My piece on universal health care, originally posted here, has been published on Mises Daily: Why Not Universal Car Insurance?
Nation-Wrecking in Afghanistan
The United States invaded Afghanistan to topple the Taliban regime and capture Al-Qaeda leader Osama bin Laden. Neither objective was completed, as while the Taliban lost power in Kabul, their control over certain regions of the country remained largely intact. More than eight years later, the United States lost sight of their original goals. Osama bin Laden is nowhere to be found, while Al-Qaeda built formidable strongholds elsewhere.
With the mission of eliminating Al-Qaeda ending in failure, the United States changed its purpose in Afghanistan to that of nation building. This has come into conflict with their second original objective: ending Taliban rule. While on the surface the coalition’s military has fought an eight year battle against resurgent Taliban warlords in different areas of the country, including the most recent offensive on Marjah,[1] behind the scenes U.S. policy makers have actually been working closely with certain elements of the Taliban in an effort towards stabilization.[2]
It is becoming more and more obvious that the United States’ government is looking to patch up its credibility as a “nation-builder”, before public opinion absolutely forces it to withdraw personnel from Afghanistan. Current American policy is not too different from Richard Nixon’s “peace with honor” “exit strategy” during the Vietnam War. As such, nation-building is really a misnomer for an objective which really involves providing Afghanistan a strong government in Kabul to offer the illusion of peace and stability, no matter what the cost to the Afghan people and long-term prosperity of the country.
To be fair, not everyone who believes that central governments can provide peace is being genuinely dishonest. There has always been a strong belief in the connection between big government, stability and the establishment of an environment conducive to economic and social growth. There is no doubt that the people of a country with a single authority have a greater opportunity to prosper than a people shackled by conflicting governments. Just the same, an Afghani not suffering from the uncertainty of what military force will destroy his crops next will have a much greater opportunity to accumulate capital.
This is probably the mindset in which Professor Sheri Berman operated in while writing her piece for Foreign Affairs, “From the Sun King to Karzai”.[3] In the article, she draws attention to the rise of French King Louis XIV, who managed to dislodge French noblemen from positions of power in an effort to become an absolute monarch. She means this as an analogy, as to argue that the best course of action in Afghanistan is to create a strong national government in Kabul at the expense of local, rural leaders. It is clear that Berman believes that a strong central government in Afghanistan is bound to lead to development, growth and long-term prosperity. If centralization of power under Louis XIV led to the development of modern France, a similar course of action will do the same in Afghanistan.
For all its appeal, there is a lacuna in the argument for strong central government. Historically, some central governments have not been “strong” because they have been big, but because a wealthy economic environment has allowed them to come into existence. Stability can therefore be said to come from wealth. People free to prosper are people with incentives to avoid creating regime uncertainty. Central governments can therefore form without too much opposition from the people they intend to preside over. With this in mind, it is no coincidence that most politically unstable countries are also very poor. But, the relationship between wealth and government dictates that wealth must precede central government. So even if successful, the establishment of an authoritarian and strong central government will therefore not necessarily lead to positive economic and social development in Afghanistan, as the necessary prerequisites have not been established.
In fact, historically speaking, strong central governments in poor nations have simply been oppressive dictatorships. Iraq, prior to the U.S. invasion, was one such example. Neither have these “strong central governments” provided stability for long. Even during Louis XIV’s reign there were repeated rebellions between 1630 and 1670.[4] In fact, it was not until Louis XIV reversed his crippling tax network and replaced mercantilism in favor of laissez-faire that France began to develop.[5] Freedom, not big government, is the catalyst for prosperity.
Current U.S. policy in Afghanistan is ensuring the creation of a big bureaucracy, dedicated to the oppression of the Afghani populace. Malalai Joya, an Afghani woman elected to—and then banned from—parliament, has been a vocal critic of U.S. politics in her war-torn country. She has brought attention to the fact that a large portion of Hamid Karzai’s government in Kabul is composed of warlords and religious extremists, many of which committed crimes against humanity during the civil war of the 1990s.[6] In effect, the United States is returning Afghanistan to the way it was before the 2001 invasion. But, instead of the Taliban, the new despots will be “warlords and drug traffickers”.[7]
Professor Berman’s strategy for Afghanistan only promotes disaster. While many of Louis XIV’s mercantilist policies were eventually rescinded, this occurred only because the France of the 17th Century enjoyed a fairly large body of wealthy merchantmen with interest in struggle for freedom. The poor of Afghanistan, which make up the supermajority of the population, do not enjoy the advantage of having a similar social middle class willing to pressure the Afghani government into being more business-friendly. As a result, Berman’s strategy is bound to lead to dictatorship, not long-term peace and development.
The Conservative Delusion
The rise of Barack Obama to the presidency of the United States served as a warning to the Republican Party. The latter came out of the George W. Bush presidency bruised and tattered. The Bush administration served only to reveal the true intentions of a dangerous neo-conservative ideology, eliminating the Republican Party’s already eroded credibility. The transition of power hardly came with a shift in ideology. The United States went from leadership intent on expanding government to leadership looking to expand government at an even faster pace.
George W. Bush’s second presidency and the coming of the “Great Recession” bore witness to a great rise in libertarianism. Barack Obama’s election turned out to be yet another positive catalyst for the libertarian movement. Those disillusioned with the eight-year Republican reign and then deceived by Obama’s cries for “change” turned toward more virtuous alternatives—personal liberty and limited government. Thanks largely to the efforts of Congressman Ron Paul, one of the few true limited government conservatives, the libertarian movement turned mainstream.
The Republicans, ever so cunning, were quick to shift their ideology to one which came closer to libertarianism. Given his position as leader of the ruling party, Obama became the symbol of big government. Seeking to redefine the conservative ideology in an effort to regain popularity, the Republican Party moved to oppose Obama’s every move, campaigning mostly on the concepts of limited government, liberty and the free market.
This change in ideology has brought about a revival of the Republican Party. Although it would be naïve to take Republican ideology at face value, whatever it may be, it is disappointing to see that recent events show that the return of the “Grand Old Party” to its “old right” roots is nothing more than an elaborate swindle. The party’s politicians are doing what they do best: lie.
Garet Garrett’s Lesson
My piece on Garet Garrett’s book, The Bubble That Broke the World, was published on Mises Daily: Garet Garrett’s Invaluable Lesson.
The South African Experience With Redistribution
The BBC reports:
Some 90% of farms redistributed to South Africa’s black population from white farmers are not productive, the government has said.
Surprise, surprise. If the government were to redistribute a steel mill from one person to another based only on the color of one’s skin, raise your hand if you think there is a good chance that the new owner will have no idea how to run a steel mill.
U.S. Postal Service: Another Government Failure
From A.P. News (hat-tip Jeffrey Tucker, from the Mises blog):
WASHINGTON (AP) — The U.S. Postal Service is increasing the pressure for dropping Saturday home delivery as it seeks to fend off massive financial losses.
This is what Paul Krugman wrote last year:
Maybe I’m living a sheltered life here in central New Jersey, but I don’t find the Post Office a terrible experience — no worse than Fedex or UPS. (Full disclosure: I worked as a temp mailman when in college.) And nobody likes going to the DMV, but the one on Rt. 1 I go to always seems fairly well managed.
And in general: is dealing with these government agencies any worse than, say, dealing with the cable company?
The prejudice against government seems to have become free-floating, unattached to any actual experience.
The local news is blaming the deficit on a decrease in the volume of mail being moved by the U.S. Postal Service, thanks to an increase in the volume of emails. However, the USPS has been suffering budget deficits for at least the past decade, and so acting as if it was fiscally inefficient as of only recently is at best disingenuous. But, alas, nobody is likely to admit that the real problem is the fact that socialized industries just do not work.
Interestingly, the final comment on the local news network was that privatizing the postal system was not on the table.
The Tragedy of Spanish Government
[The following is a rough draft to an upcoming article on two episodes during Spanish history; given that it is loaded emotionally, and somewhat off topic, it has to be re-written, but should still give a fair image of the article to come.]
When we contemplate the magnitude of Spain’s hegemony, and compare it with the poverty from which it arose, we should not let ourselves give way to pride.—Ramón Carande[1]
The history of Spain is one beset by human tragedy. At first glance, the economic heritage of Spain seems cyclical, with periods of wealth and power followed by long epochs of poverty. Upon closer inspection, however, it becomes evident that even the years of wealth were at best illusionary. Until only recently, the Spanish people have known only poverty. The end of the Francisco Franco regime brought hope, as totalitarianism gave way to democracy. But, democracy has simply become a means of returning to totalitarianism.
Spain was the first great modern empire. Under the auspices of its Catholic regents it spanned across five continents, and for almost two hundred years commanded the European mainland. Military historians have attributed Spain’s rise to its martial capabilities, but her power ultimately came from the illusion of wealth—the inflow of gold from the Americas.[2] While an inflow of gold gave the Spanish government the advantage of being able to buy material for pre-inflationary prices, the common Spaniard became subjected to a dramatic increase in the general price level. Most tragic of all, wages tended not to rise proportionally with the price level, causing even more widespread pain and suffering than had existed prior to the discovery of the New World.[3] It should come as no surprise that the empire fell almost as soon as the “golden faucet” shut off. Any real wealth created was quickly stifled by Spanish mercantilism and regulation.[4]
The Failure of Anti-Money Laundering Laws
Daniel Mitchell on money laundering laws:
Capitalism City
I just came back from a weekend in Las Vegas. This was the first time I have ever been in the city, and was thoroughly impressed:
Response to Gary Williams on Health Care
Gary Williams,
So, getting to the bare bones of your reply:
I am not sure that I ever referred to anything as an agenda. I never suggested that the Progressive movement envisioned the extent of the welfare state that we have today, but the idea that they did push for an enlargement of the welfare state is historically true. I do not think that purposefully exaggerating what I said is useful when interpreting my position on the history of the progressive movement in the United States, or when interpreting a relatively minor point in the article.
In any case, the conditions you describe were superior to conditions which existed beforehand, and are also exaggerated. Even if true, what allowed these conditions to improve were not laws, but capital accumulation. It was the ability for an individual to have greater purchasing power with a similar wage, due to capital accumulation, investment and increased production. In this fashion, the Industrial Revolution directly bettered the lives of the average worker (I think that oftentimes people do not consider how bad conditions were prior to the Industrial Revolution). The causation for improvement of work conditions must be highlighted as to clear up any misconceptions about the role of the state.
I am not really sure what you are trying to say here; technology has allowed us to purchase more at equal wages. What is necessary is completely subjective, and a decision made by an individual. Entrepreneurs respond to demand, and so to claim that technology has produced more than what is needed is completely fallacious. The concept of general overproduction is flawed. In any case, we are really leaving the topic of the article, which was universal insurance programs, or social insurance programs.
I don’t know who told you this, but this is completely wrong. As an earner of minimum wage, I can attest to this. My wages did not increase with an increase in the tax rate, and this was definitely not true during the Great Depression. Finally, you write, “And why are you so averse to people helping other people?”. This is why I feel you do not really understand my position. I am not against altruism, I am against forced altruism. There is a very clear difference. Social insurance programs are not paid voluntarily; if they were, there would absolutely be no problem.
Now, wading past all the personal insults, misinterpretations and your attempts to categorize me (incorrectly), I will finally address your “argument” for social insurance (more of an appeal to authority than anything else, really).
I am a citizen of Spain, which is a country with a universal health care system. Fifty-percent of Madrid’s population has private insurance, whilst those who rely on the universal system have to put up with very poor service and long waiting times (up to multiple days). These are solvable issues. The real issue with universal health care is not within the service at any given point in time, but the cost of making it efficient. As a mix between a monopoly and a monopsony, the way it evolves in the market is different from the way an insurance system would evolve in a free-market. Instead of lower costs and better service, what occurs is the opposite. I expand on this point in the article you replied to; I would suggest actually reading it. Most countries that have universal health care systems are not able to perpetually fund it, because the costs grow beyond the budget. This includes the United States, with its limited medical insurance programs.
In any case, I invite you to read the article and actually put forward an intelligible argument on why the free-market cannot provide an efficient and affordable medical insurance program, or why my own arguments are flawed. I, however, ask you to avoid insulting me, or making flawed assumptions on where I am from or what social strata I belong to.
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Tagged: Gary · Health · insurance · universal · Williams