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Government Failure Is WORSE Than Market Failure

Do Capitalists Manipulate, Deceive, and Cheat?

Not as Much as Politicians Do
Monday, November 9, 2015
Michael Makovi
  

Real-world markets, according to Nobel laureate economist Robert Shiller, are all about manipulation and deception.

So he argues in a New York Times article summarizing his new book, coauthored with fellow Nobel laureate economist George Akerlof: Phishing for Phools: The Economics of Manipulation and Deception. According to Shiller, merchants and vendors regularly “phish for” ignorant consumers who they can mislead into acting less in their own interests and more in those of the phishermen.

The question is not whether the market fails, but whether the government is more likely than the market itself to correct those failures. 

Shiller claims that the theoretical defense of the free market depends on consumers being rational and well informed — a condition that doesn’t hold true in the real world. Drawing on behavioral economics, he argues that consumers are often possessed with cognitive biases that allow them to be systematically deceived by unsavory merchants. For this reason, Shiller argues, consumers need government regulation to protect their interests. The internal forces of the market are not sufficient.

Deux ex Nirvana

But government regulation is not an infallible deus ex machina. The question is not whether the market fails, but whether the government is more likely than the market itself to correct those failures. Economist Harold Demsetz coined the term “nirvana fallacy” to make this point: it is not enough to find flaws in the real world; one must prove that some feasible alternative is likely to be less flawed. James Buchanan, one of the fathers of public choice economics, compared advocates of government regulation to the judges of a singing contest who, after hearing an imperfect performance from the first contestant, immediately award the second contestant, reasoning that he must be better.

No, the market is not perfect, and consumers are often ignorant and manipulable. But the real question is this: Will government do any better?

Just because the first singer offered a less-than-perfect performance is no proof that the second singer will be any better. Ironically, Nudge author and former member of the Obama administration Cass Sunstein, no friend of economic freedom, accidentally makes this very point in his positive review of Shiller and Akerlof’s book.

According to Sunstein,

Bad government is itself a product of phishing and phoolishness, for “we are prone to vote for the person who makes us the most comfortable,” even when that person’s decisions are effectively bought by special interests.

So yes, people behave irrationally in their capacities as market participants, but they are no more rational in how they cast their votes than in how they spend their dollars.

Buying What You Don’t Want

The difference is that in a market, there are feedback signals, however attenuated. If a vendor cheats his customer by holding back information about his product, at least the customer will learn about the product’s faults after he purchases it, and he will buy from someone else next time. He will likely warn others, too. The consumer may have cognitive biases, but he has the opportunity to learn from his mistakes, prevent others from making them, and correct them in the future. The deceptive merchant will develop a bad reputation, and paying customers are motivated to learn about merchants’ reputations — especially as 21st-century technology develops ever-more-robust reputation markets, accessible through anyone’s smartphone.

By contrast, there are fewer feedback signals in politics and even fewer opportunities to act on that feedback. One vote barely counts, and each voter must vote not for specific policies, but for politicians with a range of policies. Electoral politics doesn’t really offer a choice so much as it imposes a bundle. A vote for a particular candidate implies endorsement of all the policies in that bundle when the truth is more likely that the voter has selected the least bad option. In the market, customers can easily split their “dollar votes” to purchase only the specific products they want.

In Freedom and the Law, Bruno Leoni notes that we are all doubly unrepresented by politics: we vote for A, but B defeats A in the election. Then, when B is sitting in the legislature, he is outvoted on a bill by C. So in the end, a person is governed by politician C who beat B, who in turn beat the voter’s preferred choice, A.

When Phoolishness Is Rational

In such a situation, it makes sense for voters to be rationally ignorant of the effects of government policies they are helpless to affect. Politicians are free to peddle shoddy products when they know voters have few opportunities to learn from their mistakes — and even fewer opportunities to correct them.

Meanwhile, markets tend to concentrate benefits and costs on the consumers who use a specific product. This internalization of costs and benefits promotes learning and feedback. In a market, a person must bear the consequences of his or her own actions.

In politics, benefits are concentrated on those whom the politician wishes to favor — such as financial donors and special interests whose attention is narrowly focused — while costs are dispersed among those whose attention is elsewhere, including many who focus on producing wealth instead of transferring it.

The combination of rationally ignorant voters and informed and motivated special interests encourages rent seeking. Private benefit and social cost diverge as the political process encourages the creation of new externalities. While markets tend to internalize the costs, politics encourages externalities.

So yes, consumers are often “irrational” and deceived and make mistakes. But, as Sunstein himself tells us, this is true in both politics and markets. The question is, Which institutional environment is more likely to promote learning from mistakes? And which institution — the market or politics — maximizes a person’s ability to correct those mistakes? Shiller and Akerlof have failed to prove that government regulation will detect or correct mistakes better than the market itself can.

Michael Makovi recently graduated from Loyola University in New Orleans, where he majored in economics.

From FEE, here.

‘Though You Soar Like an Eagle, Though You Place Your Nest Among Stars…’

Are All the World’s Problems Ours?

By 

May 10, 2019

In 2003, George W. Bush took us to war to liberate Iraq from the despotism of Saddam Hussein and convert that nation into a beacon of freedom and prosperity in the Middle East.

Tuesday, Mike Pompeo flew clandestinely into Baghdad, met with the prime minister and flew out in four hours. The visit was kept secret, to prevent an attack on the Americans or the secretary of state.

Query: How successful was Operation Iraqi Freedom, which cost 4,500 U.S. lives, 40,000 wounded and $1 trillion, if, 15 years after our victory, our secretary of state must, for his own security, sneak into the Iraqi capital?

Topic of discussion between Pompeo and the prime minister:

In the event of a U.S. war with Iran, Iraqis would ensure the protection of the 5,000 U.S. troops in the country, from the scores of thousands of Iranian-trained and Iranian-armed Shiite militia.

That prospect, of war between the U.S. and Iran, had been raised by Pompeo and John Bolton on Sunday, when the USS Abraham Lincoln carrier task force and a squadron of U.S. bombers were ordered into the Middle East after we received reports Iran was about to attack U.S. forces.

The attack did not happen. But on Thursday, Tehran gave 60 days’ notice that if it does not get relief from severe U.S. sanctions, it may walk out of the nuclear deal it signed in 2015 and start enriching uranium again to a level closer to weapons grade.

The countdown to a June confrontation with Iran has begun.

Wednesday, North Korea’s Kim Jong Un, for the second time in a week, test-fired two missiles, 260 miles, into the Sea of Japan. Purpose: To signal Washington that Kim’s patience is running out.

Kim rejects the U.S. demand that he surrender all nuclear weapons and dismantle the facilities that produce them before any sanctions are lifted. He wants sanctions relief to go hand in hand with the disposal of his arsenal. Few believe Kim will surrender all of his nukes or his ability to replicate them.

The clash with Kim comes days after the failed U.S.-backed coup in Caracas, which was followed by Pompeo-Bolton threats of military intervention in Venezuela, a country 100 times the size of Puerto Rico with 10 times the population and a large well-equipped army.

This week also, Joint Chiefs of Staff Chairman Gen. Joe Dunford told Congress that the U.S. will have to keep counter-terrorism forces in Afghanistan “until there is no insurgency left in the country.”

Which sounds like forever, as in “forever war.”

Before flying to Baghdad, Pompeo was in Finland. There, he warned the eight-nation Arctic Council about Russian aggression in the region, suggested China’s claim to be a “near-Arctic” nation was absurd and told Canada’s its claim to the Northwest Passage was “illegitimate.”

Our Canadian friends were stunned. “Those waterways are part of the internal waters of Canada,” said the government in Ottawa.

After an exhausting two weeks, one is tempted to ask: How many quarrels, clashes and conflicts can even a superpower manage at one time? And is it not time for the United States, preoccupied with so many crises, to begin asking, “Why is this our problem?”

Perhaps the most serious issue is North Korea’s quest for nuclear-armed missiles that can reach the United States. But the reason Kim is developing missiles that can strike Seattle or LA is that 28,000 U.S. troops are in South Korea, committed to attack the North should war break out. That treaty commitment dates to a Korean War that ended in an armed truce 66 years ago.

If we cannot persuade Pyongyang to give up its nuclear weapons in return for a lifting of sanctions, perhaps we should pull U.S. forces off the peninsula and let China deal with the possible acquisition of their own nuclear weapons by Japan, South Korea and Taiwan.

Iran has no nukes or ICBMs. It wants no war with us. It does not threaten us. Why is Iran then our problem to solve rather than a problem for Saudi Arabia, the Gulf States and the Sunni Arabs?

Continue reading…

From LRC, here.

Vaccine Safety: Who Watches the Watchmen?

Once Burned, Twice Shy—Why “Anti-Vaxxers” Are Really “Ex-Vaxxers”

Children’s Health Defense

May 2, 2019

In the 1920s, Edward Bernays, the so-called “father of public relations,” wrote several influential books outlining the principles of successful propaganda. In his book by that title, Bernays argued that “the mind of the people…is made up for it by…those persons who understand the manipulation of public opinion” and know how to skillfully supply the public with “inherited prejudices” and “verbal formulas.”

Bernays’ comments come to mind in the current climate of hostility and intolerance being directed against individuals pejoratively dubbed by the vaccine lobby as “anti-vaxxers.” The dumbed-down propaganda being plastered across the mainstream media on an almost daily basis would have the public believe that anyone who questions any aspect of vaccination is ignorant, selfish or both. However, there is a glaring flaw with this logic. The incontrovertible fact—which the legislators, regulators, reporters and citizens who are participating in mass tarring and feathering are not honest enough to admit—is that many of the people classified as “anti-vaxxers” are actually “ex-vaxxers” whose dutiful adherence to current vaccine policies led to serious vaccine injury in themselves or a loved one.

Parental compliance with the Centers for Disease Control and Prevention’s (CDC’s) heavy-duty vaccine requirements for infants is often the catalyst for the injuries that start families down the path of becoming ex-vaxxers.

From compliance to injury

Vaccine coverage in the United States is high. In their first three years, over 99% of American children receive some vaccines. By the government’s indirect admission, however, vaccine-related adverse events are also common—with fewer than 1% of vaccine injuries ever getting reported.

Parental compliance with the Centers for Disease Control and Prevention’s (CDC’s) heavy-duty vaccine requirements for infants is often the catalyst for the injuries that start families down the path of becoming “ex-vaxxers.” In one tragic case, a parent who followed doctors’ orders lost her six-week-old infant girl 12 hours after the child received eight vaccines; medical experts’ conclusion that vaccination was the cause of death prompted a different valuation of risks and benefits with a subsequent child. There are many other such stories. Moreover, when individuals who suffer nonfatal vaccine injuries stick to the standard vaccination regimen, research shows that they often experience even more severe injuries the next time around.

In the U.S., vaccines have been liability-free since 1986—and evidence suggests that vaccine safety has deteriorated significantly as a result. The only current recourse for the vaccine-injured is to file a petition with the stingy and slow-moving National Vaccine Injury Compensation Program (NVICP). Although the NVICP has paid out over $4 billion in taxpayer-funded compensation, it denies far more petitions than it awards. The family of the six-week-old described in the preceding paragraph eventually received NVICP compensation, but not before the program expended considerable effort to leave the cause of death unexplained. And, literally adding insult to injury, the maximum payout for any vaccine-related death is only $250,000.

The chair of a Food and Drug Administration (FDA) committee has stated, ‘Congress is getting paid to not hold pharma accountable.’

Money talks

When people or their loved ones are vaccine-injured, many begin to unravel the unscrupulous world of pharmaceutical influence on our media, government agency leaders and lawmakers. Connecting the dots is a horrifying and enlightening experience, exposing facts to which the general public generally remains oblivious. These revelations weigh heavily when someone makes the decision to permanently change into an “ex-vaxxer.”

Why would the people’s elected representatives (and the officials they appoint) propagate smears, promote censorship and ignore the testimonials of the many families that have experienced devastating vaccine injuries?

Why would officialdom ignore the escalating fiscal implications of vaccine injuries, which are imposing a staggering financial burden on households and taxpayers?

Why do the media increasingly advocate for the elimination of informed consent and vaccine choice?

One of the inescapable answers has to do with the overt and covert influence of pharmaceutical industry funding on those who shape vaccine policy and public opinion.

At the government level, senior Senators openly admit that “drug companies have too much influence in Washington,” with big pharma spending more than any other industry on lobbying and campaign contributions. For example, the pharmaceutical industry poured an estimated $100 million into the 2016 elections, rewarding politicians on both sides of the aisle with its largesse. The chair of a Food and Drug Administration (FDA) committee has stated, “Congress is getting paid to not hold pharma accountable” [emphasis added].

…studies show that medical journal advertising generates “the highest return on investment of all promotional strategies employed by pharmaceutical companies.”

Not content to just influence legislators, the pharmaceutical industry puts equally high value on print advertising directed at doctors—the all-important “gatekeepers” between drug companies and patients. In fact, studies show that medical journal advertising generates “the highest return on investment of all promotional strategies employed by pharmaceutical companies.”

Covering all bases, pharmaceutical companies also advertise vaccines and other drugs directly to U.S. consumers. The U.S. is one of only two countries in the world (along with New Zealand) that permits this type of direct-to-consumer pandering. Drug company spending on television and print advertising in the U.S. rose to $5.2 billion in 2016—a 60% increase over 2012—with untold additional amounts spent on digital and social media advertising. Astoundingly, pharmaceutical companies even get a tax break for these marketing expenditures, a corporate deduction that costs taxpayers billions annually.

The media benefit handsomely from the steady infusion of pharma advertising dollars. Four networks (CBS, ABC, NBC and Fox) received two-thirds of the TV ad monies spent on top-selling drugs in 2015, with the Prevnar 13 vaccine representing the eighth most-advertised pharmaceutical product that year. Under these bought-media circumstances, it is somewhat astonishing that a few media outlets were willing to concede that drug money “coursing through the veins of Congress” directly contributed to the opioid crisis. So far, however, no reporters have been willing to connect similar dots between drug money and unsafe vaccines.

What the WHO failed to mention, however, is the preponderant role of “commercial interests”—and especially pharmaceutical industry interests—in shaping its goals and strategies.

Pharmaceutical industry influence makes itself felt not just domestically but also globally, and this has led to a corresponding amping-up of rhetoric against “anti-vaxxers” around the world. In early 2019, the World Health Organization (WHO) hyperbolically declared “reluctance or refusal to vaccinate” to be one of ten major “global health threats.” What the WHO failed to mention, however, is the preponderant role of “commercial interests”—and especially pharmaceutical industry interests—in shaping its goals and strategies.

Back in 2009, sleight of hand by WHO scientists rebranded the swine flu from “a ‘perfectly ordinary flu’” into a “dangerous pandemic.” This maneuver successfully generated billions in profits for vaccine and anti-flu drug manufacturers; however, the vaccine in question (Pandemrix) caused cases of narcolepsy—many in young people—to surge all over Europe to nearly four times higher than prevaccine levels. In all likelihood, the parents of the narcolepsy-afflicted youth joined the ranks of “ex-vaxxers.” A researcher looking back on the Pandemrix fiasco recently stated:

“If vaccine regulators were serious about safety, the entire vaccine fleet would have been grounded following the Pandemrix narcolepsy disaster, to check for the same mechanism of failure in other vaccines. But nothing of that sort happened….”

Double standards

If consumers want to learn about the potential risks of widely used FDA-approved drugs, they can—with a little legwork—find detailed information on hundreds of drugs on the FDA’s website. For azithromycin, for example, the FDA links to studies showing that the antibiotic increases risks of cancer relapse and cardiovascular problems. A link for fentanyl clearly warns of “the potential for life-threatening harm from accidental exposure” and “deadly” risks to both children and adults. Although it can be an uphill battle to get drugs taken off the market, the ongoing pressure of lawsuits has succeeded in removing some egregious offenders such as Vioxx—and Merck, Vioxx’s manufacturer, has been forced to pay out billions in settlements.

In contrast, consumers who go to the FDA website for risk information about vaccines (classified as “biologics” rather than “drugs”) will search almost in vain, finding sparse information for only four vaccines. One of the four is Gardasil—also manufactured by Merck, and one of the most notoriously dangerous vaccines ever rushed onto the market. While the FDA cautiously states that “concerns have been raised about reports of deaths occurring in individuals after receiving Gardasil,” the agency asserts that “there was not a common pattern to the deaths that would suggest they were caused by the vaccine.” The 2018 book, The HPV Vaccine on Trial, contradicts this benign narrative and describes how Gardasil has caused thousands of perfectly healthy young women and men to “suddenly lose energy, become wheelchair-bound, or even die” while Merck continues to enjoy “soaring revenues.”

For government and the media to dismiss these and other accounts of serious vaccine injuries as insignificant—while falsely labeling injured individuals and their advocates as irresponsible “anti-vaxxers”—is both shameful and insulting. After revealing how the mainstream narrative about Gardasil is riddled with “discrepancies and half-truths,” the authors of The HPV Vaccine on Trial issued a call for greater civility. Noting that marginalization and bullying of the vaccine-injured “destroys civil public discourse and discourages scientific inquiry,” they pointed out that “we urgently need both.”

Copyright © 2019 Children’s Health Defense, Inc. This work is reproduced and distributed with the permission of Children’s Health Defense, Inc. Want to learn more from Children’s Health Defense? Sign up for free news and updates from Robert F. Kennedy, Jr. and the Children’s Health Defense. Your donation will help to support us in our efforts.

 From Lewrockwell.com, here.

Reading Parshas Arayos (Homosexuality, Sex Change) With Current Events

Letter to A Friend: The Parasha Is Even More Relevant Today

This entry was posted on April 29, 2019, in original.

(Watch and listen here.)

Dear *****,

As you are aware, this most recent scandal was foreseen by many of us. I am mostly in agreement with the author of this article, although I would also like to make it clear that I have nothing necessarily against Open Orthodoxy. As you know, as the father of many daughters, I am slightly sympathetic to those women who may want an expanded role in communal involvement, and that I believe that that there are halachic grounds for doing so, perhaps even for allowing them into leadership roles, as I have written about earlier. It so happens that where I tend to live there is little demand for such things among the women, and my wife is exceptionally traditional, so I have no reason to personally get involved in such matters. But I do believe that the tolerance of homosexuality among certain circles is surprisingly foolish. As the sages say, “even the Sadducees concede the matter,” that sometimes there are Torah principles that are so clear, even those who deny the authority of the Oral Torah and the sages agree that something is as it is. The ordination of women or the impossibility thereof is not explicit in scripture or even the Talmud or the codes, so at least between us, it is clear that if a scholar were to claim that women could serve as Rabbis, we would not write him off. However, the practice-of-homosexuality issue is entirely different. Even today’s Karaites know that there is no room for it within Judaism. Similarly, those Jews who are knowledgable enough of Judaism and disrespectful enough to poke fun at it realize the obvious incompatibility. This is where, I believe, their downfall has started and where it will ultimately end, and, believe it or not, all of this was alluded to in the coming parashiyot the Jewish world is currently reading.

…

Secondly, why, among all the other Torah prohibitions, are the forbidden relations connected to the two cultures that had the most profound influences on our people at that time? Keeping kosher, for example, and the laws of ritual purity are distinctly Jewish and practical, yet the Torah does not stress that we should keep those laws in contrast to the practices of our Egyptian former overlords and the Canaanites. It seems that the forbidden relations and the laws against idolatry and its accouterments are the only ones that we were specifically and repeatedly bidden to not pick up from our gentile neighbors. Why? Because these are the sinful facets of their cultures that, unfortunately again, are the easiest to adopt from them. We both know that it is not a  coincidence that the phenomenon of Jewish “Orthodox leadership” accepting the infiltration of homosexuality is in a time and place which accepts the entirety of the LGBT political agenda. As I wrote about last month, religion and politics should not mix, and we are aware of those rabbis who miraculously seem to agree entirely with the conservative political platform, but on the left it has gotten out of control. The Torah was very clear here: the forbidden relations are part and parcel of their cultures, and if you are not vigilant, it will also become part of yours. And notice that the Torah does stress the capital punishments for the forbidden relations as much as it emphasizes the historical and societal consequences for us as a people. (See also Nahmanides’s entire commentary to this chapter; he concludes with a reason as to why the forbidden relations are capital crimes, whereas kashruth and ritual purity are not.) Indeed, many modern researchers have pointed out that a stage of sexual permissibility, especially of homosexuality, is a harbinger of societal disintegration and collapse, and it is already happening in the West.

Thirdly, the list of forbidden relations occurs in both Aharei Moth and Q’doshim, making the latter seemingly redundant. Why the redundancy?

The first list is prefaced with the injunction to not be like the Canaanites and Egyptians. The second is prefaced with the command for us to be uniquely holy Jews.

…

And then there was this:

In an exceptional move, 56 Orthodox rabbis published a letter of support for Osher Band, a 15-year-old transgender girl from Ashkelon who hasn’t gone to school for more than six months because of violence and threats to her life by other students.

Like everything that emerges from the festering abscess that is Haaretz, take the entire article and the original letter with a cup of salt, if you can stomach these celebrations of carnal sin.
Note how these fellows love to constantly be identified as “Orthodox,” although you and I never have a need to broadcast that we are Orthodox, because they are always up to something decidedly not Orthodox. Methinks the lady doth protest too much. The sages said that members of the Sanhedrin should be sharp enough to bring 150 arguments for the purity of the sheretz, but they certainly did not believe that any potential sage could, Heaven forbid, actually rule as a matter of practical halacha that indeed a rat is pure. But look what they have done.
Note how they write to this poor young man using the Hebrew feminine case. Note how they were more than happy to make what should have been a private letter public in order to virtue-signal. Note how their entire position with regard to this issue is entirely in line with modern, Western, (im)moral sensibilities. This is not a coincidence.
What should be done with such a young man? Well, let’s consider the high schools of the Metro New York area of twenty years ago with which we are familiar. Would any of the boys’ high schools, like YUHSB and TABC, have been able to handle a student prancing around dressed like an (immodest) adolescent women? Would any of the girls’ schools, like Central or SKA, have been able to do so either? Or what about the mixed schools, like Frisch or Ramaz? I find it less than surprising he was harassed by his peers wherever he was in school. Kids can be cruel, and there is no justification for their behavior, and we need to educate them to be kinder, but let’s face it: peer pressure is a natural force that is there to keep the naturally developing social structure in order. Kids detect the abnormal, and when imposed on them in order to force a change within their own naturally comfortable system, they push back. And, just so that we are clear, there is no leniency that exists within the halacha for a young man to dress as a woman, no matter how strongly he feels that he is one. Osher Rand needs sympathy and help. He does not need encouragement, especially from self-proclaimed religious authorities. Both will ultimately be harmful to him and his peers, and no school should have to destroy itself and its students in order to indulge his delusions.
But, and this is written in an attempt to try to give them the benefit of the doubt, I believe that they were compelled to write this letter because they suffer from the same malady that torments this poor young man: The obsessive belief, instigated by their drowning in a perverse and pervasive culture, that they are what they are not, and the intolerable demand that others fully accept their delusion despite all the evidence to the contrary and despite the severe harm it inflicts on the members of society.

I pray that this serves as a wake up call for our Jewish brethren in America.

From Avraham Ben Yehuda, here.