The quest for reelection outweighs all loyalties.

FEE Timely Classic
“‘Deliberative Democracy’ Dementia” by James Bovard

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Déjà vu.

FEE Timely Classic
“Can the Feds Save the Housing Market?” by Robert P. Murphy

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This doesn’t mean there is anything in the bill to be thankful for. Like its Senate predecessors and House counterpart, it should offend any advocate of liberty and good economic sense.

First and foremost among its defects is the individual health insurance mandate: Every individual would be forced to buy government-defined comprehensive medical coverage (or to have it bought by one’s employer). A fine up to $750 awaits anyone who defies the mandate.

As Shikha Dalmia points out in Forbes this week, the individual insurance mandate is the major outrage in the whole “health care reform” scam. I would say it’s the keystone. Remove it and most of the rest crumbles to the ground.

Who do these politicians think they are? Our lives are not theirs to dispose of.

Politicians love to sugarcoat their threats of force. So the Reid bill calls the mandate “shared responsibility.” To those who wonder by what authority the government can make us buy insurance against our will, the bill alludes to the Constitution’s Commerce Clause, which gives Congress the power to “regulate … commerce among the several states.” (For a fuller story on the clause, see this.) The bill says, “The individual responsibility requirement provided for in his section . . .  is commercial and economic in nature, and substantially affects interstate commerce.”

How would an insurance requirement affect interstate commerce? The bill says that since without the requirement people wouldn’t buy insurance until they are sick, it therefore “will minimize this adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums. The requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.”

In other words, for the sake of making the insurance market work better, we must be forced to buy coverage. How’s that for a justification?

It’s amazing how many fallacies can be stuffed into one argument. To begin, medical insurance isn’t really interstate commerce. One of the few sensible things proposed during the public discussion on medical care is that the federal ban on interstate purchase of coverage be repealed. Residents of California are not free to buy less-fancy, less-expensive policies offered in Arizona. They are stuck with policies made more expensive by California’s overbearing regulatory regime. Interstate sales would increase competition and lower prices, but the ruling party shows no interest in that idea. So how can this be about interstate commerce?

There’s more that is wrong with the argument. Typically, the Commerce Clause has been invoked against barriers to the free flow of interstate commerce. The Supreme Court has occasionally upheld the prohibition of activities (such as growing wheat for one’s own use in violation of an acreage-allotment program or dispensing medical marijuana) that were said to adversely affect interstate commerce. But the insurance mandate would represent the first time that individuals were compelled to buy product or service in the name of making interstate commerce more effective. The Congressional Budget Office calls it “unprecedented”: “The government has never required people to buy any good or service as a condition of lawful residence in the United States.”

Even under the most expansive reading of the Commerce Clause, how does compelling the purchase of insurance qualify as regulating interstate commerce?

The nub of the bill’s argument is that if healthy people are not forced to buy coverage, the insurance market won’t work properly. Why not? Because same bill would compel insurance companies to accept all applicants for coverage, sick or healthy, without price discrimination. That is, the bill creates the incentive for people to opt out of insurance until they are sick. Obviously, that would not be good for the insurance market.

Self-Caused Problem

The individual insurance mandate, then, is a solution to a problem the bill itself would create. The authors invoke the Commerce Clause to protect interstate commerce from a threat they themselves pose to it. They could avert the threat simply by not imposing guaranteed-issue on insurers.

But of course the advocates of nationalized medicine wouldn’t do that. Guaranteed issue is at the center of their scheme. They want to proclaim that they brought universal coverage to America. Freedom must take a back seat to their objective, which is to disguise a welfare program as insurance and put us on the road to government-administered rationing.

The “reformers” are quick to point out that people without insurance go to emergency rooms for medical care and sometimes don’t pay their bills, shifting the costs to the rest of us. But Shikha Dalmia notes that uncompensated care accounts for less than 3 percent of the country’s total medical bill. To save $40 billion a year, we should spend more than $100 billion a year and lose more liberty? No thanks.

One reason for uncompensated care is that emergency rooms are forbidden to turn away patients (even in non-emergencies) who have no means of payment. Who imposed that prohibition? The government, of course. That may sound humane, but one unintended consequence is a likely contraction of charitable care. Why set up facilities for the indigent if they can turn up at any emergency room?

Again we see Mises’s Law at work: Intervention begets intervention. Government action creates problems that politicians then use to justify more government action. Undoing the first intervention would help solve the problem, but politicians have little incentive to move in that direction.

Government has suppressed the free market in medical care both on the supply and demand sides. As a result, medical services and insurance are artificially expensive, pricing many people out of the market. Instead of removing the interventions and letting the free market—including mutual-aid associations and philanthropy—lower prices and create more widespread coverage, the politicians propose to pile on more market-suppressing measures. Freedom is the first casualty. But we can also anticipate an aggravation of the current system’s worst features.

Forcing individuals to buy insurance is an intolerable assault on our liberty—not to mention a massive subsidy to the insurance companies. (They’re mad the penalty is not greater.) How many more usurpations can we be expected to tolerate?

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3. Abortion Threatens Health-Insurance Overhaul

And the tooth fairy collects children’s teeth.

FEE Timely Classic
“The Right to Medical Care” by Sheldon Richman

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Didn’t they borrow the TARP money?

FEE Timely Classic
“Our Presidents and the National Debt” by Burton W. Folsom Jr.

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But it’s not the relationship we need.

FEE Timely Classic
“Regulation Will Stop Future Madoffs? It Just Ain’t So!” by Chidem Kurdas

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This time it happened on p. 31, where Bastiat writes, “Socialists look upon people as raw material to be formed into social combinations. This is so true that, if by chance, the socialists have any doubts about the success of these combinations, they will demand that a small portion of mankind be set aside to experiment upon. . . . And one socialist leader has been known seriously to demand that the Constituent Assembly give him a small district with all its inhabitants, to try his experiments upon.”

Two things occurred to me as I read this. First, you don’t have to be socialist to believe that people are raw material to be experimented upon. And second, in modern America, doubts or no doubts about success, experiments can be run on the entire country at once. No need to try things out first on a small district.

As for point one, I have in mind the current administration. The word “socialist” (as well as “fascist”) is thrown around too glibly today, and everyone ought to be more careful. Lots of bad things are being proposed that would interfere with the market process, but no one in power is proposing to replace the market with central planning. Ludwig von Mises called the philosophy behind the mixed economy “interventionism,” and we ought to be working to make that word the pejorative we know it deserves to be.

Point two, of course, refers to the Obama administration’s experiments on the health-insurance, financial, and energy industries. Without getting into details here, I want to emphasize the sheer presumptuousness of those experiments. Those are our lives they are fooling with.

Bastiat brimmed with controlled outrage at the French politicians and writers who so blithely presumed that other people’s lives were theirs to dispose of in grand experiment. He dissected the classical notion, popular among the pundits of his day and ours, that individuals are inert until a wise leader comes along and invests them with a principle of motion—“They assume that people are susceptible to being shaped by the will and hand of another person—into an infinite variety of forms, more or less symmetrical, artistic, and perfected,” he wrote.

This superior attitude is palpable throughout the Obama administration. One sees it in the words and tone of the President, Geithner, Summers, Emanuel, Sebelius, Clinton, and their allies in Congress. In a profound way, they are the anti-egalitarians. They know better than we. They exercise powers that we mere individuals outside of government can never possess. They dictate to us, but we can’t dictate to them. They get to determine our lives in important ways—which means that in those respects we don’t.

Yes, they claim to represent us. It’s a baseless claim! They are not our representatives. They do not know us, and they cannot really care about us. They are our rulers, gratifying their ambitions to “make a difference”—whether we want it made on our lives or not. If we don’t comply, they can take our liberty, our property, even our lives.

Depriving them of that power is a long and arduous educational process requiring a philosophical sea change. In the meantime, those of us who know that we, and not they, own our lives, need a battle cry. In dedication to Bastiat, I propose this:

We shall not be experimented upon!

* * *

When President Obama intervened in the bankruptcies of GM and Chrysler, longstanding financial-legal precedents went by the wayside. What consequences will this have for the future? Richard Epstein ponders this question.

The numbers are in on Cash for Clunkers. Despite the program sponsors’ and participants’ euphoria, it was a bad deal all around. Bruce Yandle has details.

New Nobel laureate Elinor Ostrom explained how people voluntarily coordinate to solve problems. Peter Boettke says every freedom-lover should rejoice in her prize.

When it opened its doors in 1914 the Federal Reserve System was supposed to bring stability to the U.S. economy. It didn’t quite work out that way. Chidem Kurdas explains why.

Why don’t we ever hear older people reminisce about how tough life was during the depression of 1920–21? Maybe it’s because that one, unlike the Great Depression, was what W. S. Gilbert might have called a short sharp shock. Robert Murphy describes the depression history forgot.

Mexico’s violent drug trade has spilled across the border, creating concern throughout the United States. There’s an easy way to stop it, Paul Armentano writes: End the war.

Belief in manmade climate change once led to large-scale economic and personal dislocation. That was in the nineteenth century. Will it happen again? Tyler Watts reminds us that we can learn from history.
Here’s what’s been on our columnists’ minds lately: Lawrence Reed recalls the influence that a movie had on him long ago. Thomas Szasz remembers those whom the criminal justice system has forgotten. Robert Higgs looks at the case for slavery. John Stossel finds it curious that big pharmaceutical and big insurance companies like Obama’s healthcare plans. Charles Baird analyzes the latest papal encyclical on labor unions. And Art Carden, confronting the claim that profit has no place in the healthcare system, responds, “It Just Ain’t So!”

Our reviewers test-drive books on the effect of higher taxes, the bloated presidency, the dollar, and Paul Krugman’s view of the economy.

It’s December, which means the issue wraps up with the year-end index, prepared by Managing Editor Michael Nolan.

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2. Bastiat, Socialism, and the Blank Slate
3. Bastiat, Liberty, and The Law

I’m inclined to think of George Orwell and F. A. Hayek at the same time. Both showed great courage in writing the truth, undaunted by the consequences. Both valued freedom, though they understood it differently.

Orwell, a man of the “left,” could not remain silent in the face of the horrors of Stalinism. Twice—during the Spanish Civil War and again at the dawn of the Cold War—he refused to permit his comrades to blind themselves to where their collectivism had led and could lead again. For his favor he was called a conscious tool of fascism, a stinging accusation considering he had gone to Spain to fight fascism. (But for a few inches, the bullet that penetrated Orwell’s neck in Spain would have denied us the latter warnings, Animal Farm and Nineteen Eighty-Four.)

Hayek, a man of the “right,” risked ostracism and worse in 1944 by publishing The Road to Serfdom. Writing in England at the height of World War II, this Austrian-turned-Briton warned that central economic planning would, if pursued seriously, end in a totalitarianism indistinguishable from the Nazi enemy. That couldn’t have been easy to write at that time and place—central planning was much in vogue among the intelligentsia. While a good deal of the reception was serious and respectful, a good deal of it was not. Herbert Finer, in Road to Reaction, called Hayek’s book “the most sinister offensive against democracy to emerge from a democratic country for many decades”; it expressed “the thoroughly Hitlerian contempt for the democratic man.”

Not surprisingly, The Road to Serfdom brought Orwell and Hayek together in print. Orwell briefly reviewed the book along with Konni Zilliacus’s The Mirror of the Past in the April 9, 1944, issue of The Observer. The man who would publish Animal Farm a year later and Nineteen Eighty-Four five years later found much to agree with in Hayek’s work: “In the negative part of Professor Hayek’s thesis there is a great deal of truth. It cannot be said too often—at any rate, it is not being said nearly often enough—that collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamed of.”

But true to his left state-socialism, Orwell could not endorse Hayek’s positive program:

[H]e does not see, or will not admit, that a return to ‘free’ competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State. The trouble with competitions is that somebody wins them. Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led, and since the vast majority of people would far rather have State regimentation than slumps and unemployment, the drift towards collectivism is bound to continue if popular opinion has any say in the matter.

It’s disappointing to see Orwell give such short shrift to Hayek’s positive thesis. He is glib and dogmatic, which is unbecoming a serious intellectual such as Orwell. His ignorance of economics leaps from the page.

“[A] return to ‘free’ competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State.” It’s hard to believe that someone so familiar with Stalinism could have written that. Even without knowing much economics, could he really have thought that what goes on in market-oriented societies, even during depressions, could be worse than the famine Stalin inflicted on the Ukrainians, the show trials and executions, or the labor camps in Siberia?

“The trouble with competitions is that somebody wins them.” In a market producers compete to better serve consumers. The losers in that competition are not exiled or executed. They find other ways to serve consumers, just as producers are trying to serve them.

“Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led. . . .” Where has monopoly arisen without the aid of the State? We find no market-generated monopoly in England or the United States. There, major business interests actively promoted protectionism and other interventions precisely to tamp down competition and protect their market shares.

“[T]he vast majority of people would far rather have State regimentation than slumps and unemployment. . . .” But that’s a false choice. Slumps and unemployment, as Hayek and his mentor Ludwig von Mises taught, are products of central-bank manipulation of money and interest rates—that is, of government, not of the free market.

I must pause here to focus on Orwell’s disgraceful use of the word “regimentation.” I say “disgraceful” because he committed the sin he himself so eloquently condemned in his justly famous essay “Politics and the English Language”: the sin of euphemism. Regimentation is the least of the State’s crimes.

One wonders how Orwell avoided despair. He misidentified the free market with state capitalism and rejected it, and he saw the totalitarian tendencies of socialism up close. Yet he could write, “There is no way out of this unless a planned economy can somehow be combined with the freedom of the intellect, which can only happen if the concept of right and wrong is restored to politics” (emphasis added).

Hadn’t he just read chapter 11 of The Road to Serfdom, “The End of Truth,” in which Hayek described how a serious commitment to central planning must produce “contempt for intellectual liberty”?

“The word ‘truth,’” Hayek wrote, “itself ceases to have its old meaning. It describes no longer something to be found, with the individual conscience as the sole arbiter of whether in any particular instance the evidence (or the standing of those proclaiming it) warrants a belief; it becomes something to be laid down by authority, which has to be believed in the interest of unity of the organized effort and which may have to be altered as the exigencies of this organized effort require it.

“The general intellectual climate which this produces, the spirit of complete cynicism as regards truth which it engenders, the loss of the sense of even the meaning of truth, the disappearance of the spirit of independent inquiry and of the belief in the power of rational conviction, the way in which differences of opinion in every branch of knowledge become political issues to be decided by authority, are all things which one must personally experience—no short description can convey their extent.”

But of course Orwell had experienced those things in Spain and knew how it was in Russia. He certainly put a heavy burden on that word “somehow.” How restoring the concept of right and wrong to politics would make central planning either decent or practical is a mystery no one has solved. Mises had shown long before that socialism could not be practical because without prices arising out of the exchange of privately owned means of production, the socialist planner could not make rational calculations with respect to what should be produced, in what manner, and in what quantities. As for decency, Hayek addressed that in chapter 10, “Why the Worst Get on Top.”

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Let’s face it. He has no idea what to do.

FEE Timely Classic
“In Another Recession” by Hans F. Sennholz

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Yes, a well-worded executive order should do the trick.

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“Most Outrageous Government Waste” by Thomas A. Schatz

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