Monthly Archives: May 2016

Liberals don’t acknowledge trade-offs

The left almost never acknowledges the trade-offs associated with the policies it advocates.  Its ongoing attempt to raise minimum wage is the latest example.

It would be nice if liberal politicians or pundits said, We understand that raising the minimum wage always reduces employment, but we are willing to make that trade-off in favor of a higher standard of living for those who keep their jobs.  Instead, the left usually denies the existence of any trade-off (a New York Times editorial in favor of California’s recent law gradually raising the statewide minimum wage to $15 per hour sort of acknowledged some associated costs, but tried to explain them away via economic bunk) or resorts to demagogic attacks against the more productive.

Similarly, you almost never hear liberals make arguments like these:

  • We understand that raising income taxes reduces economic growth, but we are willing to make that trade-off to redistribute resources to government services that benefit some subset of the population in the short-term.
  • We understand that Obamacare will result in healthy people, and taxpayers, paying more for inferior health insurance, but we are willing to make that trade-off so that everyone will have some minimal level of health care coverage.
  • We understand that tariffs and other protectionist measures hurt consumers and overall economic growth, but we are willing to make that trade-off to protect certain workers who have good jobs.  (This stance has become more bipartisan lately.)
  • We understand that carbon taxes, regulations that shutter businesses, and other mechanisms that we propose to reduce the effects of “climate change” will seriously harm the economy and jobs, but we are willing to make that trade-off to prevent more catastrophic consequences–which would result in much lower levels of economic activity and human welfare—in the future.

These are legitimate philosophical positions to take and defend in a democracy, and they might win the day in today’s America.  But it is a striking feature of our culture in the last half-century or so that debate is rarely cast on these terms.

Why don’t liberals mention trade-offs?  One factor is that they think that such arguments are too sophisticated and would make it more difficult to sell their policies; it’s much easier to promise everyone a free lunch.  In some cases, they probably don’t understand that a trade-off exists in the first place (most liberals lack appreciation of basic free-market principles).  In others, they don’t see the trade-off as a cost at all:  when it comes to “climate change,” the massive reduction of industry, redistribution of resources from innovative capitalist societies to retrograde third-world countries, and the creation of supranational bureaucracies to centrally plan the economy are features, not bugs.

The essential problem is that the left has universalized its ideology that government is the solution to all problems.  Whenever there is any unintended consequence—and the consequences are almost always unintended, because the left’s first principles simply don’t understand that their good intentions have costs—they can simply enact another government program to solve the problem.

 

 

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Government programs are like prescription drugs

Kudos to an excellent column by Glenn Reynolds linking the growth of government—and what he calls the “web” of patronage that radiates from it—to the decline of civilizations.  We have always believed that the only way to really counter government corruption, at least in a Western society that values individual liberty, is to reduce the scope of government.  Wouldn’t it be nice if most companies simply didn’t see the need to hire lobbyists, or pay bribes, because there weren’t that many areas in which the state would be inclined to interfere in their businesses?  Wouldn’t it be nice if the only way that a government bureaucrat could steal were to raid the petty cash box, as opposed to misappropriating funds via the countless overlapping, unaccountable ways that the government spends our money?

Most government programs are enacted largely to mitigate the effects of other government programs.  In turn, each program has its own constituents who know how to work the system to keep their goodies.  Liberals like to think of complex legislation, like Obamacare, as a piece of exquisitely-engineered and finely-tuned machinery, with savvy operators balancing the various mechanisms and behavioral responses to achieve their desired ends.  (Actually they think of the whole economy this way.)

In the case of Obamacare, much of the purported problem that it was intended to solve—that many Americans do not consume enough health care—largely came about due to government programs, such as the tax treatment of employer-provided health insurance and the hyper-regulation of the health care and insurance industries, which create all kinds of distortions in the market such as de-linking supply and demand for health care.  Beginning with the premise of making health insurance mandatory, then subsidizing it, the law includes hundreds of provisions to mitigate the iterative incentives and distortions layered upon one another in pursuit of these objectives.

We are reminded of a relative who takes around 15 prescription drugs each week.  Two of them are supposed to treat certain diagnosed ailments, and the other 13 are to counteract the side-effects of those two and among themselves.

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