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Economics Puzzle

This one has been bugging me for awhile: Why does McDonald's charge 20 cents more for a single cheeseburger than a double cheeseburger?

A Whopper to the commenter with the best answer!


On Democrats, Republican, and Voting – 127th edition

Golly, it’s been months since the last general election – time enough to drag out this old chestnut: After noting a bit of Democratic union pandering, Jacob Lyles remarks,

I doubt that I can ever vote for a Democrat without breaking out in hives....

which prompts me to ponder what afflictions attend his votes for other parties.

On voting, I basically see two options: 1) vote for the candidate that will always do what I would do, or 2) vote for the lesser of evils. Option 1 requires that I write in my own name (or perhaps engage in some studied ignorance combined with wishful thinking). Option 2 requires me to candidly acknowledge that life is full of trade-offs, go through my pouty period, and get on with it.

As far as I can tell, all successful politics is coalition politics. As Lord Acton remarked, "At all times sincere friends of freedom have been rare, and its triumphs have been due to minorities, that have prevailed by associating themselves with auxiliaries whose objects often differed from their own...." You can have purity, you can have victory, but you can’t have both.

Yes, the Democrats are beholden to unions and trial lawyers. However, these ties have not kept Obama from proposing a tax on the “Cadillac health plans” included in some union contracts, and his substitute proposal for No Child Left Behind that focus both rewards and punishments on teachers; nor have they kept Obama from putting tort reform on the table.

And what’s the lesser evil? As F.A. Hayek remarked in Why I Am Not a Conservative,

Unlike liberalism, with its fundamental belief in the long-range power of ideas, conservatism is bound by the stock of ideas inherited at a given time. And since it does not really believe in the power of argument, its last resort is generally a claim to superior wisdom, based on some self-arrogated superior quality.

[T]he most objectionable feature of the conservative attitude is its propensity to reject well-substantiated new knowledge because it dislikes some of the consequences which seem to follow from it - or, to put it bluntly, its obscurantism.... I can have little patience with those who oppose, for instance, the theory of evolution....

Connected with the conservative distrust of the new and the strange is its hostility to internationalism and its proneness to a strident nationalism.... The growth of ideas is an international process, and only those who fully take part in the discussion will be able to exercise a significant influence. It is no real argument to say that an idea is un-American....

[T]he anti-internationalism of conservatism is so frequently associated with imperialism. [T]he more a person dislikes the strange and thinks his own ways superior, the more he tends to regard it as his mission to "civilize" others....

And Hayek wrote that in 1960! (If Texas teachers remove all their Jefferson quotes from their walls, at least they can put up this quote in their place.)

When it comes to picking the lesser of evils, I regard Republican crony capitalism, loopy public finances and paranoid fundamentalist nationalism as the greater threat.


Democrats vote to keep poor kids out of good schools

I guess the more accurate headline would be "Democrats vote to preserve teacher union monopoly". For the second time this week, a party line vote denied funding for the DC Opportunity Scholarship fund.

There are some issues where I am closer to the Democrat platform than the Republican. But on issues like this, the Democrats' shameless bowing to the unions turns my stomach. I doubt that I can ever vote for a Democrat without breaking out in hives.


Look on the bright side

At least under universal health care this woman will be charged with some kind of recklessness.


Markets Know No Borders - Freedom Must Stretch Across All Humanity

My progressive friend Yitz and I had another interesting discussion on Facebook, this time regarding healthcare, free markets, and socialism, inspired by a BusinessWeeks news post Yitz linked to and summarized:

Finland recently signed a law which provides every citizen there with a legal right to a 1 MB/second internet connection as of July 2010, and 100MB/second by December 2015. The Finnish government says that people "need broadband connections to live normal lives."

Yitz followed up this summary with his thoughts:

While I believe in socializing basic needs such as food and healthcare, I had never thought of broadband internet access as a basic need -- but apparently the Finnish are looking towards a future where bandwidth and healthcare are equally vital. Still, all in all -- go Finland.

While the Finnish are a great people - they make the best metal in the world - I'm not so sure we should be following in their footsteps on economic policy. Here is my initial comment in response to Yitz:

Socialized food? So like ban private supermarkets and implement a 5 year agricultural plan, Soviet style?

Or do you mean providing a basic minimum through vouchers like we do with foodstamps?

Personally, I think food and healthcare are too important to be left to a government monopoly heavily influenced by entrenched corporate interests. That's how we got the worst-of-both worlds health care system we have in the U.S. today.

Another commenter challenged me on my characterization of the U.S. health care system as "worst-of-both worlds":

It's interesting how people from all over the world come to the "worst-of-both-worlds health care system we have in the U.S. today" for medical care.

As for free (*someone* i.e. taxpayers pay for it) broadband for all citizens, how about indoor plumbing and toilets? Are those also provided free by the government? I would think that they're more of a "basic need" than broadband Internet.

A different commenter took issue with preexisting condition clauses in insurance contracts:

The second biggest besides the Pre Existing conditions clause, which to me is criminal negligance, is the uncontrolled price gouging on medicines, whereas Canada,Israel etc force low prices and competitiveness.

I clarified and responded to both:

Our system is the worst of both worlds in the sense that either a real free market or a real socialized market would be better than the status quo. We spend more money under our mixed, corporatist system and receive worse health outcomes than we would under outright socialized medical care.

That fact is not incompatible with the fact that people from all over the world come to the U.S. for medical tourism. Our system can be great for people with money; not so great for people without it.

As for preexisting condition clauses, without them, health insurance would not be *insurance*. Insurance insures against risk; if you have a preexisting condition, there is no risk, only certainty. You cannot insure against certainty; you can only pay for it outright. Whether the money to pay for preexisting conditions should come from one's own wealth, charity, or forcibly taken away from others through taxes is a separate question, but you can't fault insurance companies for not insuring against certainties. They wouldn't be insurance companies; they would be welfare companies.

At this point, Yitz joined back in:

I just can't see how a real "free market" system (i.e., you pay, you get healthcare, you don't pay, you die) is even palatable to a society. First of all, it literally puts life-and-death powers EXCLUSIVELY in the hands of corporations (you want to talk about death panels? are they better when called 'ROI Assessment Committees'?).

Second of all, let's take swine flu for instance. Relenza, Tamiflu, all the anti-flu antivirals were made available to populations sometimes with heavy government subsidy. A real "free market" system would have set a price per dose, perhaps offered some sort of sale or promotion, but established prices based on "market value". Thousands of people would have died.

This assumption that people are just going to be charitable AND THAT there will be enough voluntarily offered resources TO SUSTAIN THE POPULATION is just not the case. Why would any society CHOOSE to have a percentage of its citizens destitute (health care cost is the #2 reason for bankruptcy) -- and much more prone, therefore, to crime and other social ills?

Scandinavia is right on the money with that. Internet might be a bit much...

I responded:

Yitz, we actually had something very much like a true free market in health care with low costs and widespread accessability, until the government "fixed" it. And it didn't involve corporations at all. The Jewish community was a particularly good example of how such a cooperative system could and did function. See Roderick Long's article here: http://libertariannation.org/a/f12l3.html

A snippet: "In the late 19th and early 20th centuries, one of the primary sources of health care and health insurance for the working poor in Britain, Australia, and the United States was the fraternal society. Fraternal societies (called "friendly societies" in Britain and Australia) were voluntary mutual-aid associations. Their descendants survive among us today in the form of the Shriners, Elks, Masons, and similar organizations, but these no longer play the central role in American life they formerly did. As recently as 1920, over one-quarter of all adult Americans were members of fraternal societies. (The figure was still higher in Britain and Australia.) Fraternal societies were particularly popular among blacks and immigrants. (Indeed, Teddy Roosevelt's famous attack on "hyphenated Americans" was motivated in part by hostility to the immigrants' fraternal societies; he and other Progressives sought to "Americanize" immigrants by making them dependent for support on the democratic state, rather than on their own independent ethnic communities.)"

As for vaccines and other medications, keep in mind that the current system we have is in no way a free market system. A free market does not grant government protected monopolies in the form of patents to drug companies. A free market does not have a single, monopolistic regulatory organization like the FDA that increases the cost of bringing new drugs to market dramatically. If you want someone or something to blame for the outrageous cost of modern pharmaceuticals, don't blame the free market: blame FDA regulation and government-created pharma patents.

Finally, if you don't assume that people care enough about each other to be charitable and voluntarily help each other when they are in need, why in the world would you assume that people would care enough to vote for a workable state socialist system to force themselves to be charitable? Electoral democracy doesn't magically transform selfish people into philanthropic people.

Yitz then wrote:

OK so no patents. So no intellectual property rights? On anything? Where I DO agree with you is that a patent only means "I invented the X. If you create an X, you must give me royalties." MONOPOLIZING the production of X's, however -- it makes me wonder why this isn't ALREADY illegal under anti-trust legislation (Microsoft Internet Explorer locks out competition and it's illegal, Pfizer locks out competition and it's good business?).

Teddy Roosevelt's "famous attack on hyphenated Americans" only stemmed from the "anti-hyphenate" sentiment in America at the time (America was virulently anti-Semitic and anti-Irish) -- this would be most shocking in Woodrow Wilson's administration where the Ambassador to the UK suggested America "shoot our hyphenates". I agree with you in that the Progressives back in the day were extremely pro-assimilationist (as are some Latinos and Asians in the GOP today btw) -- but we know that the civil rights struggle saw a flip of right & left in America.

Why do you think a "free market" situation would benefit America? How would there not be a horribly destitute underclass created, with no recourse and no resources? Why would "free market" 911 services, let's say, not create Hurricane Katrina-esque situations with every natural disaster? Where does "free market" stop?

My most recent comment in response:

No intellectual property rights on anything. There is a long and rich libertarian/classical liberal history of opposition to intellectual property. See: http://praxeology.net/anticopyright.htm

Asking how a free market would benefit America is a great question, and it's the project of left-libertarians to show progressives how and why this is the case, but it's not the sort of case that can best be made in a Facebook comment thread. The best I can do is try to answer specific questions and point to other resources for longer explanations.

I found your formulation of the question jarringly nationalist. I don't think you intended it to be read this way, it's just a habit that we get into when we stop thinking of people as separate persons and start thing of them as mere parts in a collective. (Hence, free-market left-libertarians are individualists.)

The question is not best phrased as how a free market would benefit *America*, but more accurately, how it would benefit *Americans* and non-Americans alike. For markets know no borders, and there is no justifiable reason for us to treat a person lucky enough to be born into a first world country better than a person unfortunately born into an impoverished developing (or regressing) country. Haitians deserve as much of a right to our care and concern as Haitian-Americans. Anything less is a form of bigotry, discrimination on the basis of national origin; i.e. xenophobia.

This is a huge intellectual hole in modern progressive thought: the interplay between the welfare state and non-citizens. As one of my co-bloggers posed the problem,

"Suppose there are two brothers in Nicaragua. Brother A illegally comes to the United States and gets cancer. Brother B stays in Nicaragua and gets cancer. Why should I pay for Brother A's chemo and not Brother B?"
http://distributedrepublic.net/archives/2009/08/21/immigration-and-national-health-care

So to answer your specific question, the free market, and freedom, and morality, stop no where. They should stretch across all of humanity, and perhaps beyond. This is what humanism means.

You mention Hurricane Katrina. It's a terrific example, because it was a disaster only as a direct result of outrageous government mismanagement, which caused the initial flooding, as well as horrible government mismanagement once the levees broke and the government blocked civil society from responding. To take one famous example, Wal-Mart, that corporation so hated by progressives, was a model of decency and efficiency, while the government was a model of chaos and confusion. From a Washing Post article published shortly after the hurricane:

"While state and federal officials have come under harsh criticism for their handling of the storm's aftermath, Wal-Mart is being held up as a model for logistical efficiency and nimble disaster planning, which have allowed it to quickly deliver staples such as water, fuel and toilet paper to thousands of evacuees. [...] During a tearful interview on "Meet the Press" on Sunday, Aaron F. Broussard, president of Jefferson Parish in the New Orleans suburbs, told host Tim Russert that if "the American government would have responded like Wal-Mart has responded, we wouldn't be in this crisis.""

http://www.washingtonpost.com/wp-dyn/content/article/2005/09/05/AR2005090501598.html

And to address your question "How would there not be a horribly destitute underclass created, with no recourse and no resources?", let to me point to my friend Charles Johnson's excellent article, "Scratching By: How Government Creates Poverty as We Know It."

http://www.thefreemanonline.org/featured/scratching-by-how-government-creates-poverty-as-we-know-it/

Far from helping the poor, the government consistently and systematically hinders them. (One need look no further than this country's insane and racist drug policies to confirm that this is the case.)

I should have noted, of course, that Yitz's horror scenario, "a horribly destitute underclass created, with no recourse and no resources" is what we already have now under a democratic, supposedly progressive, corporatist government.


Hey IOZ, this affects all of us man. Our basic freedoms!

You kids must think you're so cool and trendy with your Shakespearean Lebowski. But if there is going to be a genre spoof of perhaps the greatest movie ever made (and I include Citizen Kane in that calculation), then for the love of all things Dude, please make it a porno.


Tricks up the sleeve

Obama has given a deadline of March 18 for a vote. If da Dems had da votes, they'd have voted already, meaning they don't yet have the votes. So why is Intrade's price for Obamacare's passage reaching higher every day? Either Intrade is totally wrong, or there's something wrong with the conventional wisdom.

Republicans now expect Democrats to pass health care through the House with a trick only Capitol Hill could dream up: approving the Senate bill without voting on it.

Democrats will vote on a separate bill that includes language stating that the original Senate bill is “deemed passed.”

So by voting for the first bill — a reconciliation measure to fix certain things in the Senate bill — that will automatically pass the second bill — the original Senate bill — without a separate roll call taking place.

It’s called the “Slaughter Solution” (prepare for a weekend of endless TV gabbing about it).

And after debating House Majority Leader Steny Hoyer on the chamber floor, Minority Whip Eric Cantor emerged convinced that Democrats are going to use the tactic, and that they won’t allow Republicans, and the public, to see the text of any legislation for 72 hours before a vote.

I don't understand any of this, but what it basically boils down to is shoving the bill through on a technicality that's even more technical than reconciliation.

It would be a say day for the republic when this happens because it sets a precedent. Anything the Dems do today can be matched by the Repubs in the future. Legislation will become that much easier to pass. For those of us who believe that legislation trends the size of government in the wrong direction, ,it will be a dark day indeed.


Libertine Constitutional Theory

Speaking of the Framers, this one goes out to all the Constitutionalists out there. Some theories of interpretation argue for original intent, others for original meaning, still others for a living constitution. As a libertine, I follow the naughty interpretation doctrine.


Pursuit Of Happiness

I don't think this is what the Framers had in mind. Possible subject matter for John Papola's next music video? A remix featuring John Locke vs. Thomas Jefferson. Bonus points if he can get Terry O'Quinn to play Locke.


B.O.B.

Kerry Howley once tweeted that she will "start paying attention to the Independent Women's [F]orum when they declare 'Single Ladies (Put a Ring on It)' their official anthem."

This got me thinking: The Weekly Standard needs a theme song too.