In fact the program is a favor to banks that should have gone bankrupt.

FEE Timely Classic
“Wall Street Couldn’t Have Done It Alone” by Sheldon Richman

“Nothing, however, can be more absurd than this whole doctrine of the balance of trade.” –Adam Smith

FEE Timely Classic
“The Balance-of-Payments Deficit: Not to Worry” by David R. Henderson

Controversy rages over the Obama administration’s mandate that all employers – including Catholic hospitals and universities — include free contraception in their employee health insurance policies. Catholic officials object that since their church forbids contraception, the decree violates the First Amendment’ s protection of religious freedom. Others have joined in the protest, prudently anticipating that this violation of freedom of conscience could spread to other matters and other faiths.

Those raising the objection have an unimpeachable case. The precedent apparently set in the more than two dozen states that already have similar mandates is irrelevant. What’s immoral does not become moral simply by precedent. The principle that no one should be forced to finance that which he or she finds abhorrent is sound. In fact, it should be generally applied.

Changing the Subject

Defenders of the decree are quite good at changing the subject. Of course they are — what else have they got? To hear them, you’d think someone has proposed that contraception be outlawed. (Well, Rick Santorum does seem to favor that; but he’s pretty much alone.) Obamacare champions would have us believe the controversy is about “access” to certain products and services. All the decree does, they say, is provide insurance coverage for, and therefore access, to free contraception (along with other preventive services) for women who want it. But that just raises another question:

What has this got to do with insurance?

Access does not depend on coverage. We have access to many important things not covered by insurance. Weirdly, some say the decree actually affirms religious freedom. How so? Sens. Barbara Boxer, Jeanne Shaheen, and Patty Murray explained in the Wall Street Journal: “[T]he millions of American women who choose to use contraception should not be forced to follow religious doctrine, whether Catholic or non-Catholic.”

In other words, lack of insurance coverage for contraception is equivalent to being forced not to use contraception. That is some strange argument, but it’s what we’ve come to expect from members of the “world’s greatest deliberative body.”

Well?

So the question remains: What has this got to do with insurance?

“Access to birth control is directly linked to declines in maternal and infant mortality, can reduce the risk of ovarian cancer, and is linked to overall good health outcomes,” Sens. Boxer, Shaheen, and Murray write.

Fine, but what’s it got to do with insurance?

“[B]roadening access to birth control will help reduce the number of unintended pregnancies and abortions, a goal we all should share.”

Fine, but what’s it got to do with insurance?

“Proper family planning through birth control results in healthier mothers and children, which benefits all of us.”

Fine, but what’s it got to do with insurance?

“It saves us money too….”

Fine, but what’s it got to do with insurance?

“It can cost $600 a year for prescription contraceptives.” (That’s a high-end estimate; there are lower cost options, including Planned Parenthood for low-income women.)

Fine, but what’s it got to do with insurance?

“Some 99% of women in the U.S. who are or have been sexually active at some point in their lives have used birth control, including 98% of Catholic women, according to the Guttmacher Institute.”

Fine, but what’s it got to do with — oh never mind. I’ll answer myself: It’s got nothing to do with insurance.

Pooling Risk

Insurance arose as a way for individuals to pool their risk of some low-probability/high-cost misfortune befalling them. It shouldn’t be necessary to point this out, but coming of child-bearing age and choosing to use contraception is not an insurable event. It’s a volitional act. It may have good consequences for the person taking the action and society at large, but it is still a volitional act. It makes no sense to talk about insuring against the eventuality that a particular person will use contraception. Strictly speaking, contraception has nothing to do with insurance.

Unfortunately, we don’t speak strictly about health insurance. One reason we don’t is the tax code. Since World War II compensation for labor in the form of employment-based health insurance does not count as taxable income. (Money spent independently on health insurance does count.) The tax code thus creates perverse incentives to 1) depend on one’s employer for medical insurance, 2) shift income from liquid cash to restricted insurance benefits, and 3) define uninsurable events as insurable. Would someone care to explain how well-baby care can be insurable?

So we have taxation to thank for yet another feature of the modern world: the corruption of language. In the medical realm insurance no long means insurance.

Instead it’s a game by which we get other people to pay for stuff. Well, that’s not quite accurate. It’s actually a game in which we pretend that other people pay for stuff. Look, contraception, mammograms, colonoscopies, and well-baby care are not free. (See my “There’s No Such Thing as a Free Mammogram.”) They require labor and resources for which the owners wish – not unreasonably — to be compensated. Someone has to pay. If employers are compelled nominally to pay for the coverage, does anyone seriously doubt that employees will actually pay through lower cash wages? Employers are not charities. So even without a copayment, we all know deep down that we as workers pay for the coverage. (Which by the way is likely to be more expensive than the services would be in a freed market, since insurance companies will charge overhead and more for their trouble. Also subsidized demand raises prices.) Nevertheless, the truth is so obscured that people can pretend they’re getting something for free.

So the government-generated system treats us like children, and alas most of us seem happy to be treated that way.

Update

Under pressure, the Obama administration was expected to announce a “compromise” under which exempt Catholic employers would not have to pay for contraception coverage. Instead, insurance companies would provide the coverage directly to employees. Since under Health and Human Services rules, this coverage must be free, the Obama administration is in effect directing insurers to eat the cost. But insurers are profit-making companies, not charities, so we may expect them to pass the cost to someone else. But to whom? There’s only one possibility: nonexempt employers, which means in fact employees of nonexempt companies. So the grand compromise shifts the cost from a small minority of employees to the vast majority — all in the name of religious freedom. All workers in nonexempt companies and institutions will take a pay cut.

Update II

Perhaps I stopped the movie too soon. The Wall Street Journal writes, yes, there will be cost-shifting at first. But that’s not the last of it. “The balloon may be squeezed differently over time, and insurers may amortize the cost differently over time, but eventually prices will find an equilibrium. Notre Dame will still pay for birth control, even if it is nominally carried by a third-party corporation.”

At least they’re honest about hoping this program costs more than estimated. And about mainly trying to shift the blame.

FEE Timely Classic

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

 Wait, so “severe” (read: some) budget cuts didn’t send these states into permanent, irreversible decline?  Inconceivable!

FEE Timely Classic

“The Depression You’ve Never Heard of: 1920-1921” by Robert P. Murphy

In a cold and snowy land there lived the people of the North Country.  Some of them made a living by plowing and disposing of the snow that seemed to fall endlessly from the skies between November and March.  Though the work was hard, and often took place in the dark hours of the early morning, they frequently prospered, since the snowfalls came each year and the people of the North Country needed their driveways and parking lots free of the beautiful white flakes.  The Snow Plowers were happy.

But in the winter of 2011-12 the snows seemed to stop.  Oh there was a little ice and some snow, but not really enough to plow: Warmer temperatures quickly melted the little that fell.  The Snow Plowers were not happy.  They gathered the people of the town and complained that the lack of snowfall was devastating the economy of the North Country.  Without the income they earned from plowing, they told their fellow citizens, they would have no money to spend at the local grocery store or bars or restaurants.  And their fellow citizens who owned those fine establishments (and worked there too) would see their income fall, leading quickly to an economic disaster.

Saving the Economy

At first the people of the town nodded along in agreement.  “Yes,” they said, “we must save our economy. But how?”  The Snow Plowers suggested a petition to the Clouds, begging them to bring the snow that would save their business and, through the Magic Multiplier, save their town’s economy.  And so a petition was created.

But then a wise old man stepped forward and declared this was foolishness.  When asked by the townspeople to explain, here is what he said:

It is true that the lack of snow hurts our friends the Snow Plowers, and that is truly unfortunate.  However, just because they have lost income and therefore cannot spend it in the town and beyond, that does not mean the town as a whole is suffering.  Consider your own situation.  Most winters you spend perhaps $300 to pay the Snow Plowers to clear your driveways.  This winter you have spent but $50.  What has happened to that other $250?  You have presumably spent it (or perhaps put it in the bank to be lent to others who have spent it).  And where did you spend it?  On the exact same things the Snow Plowers would have spent it on.  You have been able to eat out a few more times, buy some extra beers, or a nicer steak at the grocery store, or even some candles.  The economy hasn’t been harmed; the flow of spending has just been altered.  You must, in the words of a wise man, “see the unseen.”  And what is unseen is what you have done instead of pay the Snow Plowers.

The Difference It Makes

One young man raised his hand and asked, “If this is true, then what you are saying is that it doesn’t make a difference whether it snows or not to our local economy.  So why should we not ask for more snow and help out our friends the Snow Plowers?”

The wise man responded:

Ah, but it does make a difference.  The rest of us are better off when it doesn’t snow.  Think of it this way: Each time it snows we must spend $25 to get the thing back we value: a usable driveway.  So in snowy winters we give up $300 and have a clean driveway — and that is all.

This winter, by contrast, we have both the clean driveway and the $300.  And we are free to spend that $300 on other things we might want, such as a new flat-screen TV.  This winter we are able to have both a new TV and a clean driveway, while in past years we’ve  had only the clean driveway.  Are we not all better off as a result?   It is unfortunate that our Snow Plower friends are worse off, but would we really prefer a world where we spend $300 to get us right back where we were before the snow?

The people pondered his wisdom, and they understood.  Some of them suggested that if their Snow Plower friends were truly suffering, the rest might use some of the money they saved by not plowing to help them through winter, perhaps by asking them to do some other sort of much-needed work around their homes or around the town.  After all, painting a room or installing new thermal windows would make them better off in a way that unnecessary snow plowing would not.

So the Snow Plowers’ petition to the Clouds was ripped up, and the people of the town rejoiced in the windfall created by the absence of snowfall.

(Thanks to Sarah Skwire for some stylistic suggestions.)

There are of course differences in between the proposed Internet bills and the “banned-in-Boston” law. In Boston officials were legislating morality, while the stated purpose of SOPA and PIPA is geared toward protection of intellectual property. There are, however, two major similarities. Both attempt to stop the free flow of ideas. Subjectively we are better off if we can read the works and information that we want, but a few individuals want to erect barriers to people’s access. Which leads to the second similarity: the use of the State to impose such censorship.

The free flow of ideas has played a large part in our prosperity. Government censorship inhibits our ability to reap the rewards from the information age. Even if you find certain content questionable or believe ideas are intellectual property (though I find it hard to call something with no scarcity “property”), we should question the use of the State to stop the flow of these ideas. It might just be a Pandora’s box that could unleash more trouble than even the defenders of copyright wish.

Download the Newsweek story of H. L. Mencken’s censorship protest here.