Thursday, June 16, 2011

Humanist Article and Political Reasoning

In general, I would consider myself a humanist. I generally think that humans need to uphold to ethics, reason and justice. I also don't believe in supernatural things such as ghosts and other pseudo-sciences. Tonight I was at the library and discovered a magazine dedicated to humanist reasoning. While there was a lot of things that I like about the magazine, there was several articles in the most recent publication that attempted to provide a humanist examination of "social justice." As I figured, the reasoning of the article generally followed what I would call a typical Americanized liberal view of the topic (http://thehumanist.org/may-june-2011/what-do-we-deserve/). There are several things that I think are incorrect about the reasoning used in the article that I would like to talk about here.
In the article, the author compares life to a race. The author says "So while the racetrack may look nice and shiny, the runners don’t begin at the same starting point." The purpose of this sentence to provide reasoning for why a libertarian philosophy would not work. They are saying that because we don't start out equal, a "free market" system will not work. Namit Arora makes her definitive and conclusive by saying "In Rawlsian terms, the problem in the United States is not that a minority has grown super rich, but that for decades now, it has done so to the detriment of the lower social classes." However, I have several problems with this.
First, life is not a race. One person's victory is not another person's loss. Life is not a zero sum game. So, the fact that some people start out with some "advantages," such as a higher intelligence or wealth level, does not mean that this distracts from the abilities of others. For example, does Bill Gate's immense wealth make me any less wealthy? No, in fact the products that his company provide makes my life significantly better of. So, the wealth of Bill Gates was created by making me better of. Again, the fallacy of Namit Arora's argument is the assumption that wealth in life is some type of zero sum game, where the wealthy's success, even if unearned, has somehow come at the expense of the poor, or some other group.
Secondly, lets assume that Namit Arora is correct and wealth is in fact a zero sum game. What options does that provide us? Sure, people that are smarter, or have parents that are wealthy, will start off with some advantages. But this point just begins the discussion. Experiences throughout history has shown that inequalities are a fact of life. No matter what system we have, some will have advantages because of the way they look, or their level of intelligence. At the same time, some will have power over others, in a capitalist system it may be people with more money. In socialist, or communist, systems it is the people with political power and social connections. There will always be people with more power over others, and ultimately systems that attempt to eliminate disparities in power are ultimately self defeating, as it requires some to have a significant amount of power to distribute power in a "fair" way.

Monday, June 6, 2011

For-Profit Universities

For-Profit Post-Secondary Schools

Ever since there was an explosion in for-profit university attendance, there has been a considerable amount of discussion about the usefulness of these types of schools. For many people, for-profit universities are evidence that businesses, or profit seeking business models, should not be used to provide schooling to individuals. The reasons for these are generally as follows: for-profit schools have significantly higher dropout rates than other schools. They also graduate people with “worthless” degrees, as the people who attend are unable to find a job, or find a job that pays enough to cover their loans. More recently, the federal government developed a set of rules that would cut federal aid to for-profit schools that don’t meet a particular set of requirements. I feel that these concerns are to a large part exaggerated and unnecessary and I would like to develop an understanding of why I think I am correct.

1. For-profit universities have higher dropout rates than state or non-profit universities. This complaint is generally one of the largest complaints that are made against for-profit universities. The strength of this argument comes from the fact that there is no denying that for-profit universities do have higher dropout rates than state or non-profit universities. However, making this argument assumes that the people who attend for-profit universities are the exact same as those that attend state or non-profit universities. However, when you look at the data (http://chronicle.com/article/Who-Are-the-Undergraduates-/123916/) this does not appear to be the case. People who attend for-profit universities are significantly older, more likely to be a ethnic race other than Caucasian, and have a lower income. All of these indications are signs that people that attend for-profit schools are different than those that attend state, or non-profit, universities. For example, for-profit universities are probably more likely to admit people that struggled more in school, are non-traditional students, or are looking for an education in fields not typically associated with traditional schools. With these differences, we cannot simply look at graduation rates to determine which school is doing a better job.
2. For-profit universities could simply be expecting the student to determine if they are capable of graduating. For non-profit and state schools there is typically a screening process that is used to admit some students, while denying admittance to others. Typically, this is process is justified by arguing that only people who are likely to succeed are admitted. If the for-profit schools admit everyone that applies, there is surely going to be a higher dropout rate as the for-profit schools will be admitting people with lower academic standards. Personally, I don’t see a problem with putting the responsibility of determining success in to those that are applying. I know others feel that it should be the schools responsibility, but this is a matter of personal preference, not an indication of the success of the for-profit model itself.
3. For-profit schools graduate people with “worthless” degrees. I am not sure how we can measure if a degree is worthless. Personally, I can see a philosophy degree from Harvard being pretty worthless in its application to the modern world, but we don’t see claims that Harvard is graduating people with worthless degrees. I think that people are saying that for-profit colleges are creating worthless degrees, due to a larger proportion of those that graduate from for-profit universities falling into default of their loans, or being unable to find employment. I say a larger proportion, because there are people who graduate from state, and non-profit, colleges that have been unable to find employment, or find employment that pays enough to cover their student loans. The problem with this, again, is that it assumes that the people who attend a for- profit school are the same as those that attend a state, or non-profit, school. However, if they are different then looking at employment or default rates alone will tell us nothing about the value of a degree. In addition, this comparison forgets that the types of degrees are typically different as well.

Finally, I would like to make one final point. Recently, the federal government as set up new rules on the granting of federal student loans as to limit the amount of loans that for-profit schools can receive. These restrictions are based on many of the criteria I discussed above. To some extent, I don’t have a problem with an organization that provides a service to people, such as the federal government and student loans, having a set of requirements for receiving that service. So, in that sense I don’t have a problem with what the federal government is doing with regards to these new student loan requirements. However, where I do have a problem is in the fact that through the student loan process, the federal government is subsidizing university attendance. This is achieved through many ways, with the Stafford interest rate subsidized loans being one example. So, if the federal government provides these loans, but excludes a particular group, in this case for-profit colleges, then it is basically picking winners and losers and distorting the education market. For example, the for-profit business model may be the better education model, but because of the federal subsidies, the non-profit / state model that is currently being used may continue to dominate the market simply because it is that system the federal government has picked as the “better” system.

Tuesday, March 1, 2011

Mandating Behavior

While reading USAToday a while ago, I ran across an editorial cartoon that was talking about the new healthcare law and in particular it was addressing the relevance of the health insurance mandate. In the cartoon it makes the point that under our current system an individual can go to the emergency room, receive care and many not have to pay for the care they receive. Because hospitals are required to provide care, regardless of ability to pay, the cartoon argued that without the health insurance mandate, others are required to pay for someone’s health care if they go to the emergency room and do not pay. In addition to this cartoon, I have heard this argument several times previously from different sources. While I would agree that our system of providing care to people regardless of ability to pay induces a moral hazard for people to over-consume health care, I think that it is important to address this particular point.
The point is to make what seems to me to be a relatively obvious objection to the previous line of reasoning. To start the reasoning for the justification for mandating people purchase health insurance you have to make the initial statement: “I am, or society is, unwilling to let people go without necessary medical care.” Based on this line of reasoning, we have mandated that hospitals must provide people with health care, regardless of ability to pay. The second line of reasoning goes: “Because I am unwilling to let you go without medical care, you have a strong incentive to over consume healthcare, or not pay for healthcare. “ Finally, the argument goes: “Because you will not bear the full cost of your care, and I will bear some of the cost of your care, I am justified in dictating what you purchase or consume. (Like purchasing health insurance)” However, the problems with this line or reasoning should be obvious. Basically it is saying, because I feel one way that gives me the right to control you in some other way. So it is saying that the person doing the controlling is justified in controlling another person because of how they feel. How can the person being controlled prevent this in any way? They cannot. What limits does this place on the controlling person? None. Along this same line of reasoning, I could say that blonde hair annoys me; therefore I have the right to force every blonde person to dye their hair.
Based on the objection that individuals do not completely pay for their cost of health care, due to the emergency room, the obvious answer to me is to make them pay. Instead of mandating that everyone purchase insurance, we should eliminate the requirement that individuals admitted to the emergency room do not have to pay for their care. For those that cannot pay, they can attend private charity driven hospitals that would emerge once we have eliminated the distortion causing government policies.
In addition to the point I just made, I would like to make a couple more. First, knowing the problem that individuals do not cover the full cost of their health care, the policies we enact should work toward fixing this problem. However, we seem to be moving in the opposite direction. For example, the recent health care legislation mandated health insurance be provided through a process of community rating, where by healthy people subsidize the sick. We also moved to provide health insurance subsidizes, which shift the cost to tax payers. Secondly, there has been a lot of talk recently that the United States is the only industrialized county that does not have universal health care. However, what does the mandate that emergency rooms provide care regardless of ability to pay result in? It results in universal access to health care. Proponents of increased government involvement in health care like to ignore (perhaps they don’t understand?) this point. I personally don’t think a universal health care system is necessarily a good thing. However, for those that do, they don’t seem to realize that we already have it, they just don’t like it.

Tuesday, February 22, 2011

Contradictions Cannot Exist Part 2

In a previous blog post, I brought up the point that contradictions cannot exist, then I brought up a way in which I thought a group of particular people were making two contradictory arguments. I wish to continue this series by bringing up another area where I think that some people are making inconsistent arguments.
Recently, there has been a lot of discussions with regards to public sector unions. Individuals that would generally call themselves liberals have been concerned about the recent talk within many state governments of requiring concessions from many public sector unions in order to balance their budgets. Of course, supporters of unions have been arguing that these are attacks on unions specifically, with the ultimate hopes of eliminating public sector unions. Before proceeding, I think it is important to look at unions more closely.
Historically, the unionization of the workforce has been advocated with the grounds that firms have bargaining power over individuals and may be able to extract economic rents from workers in the form of lower wages. Unions, the supporters argue, equalize worker bargaining power, leading to higher wages for workers. So that begs the question, are public workers being exploited by their employer? Before I answer this question, I will bring up another point.
Generally, supporters of unions tend to be Democrats politically. If you doubt this, keep in mind that public sector unions are some of the Democrats largest political supporters. As a general rule, individuals that lean left tend to support an active government involvement in many of the economic sectors of our lives. They support re-distributive policies. More importantly, for this argument, they tend to support government action in ensuring our food is safe, our schools are run well, the goods we purchase are safe and many other areas. the primary argument for these actions are that government is not motivated by greed, and is concerned with the public welfare, because the government is "us."
However, the contradictions between the two topics I talked about cannot be more obvious to me. In one breath the union supporters argue that public sector workers need unions to ensure that they are not taken advantage of from the government. In the other breath the supporters generally argue that government involvement in our lives are necessary to ensure that we are kept safe. Which is it? Is the government taking advantage of individuals, or is it protecting them? If it is a force of good, why do the public workers need unions? If it is a force that takes advantage of individuals, how can we expect the government to protect us?
I think that supporters of unions would make many arguments for why there are differences. Perhaps governments are good at protecting citizens, but bad at protecting workers. However, I don't see how one is likely to occur, while the other is not. It seems to me that supporters of public sector unions, who also support an activist government policy, are living in a contradiction in their way of thinking.

Tuesday, December 28, 2010

Positive Vs Negative Rights

In the most recent discussion on CATO Unbound, Daniel Klien attempts to address the issue of property rights in a social democracy. While Daniel Klien’s essay is interesting, I felt that it is more important to address one of the topics that one of the response essays addressed. In response to Klien’s article, Matthais Matthijs wrote an essay titled “In Defense of Reason and a More Balanced Free Society.” While there are a lot of topics I would like to address in his essay, the one I would like to address now is the issue of positive versus negative liberty. In his essay he talks about unequal opportunities and how these lead some people to have less “freedom” than others, but what it basically breaks down into is the issue of positive and negative liberty.
Before proceeding, I think that it is important to address the question of that are positive and negative liberty. While some people would claim that there is no difference between the two, I would disagree. For example, a negative liberty entails restrictions on what other people can limit you to do. For example, a negative liberty would be our concept of freedom of speech and religion. While a positive liberty, defined by Matthijs, would include someone providing you with a resource that expands your consumptions possibilities. Examples of these would be the right to healthcare, or the right of someone providing you with a church to practice your freedom of religion.
Let me also say this, I would agree with Matthijs that our resource constrains, whether they are financial, biological or something else, do limit what we can do. For example, right now I could not purchase a Porsche for me to drive. This means that I lack the positive liberty to own a Porsche. However, with no one physically preventing me from purchasing a Porsche, or preventing me from saving money to purchase the car, I have the negative liberty to own a Porsche. However, I would disagree with him that this means that I am less free, or that something should be done to change this fact.
I think the best way to frame my objections to the notions of positive liberty would be to provide an example. So let me ask a question, am I free to quit my job? Right now, I could not quit my job and remain unemployed for any significant length of time. From a positive liberty point of view, I am not free to quit my job. However, there is no law, or other external restraint, preventing me from quitting my job, which means that I have a negative liberty to quit my job. From Matthijs’ point of view then, I am not genuinely free. To be genuinely free, I would need to have someone (who?) provide me with all the housing, food, clothing, heat and healthcare that I could want for as long as I want. But why stop at those items? In order to truly be free, I would also need all the internet I want, a two week vacation to anywhere in the world, and anything else I could want. I mean hey, the thought of being a professional video game player sounds like a job I would like. In order to be genuinely free, someone would have to provide for me everything I would need in order to pursue that goal, like a really good computer to handle the latest video games, etc.
In addition to the problems of determining all the physical items that would be needed for someone to genuinely free, we run into several other problems. First, if I have a right to healthcare, and a doctor has a right to quit his job, what happens when my rights and the doctors rights conflict? In fact, what about the provision of all the other goods I have a right to in order to be genuinely free. Those items don’t just appear out of nowhere. Some on has to provide them. In the sense that I have a right to the good that these people produce, I have a right to tell them what to do. There is a word for the process I just described, it is called slavery. Ultimately, it seems to me that if you follow the actual line of reasoning of what the notion of positive liberties entail and look beyond what is obscured by the notion of taxation and money, you come to a situation where we all become slaves to each other, the very Orwellian concept that freedom is slavery.
Secondly, I would also point out that Matthijs points out the fact that we are all born unequal, however he only talks about the one area where we are born unequal that he feels is important, income wealth. However, this forgets that there are other areas where people are born unequal as well. For example, some people are more attractive than others. In addition, some people are tall while others are short, some people have blonde hair while others have brown, some people have beautiful singing voices while others do not, and I can keep going on like this for a very long time. If the fact that some people have more monetary wealth than others, and equalizing this inequality makes people freer, than equalizing the other areas of inequality should have the same result. However, I seriously doubt that most proponents of positive liberty would support laws that require everyone to die their hair black, or require taller people to go through surgery to have the length of the legs shortened. After all, how is it fair for taller people to have an advantage in basketball, they only got that advantage because they were lucky and had parents that provided them will a genetic code that leads to long legs.
In addition, let me talk about another example that I was thinking about today. Under our current higher educational system, people have to pay to receive their education. I recently was reading about a woman who graduated from a private university with over $200,000 in debt and ended up with a fairly useless degree (I don’t remember what it was). Because of this debt, she cannot do some of the things she would like to do. She cannot take a low paying job that provides other non-monetary rewards. In addition, it makes it so she cannot live on her own, or she cannot take another trip to Europe. Because of these loans, Matthijs would say that her positive liberty is severely restricted. While I would point out that she took those loans voluntarily, I would agree that those loans do limit what actions she can now take. So let us suppose that upon hearing this, our country decides to provide post-secondary education for free. This way no one will come out of school with loans, and people’s positive liberty will increase. However, this is a similar problem to Bastiat’s broken window and fails to look at the unseen responses of such actions. For, the post-secondary schooling will not be free; the government will still have to pay for it somehow. It is most likely to do this through taxes. Let us suppose that it is done through a value added tax (what type of tax really does not matter). Now I, and everyone else, will have less money to spend on the goods and services we would like to purchase, because of the higher tax. Now, everyone that is taxed has had their positive liberty reduced. With the tax, I may now be unable to take a trip to Europe, or someone else may be unable to get a lower paying job that provides other non-monetary rewards. So has the total amount of positive liberty in society been increased? When we look at it, some people gained positive liberty, no student loans and more access to higher education, while others have less, lower disposable incomes.
I would say that I think Matthijs would have several counter arguments to this example. He may ask what if the tax for paying for free higher education was placed on “the rich?” Then the positive liberty of the “rich” are not reduced, or if they are it is by only a small amount, because what value does more income provide to the “rich?” So the positive liberty of society may increase significantly on net it the correct taxes are placed. However, I would argue that this line of reasoning is merely another fallacy that forgets to ask, what would that money have been spent on otherwise? Sure the rich may not get much value from that money, but they are not the ones likely to spend it. Most of the money was likely kept in investments, stocks, bonds, bank deposits. This means that most of the money would have been spent on lending to businesses to expand, or open. Perhaps the money was donated? The point is that it is unlikely that placing the tax burden on “the rich” will not change the point that providing some people with positive liberty also means depriving others of some positive liberty as well.
While I find the points I made previously to be quite compelling, proponents of positive liberty and the social democratic state would charge that I am wrong in my reasoning. For example, they are likely to point out that most of the developed countries in the world operate on the principal that healthcare is a right and yet they don’t have guns pointed to heads of their healthcare providers. While I would agree that we do not see the results I describe in other countries that state that healthcare is a right, I would argue that the reason we don’t see this is because those countries don’t actually act as if health care is a right. In those countries, people do not receive all the health care available to them that they want; it is rationed through the government. Not a single one of those countries provides any medical procedure to anyone who wants it. If you actually think that healthcare is a right, I don’t see how you could deny that care. In addition, when they do run up against the issue of doctors leaving their jobs and providing care for the sick, those governments tend to uphold the right for a person to quit their job over the right of someone to receive health care. So they do run into the problem I described, the only difference is, instead of prioritizing the right to healthcare over the right to quit a job, they do the reverse. However, this runs into the simple problem that if no one provides the service, no one can consume the service, thus they do not have a right to it.
Let me end this by saying a couple of things. I am not saying that the goal of making sure that everyone receives as much health care, heat, food, clothing, etc. that they want is not a desirable goal. I just don’t see how saying that people have a right to them gets us anywhere near that goal. In addition, if we would also agree that negative liberties are also important, then we face the impossible task of providing two separate goals that inherently conflict with each other. I agree with Matthijs that we should be working toward expanding the consumption possibilities frontiers for everyone. However, we should attempt to get there by finding ways of providing more of these goods, not by writing on pieces of paper that everyone has a right to these items and ignoring the actual process of how to provide these goods.

Tuesday, November 23, 2010

Bans for Fast Food Toys

Today I was reading one of the blogs on the Economist website. I ran across several articles that I felt like I wanted to comment on. For this post, I will be talking about a post by M.S. that talks about the fast food happy meal toy ban in San Francisco (http://www.economist.com/blogs/democracyinamerica/2010/11/happy_meals_ban). There are several things about this blog post that I think needs to be addressed.
First, M.S. begins the post by acting like the post is designed to address the slippery slope argument and its use with unhealthy food. However, the post only spends a paragraph on the subject, and I will address the slippery slope argument and its relevance to this type of paternalism in a later blog post.
In the beginning of the article M.S. first brings up his thought that paternalism in this case is good, because the people involved are children. The problem is, no one is making the argument that children should not be treated like children. The issue is, who should be engaged in the paternalistic behavior? The parents, government, or a combination of the two.
Second, M.S. spends the second half of the blog post basically making the statement that people should not eat fast food, and the people are being manipulated by fast food companies to get their children to eat fast food. Finally, he ends by saying that it is perfectly reasonable for a demographic government to impose these bans as long as it is working in the interest of the general public and is done with the support of the majority. This is what I found most interesting and is ultimately is crux of his argument for why it is ok for these types of paternalistic laws to exist. However, this is ultimately what bothers me the most. Instead of deciding not to give his children fast food and dealing with the resulting behavior, he feels that he is justified in preventing everyone else from doing the same, as long as a majority of people agree with him.
However, my concern is with the minority. What about the minority of people that want their children to have toys when they go out and eat fast food. This fails to address the question: when is it wrong for the majority to impose its will on the entire population? I would be willing to bet that the justification that he used for the ban on toys would not convince him that it is ok to ban gay marriages, or teach creationism in schools, if that is what the majority of the population supports.

Sunday, September 26, 2010

For the Win and Unions

A while a go Wired magazine had someone post a review of the young-adult book "For the Win" by Cory Doctorow (You can find the book to download for free at: http://craphound.com/ftw/download/). Within the review the Wired author mentioned that the book was about labor rights and unions and that the book had strong economic reasoning for a young adults book. Naturally, this piqued my curiosity. So, I downloaded the book and read it.
For a kids book, I don't think that it was too bad. I thought the characters were pretty flat, the story was a bit repetitive at times and was unnecessarily long. Sadly, I thought his understanding of economic consents was particularly weak. For the most part, the book was filled with the standard critiques of the economic conditions in the third world. Complaints about sweat-shops, child-labor, pollution, exploitation, etc. While some of these things may be bad, as usual, there is very little examination on why they exist, other than to say that they are rich powerful people exploiting poor weak people. I am sorry, but I generally do not think that is really the case.
In addition, I thought that his understanding of arbitrage was particularlly weak. Sure, I think that he explained what arbitrage was fairly well. However, his critique of saying that it does not create any economic value was particularly ignorant. For example, he does not seem to understand that getting goods from one person that values something for $5 to someone that values it at $10 creates economic value. His chapter on arbitrage says that the "neighborly" thing to do would be for a person to work to bring these two people together for free. Under this argument, people should be willing to work at any economic activity for free, because that would be "neighborly". However, his entire book is about people wanting to get paid more, not less.
In one area of the book, he has a child worker that is attempting to create a union in India talking with another worker who says that it is not fair for a boss to be able to fire workers, while workers cannot fire a boss. However, this argument fails, simply because it is incorrect. A worker can very easily fire a boss, it is called quitting your job. Under such an arrangement, that individual that was your boss, no longer has any control over your life. In fact, may of the laws we have today, including union rules, make it harder for a boss to fire their workers, however, we have no laws that prevent a worker from firing their boss by quiting. Just imagine the uproar that would occur if a law was suggested that would prevent people from quiting their job unless there was a justifiable reason, just like the laws that many countries have that require a business to have a justifiable reason to fire a worker.
I think that the reviewer from Wired over sold this book. While I enjoy the video game aspects of the book, the poor economics and poor reasoning of the book is going to prevent me from reading this book again. For the most part, it was entertaining, but not enough for me to want to read it again. Perhaps if I was 15 years younger, or I knew less about economics, I would enjoy it more.