel’s report on health care, would you mind documenting them as comments to this post? It will surely assist in my overcoming my biases (the goal of the OvercomingBias blog).

As promised, here’s a list of some articles John Stossel has written on health care:

1. Why the U.S. Ranks Low on WHO’s Health-Care Study
“The New York Times recently declared “the disturbing truth … that … the United States is a laggard not a leader in providing good medical care.” As usual, the Times editors get it wrong. …”

2. Another Bogus Report Card for U.S. Medical Care
“In May, the Commonwealth Fund issued its latest comparison of the U.S. medical system with five other wealthy nations’ systems: Australia, Canada, Germany, New Zealand and Great Britain. … More ridiculous is the arbitrary way the Commonwealth Fund assigns weight to each of its measures. The proportion of patients who say they got infected at a hospital counts about the same in the “quality” measure as the proportion of doctors who use automated computer systems to remind them to tell patients their test results. Those things aren’t equal in my book.”

3. Let Wisconsin Experiment with Socialized Medicine
“Want to buy insurance from another state, like nearby Michigan, where an average policy costs less? Too bad. It’s against the law to buy across state lines. Your state’s Big Brother knows best.”

4. Michael and Me
“America’s medical system has problems, but profit is the least of it. Government mandates, overregulation and a tax code that pushes employer-paid health insurance prevent the free market from performing its efficient miracles. Six out of seven health-care dollars are spent by third parties. That kills the market. Patients rarely shop around, and doctors rarely compete on price or service.”

5. No Drug Price Controls
“We should be suspicious when someone promises benefits from a government monopoly. Government doesn’t produce things. It simply uses force to move things around. So why think that Medicare, hardly a paragon of efficiency, should be given the power to negotiate — in reality, control — prices?”

6. Getting medical insurance from your boss is a bad idea
“Insurance burdens us with paperwork, invites cheating, and, worst of all, creates a moral hazard that distorts incentives. The first question people ask a doctor who recommends a test is not “Do I really need that?” but “Does my insurance cover it?” Insurance raises costs by insulating consumers from medicine’s real prices.”

Milton Friedman: champion of individual freedom

Last night on the way to a debate on gun prohibition (which I had intended to write about this evening) my friend Ralph and I were talking about effective ways to advance pro-freedom policies in a culture dominated by misguided and counter-productive government interventions into peoples lives. I expressed my concern that it was easy to ignore how basic economic principles can guide our activism.

Simply put, we need to create the right incentive structures. Or more simply put – appeal to people’s self-interest. I mentioned to Ralph how eloquently Patri Friedman, Milton Friedman’s grandson, paraphrased his brilliant father, Law Professor David Friedman, author of the fantastic book The Machinary of Freedom: A Guide to Radical Capitalism. Patri was explaining why government services are so poor by viewing governments as a service industry. From there, Patri proposed a way to lower the barrier to entry into the “government services business,” and allow customers to change providers. Just as in any other industry, this will result in a better product.
As I was saying, we soon remarked at our surprise that Milton Friedman was still alive and writing. I had read a feature on him just a few weeks ago, and bookmarked a page of interviews with him.
Little did we know that he had been hospitalized a few days ago. Upon receiving the news via e-mail I got a bit choked up, and continue to do so as I read about his accomplishments, academic and popular influence, sense of humor, and principled commitment to individual liberty and choice. And if the accomplishments of his sons and collaboration with his wife are any indication, Milton Friedman was also successful as a father and husband.

The Cato Institute has honored his life, and Ed Crane’s podcast is worth listening to. My father sent me a link to The New York Times obituary, which I’ve easily republished here thanks to the Google’s wonderful Docs and Spreadsheets. Incidentally, Patri works for Google, and has posted a few fine videos on his blog.

Milton Friedman is a hero of mine. I would consider my life a success to the extent that I can match his level accomplishment, and perhaps more importantly, do so with his characteristic passion, rigor, enthusiasm, and warmth.

* This story about Friedman’s tennis game is also quite nice.

Life 102: What to do When Your Guru Sues You, by Peter McWilliams

This is a manual cross-post to my AllConsuming.net account, where I track my reading:
Peter McWilliams is certainly a hero of mine for his prolific writing and political activism for civil liberties. This book interested me as both a memoir and a profile of the psychology of cults and indoctrination. The first few chapters satisfied my curiosity on the latter, and subsequent chapters were too heavy on the sordid actions of a cult leader, which I am not too interested.

Interestingly, this organization, The Movement of Spiritual Inner Awareness (MSIA), has roots in common with Landmark Education Corporation. McWilliams speaks well of Werner Erhard and Stewart Emery, who were both instrumental in Est, Landmarks previous incarnation in the 1970s. Apparently MSIA used the term “enrollment” in the same unconventional way LEC does today. Incidentally, Stewart Emery is co-author of a newly released book, Success Built to Last: Creating a Life that Matters, which consists of interviews with successful people from various walks of life. Life 102 is out of print and is the only one not on-line on McWilliams’s website. Life102.com is an interesting page. It begins:

The book Life 102: What to do When Your Guru Sues You by Peter McWilliams was declared out of print by Prelude Press in 1996. The copyright for the book is now owned by the Movement of Spiritual Inner Awareness (MSIA). In August 1999, Peter McWilliams offered to write a letter, on behalf of MSIA, to express Peter’s opinion of LIFE 102 to someone who had put LIFE 102 on their web site without permission from the copyright holder. The following letter represented Peter’s thoughts about LIFE 102 and MSIA at that time.

Hero: Eric Cornell

A couple weeks ago at I had the pleasure of playing against, and pitching to, Eric Cornell (Nobel Prize, Physics 2001) in the Staff Council Softball League at the University of Colorado. After once again experiencing his down-to-Earth enthusiasm, his volunteering to be the umpire for the first inning or so, I realized that I admire him enough to acknowledge him as a hero on my blog. Little did I know when I realized this was that he’d written a short article in an effort to save the softball league from bureaucratic insanity. The Colorado Daily published it on my birthday. Should that link expire, I’ve saved it on my page here.

He also sponsored a resolution proposed to the student government for them to do what they can – at this late stage of the field renovation plans – to keep the league going next year.

On Thursday of last week I joined a handful of other softball players and league volunteers (I volunteered in ’04 and ’05) to communicate to the student government how important the league was to the campus community. I was happy to incorporate the concept of social capital, made popular by the book Bowling Alone. A handful of the students had heard of or read the book, so that was a good sign.

I mentioned “bonding” among people in the same or related departments, and “bridging” that occurs between people from different department who would not ordinarily interact. Through this, I noted, we get a sense of community by, for example, seeing people we know as we walk through campus. Knowing more people also promotes smooth conflict resolution, or as I said “we’re less likely to be a jerk” when we either know the person or have a know are aware that we know people in common with someone we’re working with. Many students nodded in recognition. I could have acknowledged Guns Germs and Steel for that idea, but decided I’d been academic enough.

What Do You Care What Other People Think?

I finished this book by Richard Feyman recently (for the second time) and recorded a comment on it at allconsuming.net, which I reproduce here:

Feynman’s narrative about the Challenger investigation is a great illustration of bureaucracy and politics that goes on in Washington, D.C. A great passage is at the start of the section entitled “Committing Suicide,” a term Feynman used when referring to going to D.C. to be part of the committee:

When I heard the investigation would be in Washington, my immediate reaction was not to do it: I have a principle of not going anywhere near Washington or having anything to do with government, so my immediate reaction was — how am I gonna get out of this?…My last chance was to convince my wife, “Look,” I said. Anybody could do it. They can get somebody else.” “No, said Gweneth. “If you don’t do it, there will be twelve people, all in a group, going around from place to place together. But if you join the commission, there will be eleven people — all in a group, going around from place to place together — while the twelfth one runs around all over the place, checking all kinds of unusual things. There probably won’t be anything, but if there is, you’ll find it.” She said, “There isn’t anyway one else who do that like you can.”

Reading and typing that chokes me up for two reasons: The first is that it turns out that he does do that, which I admire and seek to emulate. The other is that his wife recognizes that and needs to remind Feynman of who he is and his own uniqueness, which is beautiful. It reminds me of what Victor Frankl writes in Man’s Search for Meaning (see “p. 125″ in link).

It’s worth saving at a profit.

Next week Patri Friedman will speak at the University of Colorado about seasteading that is, creating sovereign floating cities at sea. Such ventures have been tried before, and failed. Yet, Patri is well informed, and credentialed, in economics, history, business, and engineering, and seems to have thought this plan out quite well. Last night I listed to Patri’s speech given at Freedom Fest ’04. I’ve heard government functions discussed in economic terms before, most notably by his father, David Friedman, and Randy Barnett, but Patri explained it so simply and succinctly, it just blew me away:

I think many libertarians have the intuition that if we can just communicate our ideals passionately and effectively, we can reverse this trend. While this is romantic, I really don’t think its true. When you think through the logic of why government grows, you realize that it is the natural behavior of a system with certain characteristics. Those characteristics mainly have to do with the incentives facing individuals, not the political philosophy they believe in. Spreading our philosophy is worthwhile, but rhetoric is not enough.One of the basic tenets of economics is that people respond to changes in incentives. The problem with government is a problem of incentives, and the solution is to change them. One of the most powerful ways to change incentives is through technology, and it turns out that the technology of floating cities will dramatically change the incentives facing governments. Let’s see how.

Think of government as an industry. It has two main features that make it uncompetitive. First, the cost of switching providers is very high. You have to leave your job, sell your house, pack your possessions, leave your friends and family, apply for new citizenship, get a job, buy a house, etc. As some of you probably know firsthand, it’s colossal. This dramatically reduces market feedback. The difference to an individual between two governments must be higher than this huge cost in order to make it worthwhile to move. So it’s natural for governments to exploit their current customer base, rather than innovating to try to keep them.

Second, government has a huge barrier to entry. Even something like designing a brand-new operating system seems almost easy compared to creating a new government. Consider the current situation in Iraq as an example of the tremendous difficulty and expense of regime change. You can’t just start fresh on land because all land is claimed by some existing country. “Give me liberty or give me death” is an effective way of getting land – land that’s wide as your shoulders, as long as you are tall, and six feet deep. Since the barrier to entry is high, there are few firms, which again limits competition.

Taken together, we can see that government is an uncompetitive industry, so is no surprise that it performs so poorly.

Now think about how floating cities change these factors. The barrier to entry for the governing market is much lower, because Mark Twain’s famous line “Buy land they’ve stopped making it” becomes false. We can build new territory in unoccupied areas instead of fighting for the currently fixed supply. Nor do you need to acquire a large, contiguous territory at once. It can be built piece by piece as funds and interest become available.

Wow. Typically people think of the marketplace operating “within” governments (I’ve written about this), and the view Patri presented above reverses this relationship.

This is quite inspiring to me, as earlier in the day, while writing a paper on nanotechnology policy, I wondered if a career being a policy wonk would really be fulfilling. How could I know if I made a difference? Since the paper is really about government and market regulations intended to protect occupation, consumer, and environmental health and safety, I’d been reading much of W. Kip Viscusi‘s work, and wondered if, after so many books and papers, he knows he’s made a positive difference.

In the Machinary of Freedom, David Friedman quoted H.L. Hunt: “If this country is worth saving, it’s worth saving at a profit.”

Ayn Rand Centenary

To observe the 100th Anniversary of Ayn Rand’s birth, Alex and I attended a lecture by John Stossel at the University of Denver. Stossel is a hero of mine that I have now met. And he signed a poster I helped design for a Campus Libertarians event a few years ago.

Even better, he wanted a copy of the poster, so I was glad to have brought a few. Ari Armstrong of the Colorado Freedom Report reported on this event, and included a photo of Stossel sigining the poster! Thanks, Ari!

Ayn Rand has probably influenced my thinking, values, ideals, and life more than any other author. I read The Fountainhead during the summer of 1991, and it just woke me up to what’s important to me, my values, and priorities in life, etc. Some good links are:
1. The Literary Achievement of The Fountainhead
2. Excerpt from The Fountainhead: Roark’s Courtroom speech
3. Excerpt from The Fountainhead: Rand’s description of Howard Roark’s Monadnock Valley development.. For me, this passage is quite powerful, as are the few other ones where Roark meets Stephen Mallory and Henry Cameron. Just thinking about it activates me, and this is why I wanted to call this block “Mondanock,” but the blogspot.com domain name was was already taken.
4. The ethics section of my political links.
5. Ayn Rand’s Contribution to the Cause of Freedom, by Roderick T. Long, a philosophy professor whose work I respect. This article has good links, though perhaps written for those already in the know.