This LearnLiberty debate presents arguments for and against more government assistance to help the poor in the United States. Prof. Steven Horwitz argues that the government has created too many problems and that lifting government-imposed barriers to the poor will go a long way toward solving the problems of inequality in the United States. Prof. Jeffrey Reiman takes the view that government, while not perfect, will have a key role to play in creating better programs to help the poor. What do you think?
Have you ever thought much about property rights? Many believe ownership protections primarily favor the wealthy, but it turns out that the wealthy and politically connected actually benefit more when ownership is vulnerable. Without strong property rights, those with the power are able to take property from those who lack such political connections. In places like Zimbabwe—where the government is able to confiscate profits, merchandise, and even businesses with ease—the lack of property protections has been one cause of the country’s decline. Today, Zimbabwe is the poorest country in the world, and eroded property rights are at least partially to blame. Prof. Dan Russell argues that “doing less to protect ownership turns out to be a really effective way to create poverty.” Perhaps property rights deserve protecting. Except, maybe, among Finnish race car drivers.
Think you’re too small to save the world—even one species at a time? Sometimes big change starts with thinking big and perhaps a little outside the box. Take it from enviropreneur Hank Fischer.
Hank Fischer was concerned about the gray wolf. It was on the endangered species list and extinct in the American West. Efforts to reintroduce it in the region had been unsuccessful, largely because the local population didn’t want hungry wolves killing their livestock. Rather than fight the ranchers in the region, Hank established a fund to compensate them for losses and give them incentives to support the growth of the wolf population. And it worked! Today, the gray wolf isn’t even considered endangered. Hank’s story is just one of many stories of enviropreneurs around the world. Laura Huggins of the Property and Environment Research Center (PERC) explains how thinking outside the box and innovating can work for the environment as it does for business. Enviropreneurs like Hank have been able to save species. Think about the difference you could make!
The question of how to address poverty in the United States is complicated. Steven Horwitz, chair of the department of economics at St. Lawrence University, and Jeffrey Reiman, professor of philosophy and religion at American University, debate the level of government assistance that should be given to help the poor.
In this clip, professors Horwitz and Reiman discuss how children who are poor can best be helped. While adult poverty may, in many cases, be due to some fault of the adult, should children have to suffer their parents’ mistakes? Both argue in favor of improvements in the education system, especially in creating more choice. While Prof. Horwitz suggests this can be done outside of government, Prof. Reiman argues that government will still have to be involved, even if only to create the vouchers.
Prof. Reiman also turns the question on its head, suggesting that perhaps the children of successful parents should not benefit from the parents’ success any more than children of poor parents should not be punished for their parents’ failings. Should all children start out on an equal footing, financially as well as educationally? What should be done to improve education opportunities for the poor? Is the government the best provider of education? What are your thoughts?
What would happen if we didn’t have a central bank? Prof. Lawrence H. White explains that private banks would be able to circulate money by issuing notes and checks redeemable for coin. Trustworthy banks would make arrangements to accept each other’s notes and checks. Banks would have better incentives than the federal government to ensure their currency retained its value, because if it didn’t, people would bank elsewhere. By contrast, central banks controlled by the government are able to devalue currency as they see fit and can even quit redeeming notes for coins of real value if they want to do so. It sounds like social-science fiction, but there are numerous real-world examples in history of successful free-banking systems. In fact, central banks arose largely because governments wanted an institution willing and able to lend them money with easy terms, not because of any problem with the free-banking system. Free markets offer the most efficient system for allocating goods and services, and money is no exception. As failures among central banking systems mount, it is time to reconsider the alternative of free banking.
Is it possible the war on drugs is to blame for increased potency in marijuana and for how crack ravaged inner cities in the 1980s? Prof. Adam Martin explains how the drug war has altered incentives for both drug buyers and sellers, leading them to favor higher potency drugs. This is what economists call the potency effect. As penalties for purchasing marijuana go up, for example, the cost difference between high- and low-potency marijuana decreases and people may think that if they’re risking a fine or jail time anyway they may as well buy the stronger drugs. Similarly, cartels and dealers have shifted their focus to high-value, high-potency drugs like cocaine as a result of the steeper fines and penalties for drug trafficking. The potency effect is just one of many economic forces that make markets so complex. Public policies that alter the incentives people face—as the war on drugs does—can lead to unintended and even dangerous consequences.
When economic troubles strike, policymakers are eager to do something to try to help the citizenry. But Prof. Lawrence H. White argues that government doesn’t necessarily know how to relieve economic woes, and in fact, often wastes and mismanages resources. Individuals in the market know better what they need in their circumstances, as economist Friedrich Hayek argued during the Great Depression. Relying on government to fix our economic woes instead of allowing individuals to make decisions for themselves means putting all of our eggs in one basket. Individual decisions in the market won’t be mistake-free, but each individual mistake will be smaller and will correct more quickly. The unusually slow and painful recovery that we have seen in this recession point to problems with the “government should do something” view. What do you think might be the best way to handle economic difficulties? Why?
To understand about ownership, it helps to understand something about surfing. Surfers employ a system of ownership over waves so that everyone gets a turn. Prof. Dan Russell describes a scenario in which three friends are surfing but none wants to be selfish. As a result, the good waves pass by and no one has a good time. If they had prescribed a system of ownership instead, they would all have their turn to the waves. Among people who are not friends, a lack of ownership often leads to pushing and shoving. People who want peace need to instead determine whose wave is whose—or who owns property.
Although many people conflate ownership with selfishness, this is not accurate. Ownership plays an important role in a functional society for several reasons:
- Ownership allows for more creativity and enables us to do the things we want to do.
- Ownership puts a check on selfishness and greed because it gives the owner the right to say no. This also makes conservation possible.
- Ownership fosters greater civility and fairness. Respecting ownership is a way to respect each other, and when ownership isn’t protected, the most vulnerable people usually suffer most for it. As Prof. Russell says, “If we care about fairness for everyone, we have to care about ownership.”
It’s the Great American Taxing Game and you have chosen to tax oil companies. So what happens if you increase these taxes? And, perhaps more importantly, who will pay these taxes? While you may think raising taxes on oil companies will hurt the profits of big oil barons, consumers are likely to bear the burden of these taxes instead. Your host Prof. Art Carden explains that this happens because the consumer is less responsive to changing prices than the producer. Even if the burden did fall on the oil companies, would that be for the best? Don’t forget to see what would happen if you taxed luxury goods or cigarettes instead.
Join the Great American Taxing Game with your host, Professor Art Carden. The question posed is who should be taxed. If you were a government official trying to raise revenue, would you choose to levy taxes on gas, on smokers, or on luxury goods? How would these taxes turn out? Prof. Carden explains that it is important to consider whether the consumer or the producer of a product is more likely to bear the burden of the taxes. Choose wisely and see what happens.
Like most Americans, are you frustrated by ticket scalpers? These middle men buy tickets for events and then resell them at more than face value to make a profit. If you’ve ever purchased from a scalper, you may have been frustrated at having to pay higher than face value for your seats. But what were the alternatives? Since there may be more people who want to attend an event than the event can hold, an efficient market mechanism is to ensure that the people who are willing to pay the most are the ones who get to go. This cannot be accomplished by a lottery system to allocate leftover seats, as that would fall to pure chance to decide who won. Waiting in a long line might be an option, but maybe your time is more valuable and you’d like to get a ticket now. The scalper is able to help you get the tickets you want in the amount of time you desire.
Prof. Stephen Davies explains that although ticket scalpers and other middle men are often looked down upon by the public because they don’t physically make any goods, they do provide a service that improves the efficiency of the market. Middle men who connect buyers and sellers and profit for their work do add value to society by enabling people to get what they want or sell what they don’t.
In some cases, the ability to buy goods at a low price and sell them at a higher price has saved lives. In 18th century France it was illegal to purchase food in areas with low prices and sell them for a profit in areas where food was scarce due to a shortage or a failed harvest. As a result, many people literally starved to death because no one would supply them with food. At the same time, England did not have these laws. So while food prices increased in areas struck by famine, we don’t see many cases of people actually starving to death. The middle man’s ability to buy food inexpensively in one area and sell it for a profit in an area with a food shortage literally saved lives. Though looked down on by society, middle men perform a useful function in improving human well being.
Professor Art Carden is able to mow his yard, build a fence, and install a faucet all at the same time. How? He does this by specializing through trade. Rather than try to do those things himself—especially since he isn’t very good at doing them—he uses the money he earns doing what he specializes in to pay others to mow his yard, build a fence for him, and install a faucet.
By employing others to do this work, Prof. Carden benefits because he can spend more time doing what he does best. He may also have more free time available because he does not have to use his spare time to mow his lawn, for example. At the same time, the people he hires to do the work around his house also benefit. They earn money working for him and are able to do what they specialize in, instead of having to spend too much of their time doing other things.
Even if Wes, the man who mows Prof. Carden’s grass, is able to mow lawns and prepare economics lectures faster than Prof. Carden is able to do them, it still may be beneficial to trade. In the example that Prof. Carden uses to illustrate this, both he and Wes save thirty minutes by trading instead of each doing the same work. This frees up valuable time for them to spend as they please. This is a small example to show some of the logic behind a key principle in economics: Trade creates wealth.