Category Archive: Government

  1. Featured On Demand Program of the Week: Does Inequality Matter?

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    If you want to get the full picture of the topic of income equality check out this Learn Liberty On Demand program. We’ve pulled together a list of mind-blowing videos, featuring professors like Sean Mulholland, Steve Horwitz and others who explore the subject from many perspectives. We’ve made sure that each video builds on what was covered in the previous one to make sure you get all the angles. You’ll not only quickly get up to speed on what all the issues are but, more importantly, hear some surprisingly fresh solutions on what we can do to combat poverty.

    This program tackles issues from income inequality and social safety nets to the role the war on drugs plays in creating a permanent underclass. This topic is likely to only increase in importance in the coming years.

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  2. Remember, Remember the 5th of November

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    Today is Guy Fawkes Day, which commemorates the Gunpowder Plot of 1605, where a group of Catholic dissidents, including Fawkes, planned to assassinate Protestant King James I and reinstate a Catholic head of state. In popular culture, however, Guy Fawkes Day and notably the Guy Fawkes mask have come to celebrate broader protest against the government and establishment.

    One place where the mask has been particularly prevalent is in the Ukraine, whose citizens successfully revolted against corruption and an inept government last year. In the video below, a Ukrainian citizen explains why she and thousands of her fellow citizens are on the street in revolution. Guy Fawkes would be proud.

  3. The Scariest Thing This Halloween: Government

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    According to a recent Chapman University survey, it’s not ghosts and goblins that Americans are most afraid of this Halloween; it’s the government, the corruption of which ranks as the number one fear in a list of 88 options. (Whooping cough and zombies rank as the bottom two in case you’re curious.)

    In the video below, Cindy Cohn of the Electronic Frontier Foundation explains that we have good reason to be afraid. The National Security Agency is engaging in wide scale collection of our telephone and internet records.

    Ronald Sievert of Texas A&M counters that the government only reviews a small fraction of all internet correspondence, but Cohn explains that this is misleading because 90 percent of email traffic is spam. The government isn’t telling us how much of our relevant communications is being collected.

    Before we can have an honest debate about the trade-offs between security and liberty, we must have an accurate understanding of the scale of government surveillance and whether it’s abusing its authority in doing so. Until then, we’ll just have to hope the government polices itself. Spooky!

  4. Republican Debate: More of the Same?

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    Last night’s Republican debate was two hours of 10 candidates doing their best to distinguish themselves from the many people hoping to win the 2016 presidential election. While there were some generally agreed-upon winners (Marco Rubio and Ted Cruz) and losers (Jeb Bush, and for some the CNBC moderators), the debate itself was underwhelming. Was it just us, or did all the candidates sound…the same?

    The problem of politicians sounding the same isn’t just limited to primary elections. Even once candidates receive their party’s nominations, we’re likely to hear a lot of the same talking points from both Republicans and Democrats. But why do all politicians end up sounding the same?

    In the video below, Professor Diana Thomas explains why politicians from both parties use the same talking points. The phenomenon can be explained by the median voter theorem, which states that in two-party, majority-rule democracies, each candidate has to appeal to the voter in the middle—the median voter—in order to win the majority. Instead of catering to their right or left-leaning base of supporters, like we see in the current debates, candidates in general elections have to appeal to the average American.

    “In fact, if you want to win,” Thomas explains, “you will have to aim for the position of the median voter—the guy right in the middle of the spectrum—because he’s the last voter you have to convince to get the majority you need.”  

  5. Win the Game of Thrones by Not Playing

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    Game of Thrones won Outstanding Drama Series at the Emmy Awards recently, and its fandom has reached a feverish pitch. Though its medieval society filled with dragons, giants, and magic may seem far removed from our present day, the principles underlying the nature of power remain the same in both.

    In the video below, economist – and GoT superfan — Matt McCaffrey explains how the pursuit of power – whether for the Iron Throne or a present-day political position – hurts regular people, who just want to go about their life. In the words of the character Jorah Mormort: “The common people pray for rain, health, and a summer that never ends. They don’t care what games the high lords play.” The same is true for the vast majority of Americans today.

    McCaffrey points out that societies emerged from the brutal conditions depicted in GoT to the relative prosperity and stability of modern times by limiting the power of the throne – or its modern-day equivalent. “The very existence of the Iron Throne,” McCaffrey explains, “encourages people to kill for it, even die for it.”

    To increase (and retain) our prosperity, ordinary people must question the nature of arbitrary authority like the Iron Throne. When people remove their consent of such authority, power is weakened, and the Iron Throne becomes nothing more than an uncomfortable chair – something especially so when the emperor has no clothes!

  6. Every Flaw in Consumers Is Worse in Voters

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    I have been making a mistake for most of my life. See, I’m an economist, and one of the things that attracted me to economics is the notion of the “ideal economy.”

    Of course, there are valid objections to the use of markets. There are people who cheat and commit fraud, and there are problems with information and market power and externalities. Sometime consumers make mistakes. In fact, some of those mistakes, as my friend and Duke colleague Dan Ariely is fond of telling me, raise questions about the very nature of our “model” of consumption.

    In his book Predictably Irrational, Dan makes two main points. First, consumers are not “rational,” at least not in the sense economists assume.  Consumers have trouble choosing among several alternatives; new product prices are arbitrary; and people are seduced by “free” stuff.  Second, sellers and marketers know that consumers are predictably irrational, and they take advantage of that weakness by advertising, packaging, and carefully framed comparisons.

    So what’s the mistake I’ve been making for most of my life? I’ve been trying to defend the perfection of markets. I’ve been sucked in to the notion that markets are “ideal”: “Markets aren’t so bad!” “Consumers are generally better off!” and so on. Friends, if you have been defending the perfection of markets you have been played for a sap. Stop it.
    The simple fact is that people can be hoodwinked. People. Human beings. The results of behavioral economists and psychologists such as Dan Ariely, Richard Thaler, and others are correct, and persuasive. But when someone uses those results to criticize markets – and stops there – they are not playing fair. Because the criticism of markets always has to be in reference to some other system: markets are bad, compared to what?

    So if you are confronted with someone who has been reading behavioral economics, I would recommend that you grant their claims.  People are not that great at making decisions.  But then challenge your friend with this:  Every flaw in consumers is worse in voters.

    Think about it.  Every flaw that people point out in consumer choice is present, but much worse, in political choice!

    -Asymmetric information (where producers have more knowledge about the product than consumers) about quality? Check. Consumers can look at ratings or Consumer Reports to learn about product quality.  But it’s very difficult to know when a politician is lying (unless you buy the old line that it’s when her lips are moving).

    -Monopoly? Check. Yes, the cable company is pretty bad. But the state is the very definition of monopoly.  Your only escape is to move…to some other monopoly.  There is never competition, and the bureaucrats down at the Department of Motor Vehicles know that.  That’s why they treat you so badly.

    -Seductive and misleading advertising? Check. Maybe I do buy those new Nike kicks because they promise to make me like Mike, and maybe that Twix bar by the checkout counter is too tempting to resist. But at least I like Twix!  Politicians “place” themselves in ads all over the place like photo bombers from hell, and how often do we really get what we’re promised?

    -Finally, seduced by free stuff? Check. Ariely notes, rightly, that people will often (irrationally) choose the free alternative, and will fail to understand the other costs of free stuff, like waiting in line or filling out paperwork.  Frankly, that sounds to me like a pretty good description of government programs ranging from our new healthcare system (“It’s all free!”) to recycling programs, which conserve on everything except time, which is the one resource that is truly non-renewable.  I’ve seen people waste 10 minutes, and 50 cents worth of gas, to recycle two plastic soft drink bottles and a cardboard box worth a total of a nickel.  But since recycling gives us free resources, it must be worth it!

    A number of recent books (Caplan’s Myth of the Rational Voter, Somin’s Democracy and Political Ignorance) have made this point, but for someone reason advocates for liberty don’t close the circle very well in debates.  Here’s the fact:  People do a poor job of acquiring information and using it to make decisions in the way that the rational choice model predicts.  Here’s the conclusion:  This has implications for the capacity of consumers to benefit from markets, because consumers are people.  But the conclusion also has to be that voters have the same problem, unless you think people are dumb in the supermarket but miraculously smart in the voting booth.  It’s the same person.

    Why are voters even dumber than consumers?  Consider this: A consumer who buys a bad television, or pays too much for a coffee-maker, or gets ripped off on an investment, is stuck with the bad TV, and loses her own money on the coffee-maker or the dumb stock buy.  It happens, but you learn from your mistake (this is called “market feedback”) and make a better decision the next time around.

    Voters, on the other hand, have even less information, have no way of getting accurate information, and know that their choices won’t determine the outcome anyway.  If I spend months learning about the candidates, and then cast my vote for President, it has absolutely zero impact on the outcome.  Not small, mind you:  zero.

    I still vote, of course.  I’m a good citizen.  But I vote for the candidate who makes me feel good.  As Jason Brennan has pointed out in Ethics of Voting, this breaks the connection between civic commitment (voting) and desirable outcomes (good government).  Ignorant, irrational voters don’t just make themselves worse off.  They can harm everyone.

    People choose badly.  But they choose worse as voters than they do as consumers.  So unless you believe in suspending democracy, that’s a pretty powerful argument for markets.

  7. Foundation for Economic Education: The Ghosts of Spying Past

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    This post originally appeared on on July 8th, 2015. Below is an excerpt.

    In the early days, the Internet was thoroughly insecure; its governmental and academic users trusted each other, and the occasional student prank couldn’t cause much damage. As it started becoming available to everyone in the early ‘90s, people saw the huge opportunities it offered for commerce.

    But doing business safely requires data security: If unauthorized parties can grab credit card numbers or issue fake orders, nobody is safe. However, the Clinton administration considered communication security a threat to national security.

    Attorney General Janet Reno said, “Without encryption safeguards, all Americans will be endangered.” She didn’t mean that we needed the safeguard of encryption, but that we had to be protected from encryption.

    In a 1996 executive order, President Clinton stated:

    I have determined that the export of encryption products described in this section could harm national security and foreign policy interests even where comparable products are or appear to be available from sources outside the United States, and that facts and questions concerning the foreign availability of such encryption products cannot be made subject to public disclosure or judicial review without revealing or implicating classified information that could harm United States national security and foreign policy interests.

    The government prohibited the export of strongly secure encryption technology by calling it a “munition.” Putting code on the Internet makes it available around the world, so the restriction crippled secure communication. The Department of Justice investigated Phil Zimmerman for three years for making a free email encryption program, PGP, available.

    For the rest of the article head over to

  8. Leave Maternity Leave Alone!

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    Washington D.C. council members introduced legislation that would provide 16 weeks of paid parental leave to almost all employees in the District — paid for by a new tax on private D.C. employers. The proposal has been greeted positively by the media, which frequently point out that the U.S. is one of the only countries in the world that does not offer paid parental leave.

    Similarly, Bernie Sanders was met with resounding applause at the first Democratic Presidential Debate when he said, “When a mother has a baby, she should stay home with that baby,” making an argument for federally mandated maternity leave.

    But in the video below, Rochester Institute of Technology Professor Lauren Hall explains that while paid parental leave may sound good on paper, in practice it does little to actually help women professionally and may actually hurt them. Long maternity leaves, she explains, mean that women end up with less experience, weaker portfolios, and a smaller network, furthering professional disparity between the sexes rather than reducing it.

    Ironically, in countries with generous leave policies, there are actually a lower proportion of female managers and CEOs than in United States. We should judge policies based on such results, not on how well-intended they may seem. Remember what the road to hell is paved with.

  9. When Government Fails—Venezuela Edition

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    The following blog post by Abigail Hall appeared on the Independent Institute’s blog on September 3rd, 2015. Below is an excerpt.

    Some people look at the conditions in Venezuela and point to oil prices as the source of many of its problems. The Venezuelan government, led by President Nicolás Maduro, blames opposition leaders for the nation’s many issues. (He also blames Spiderman. No, really. You can read about it here.)

    The maleficent actor here is the Venezuelan government. Who is responsible for inflation? The government, who is printing money so fast that inflation has reached triple digits. Who is responsible for the squatters (and as a result, the shortage of rental housing)? As I discussed in a previous post, it’s the government, who fails to protect even the most basic private property rights. Who are the protestors rallying against? The government.

    The shortages are also the responsibility of the Venezuelan government. In an effort to control commodity prices, the government has put a cap on the price retailers can charge for particular products. While such prices may be attractive to consumers, they are too low for producers to earn a profit. This causes many would be suppliers to drop out of the market. The end result is surging demand and less supply.

    The losers in all of this are the people of Venezuela. With the money in their hands constantly losing its value and a lack of basic goods, they are forced to wait in unfathomably long lines to get basic necessities. Even here the government is interfering. People are only allowed to get in the queues for food on certain days, as dictated by the last few digits on their ID cards. Once in line, people mark their wrists with their number in line in an attempt to avoid arguments over position.

    Click here to read more.

  10. V for Venezuela

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    Venezuela’s condition continues to deteriorate, with opposition leaders imprisoned and elections allegedly rigged, the situation looks like it will not change anytime soon. This brings up the question, when are societies justified to rise up in a violent manner against government? Check out this short Learn Liberty video and let us know what you think in the comments.

  11. New Whistleblower Reveals “The Drone Papers,” Detailing Pres. Obama’s Covert Drone War

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    A “Second Snowden” leaked a cache of secret documents that has put the CIA’s and United States military’s use of unmanned aerial vehicles (drones) back into the spotlight. Drones have been used post-9/11 to carry out lethal strikes on those deemed enemies of the United States – even if the strikes take place outside of a declared war zone.

    Armed drones were first used by George W. Bush in 2003 and have been President Barack Obama’s “weapon of choice” since his first days in office, according to The Intercept. But the public’s knowledge of the drone program’s inner-workings has been extremely limited. That may be changing thanks to the newly released documents.

    As the use of drones has intensified over the years, the number of questions surrounding the program have increased. What intelligence is used to determine the targets? Who makes the decision to carry out specific drone strikes? Does a military with a power drone program make us safer?

    In this video, George Mason University economics Professor Bryan Caplan argues that having an army is perceived as a threat by other countries, causing them to feel angered or provoked. As a general rule, he says, being better armed doesn’t make you safer, and can even have the opposite effect.

    While Prof. Caplan made his argument in regards to our traditional notion of the military, the same questions and principles could be applied to the borderless “War on Terror.” What do you think about the use of drones for counterterrorism operations? Let us know in the comments.

  12. Bureaucratic vs. Business Management in Health Care

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    The health care debate has been long on hysterics and short on useful analysis. Incendiary and counterproductive rhetoric about socialism, Nazis, and death panels from some corners notwithstanding, critics of socialized medicine raise an important question with uncomfortable answers: in the absence of profits, losses, and prices, how will decisions about the production and allocation of health care be made?

    Ludwig von Mises offers a telling set of answers in his short, accessible book Bureaucracy, which is available for free download. Lest this be construed as an attempt to answer important questions by dusting off irrelevant ancient texts or an exercise in hero worship by someone who is a slave to some defunct economist, to borrow from John Maynard Keynes, it is important to note that a lot of Mises’s predictions turned out to be correct, and the principles he expounded about the importance of the price system remain relevant today.

    The intellectual environment in which Mises wrote is also particularly relevant. Among other things, he was writing at the height of enthusiasm for central planning, when many—economists included—thought that capitalism was breathing its last and that some form of central planning was the wave of the future. Mises escaped Europe and left for the United States just before the Nazis got to him, and he wrote Bureaucracy while on an appointment at the National Bureau of Economic Research.

    One of the most important aspects of Mises’s intellectual oeuvre is his focus on the role of prices, profits, and losses in a market economy. In Bureaucracy, Mises distinguishes between “bureaucratic management” and “business management:” “(b)ureaucratic management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body” while “(b)usiness management or profit management is management directed by the profit motive (p. 50).” This has an important implication: “(t)he objectives of public administration cannot be measured in money terms and cannot be checked by accountancy methods (p. 50).” In other words, bureaucrats free from the constraints of private property, profits, and the profit-and-loss system cannot tell whether they are creating or destroying value.

    Mises describes the problem of bureaucratic calculation as follows (p. 67). Any manager knows that he or she can make his or her enterprise better or more successful with more resources. Where bureaucratic management fails is in the fact that it does not have the feedback mechanism that would allow one to compare the costs and benefits of building a hospital to the costs and benefits of building a highway, or in a more narrow sense directly applied to the health care debate, there is no way to tell whether resources are more wisely used building a cancer center or a burn ward.

    It is true that we can evaluate policies and use statistical analysis to tell us with some precision how a change in a policy instrument will likely affect an outcome in which we are interested. For example, we might be able to measure the effect of an additional test or exam on the probability that an illness will be detected. Under bureaucratic management, however, we cannot tell whether an additional test or exam is a wise use of resources.

    Without profits and losses, we do not have a feedback mechanism that tells us whether we are using resources wisely or unwisely; further, the probability that resources will be wasted increases because decisions about production and allocation become responsive to political incentives rather than customers’ desires. Indeed, this is one of the most trenchant critiques of the status quo, which is a bizarro-world patchwork of regulations, subsidies, and interventions that is market-like in some important respects but that combines all of the worst aspects of corporatism and interventionism.

    Economic analysis has an important place at the table because it helps us understand and explain how people might respond to different incentives given their values. Further, careful economic analysis shows us that the knowledge we would need to implement a sustainable, centrally planned, socialized health care system is of a type that is too high for us to attain. In principle, it cannot be known outside of the profit and loss system. The economic way of thinking is not merely one way to look at health care, and it is not just another perspective. It is indispensable if we are going to have a rational system.

    Art Carden is an Economics Professor at Samford University and a Senior Research Fellow with the Institute for Faith, Work, and Economics, a Research Fellow with the Independent Institute, a Senior Fellow with the Beacon Center of Tennessee, and a member of the Adjunct Faculty of the Ludwig von Mises Institute. He has also starred in Learn Liberty programs and videos on personal finance, gas prices, and trade.