DRI-300 for week of 7-28-13: Was Detroit’s Fall ‘Just One of Those Things That Happens Now and Then’ to ‘An Innocent Victim of Market Forces’?

An Access Advertising EconBrief:

Was Detroit’s Fall ‘Just One of Those Things That Happens Now and Then’ to ‘An Innocent Victim of Market Forces’?

Last week’s EconBrief analyzed Detroit’s precipitous decline from America’s most prosperous city to Chapter 9 bankruptcy. The most popular explanation ascribes the event to 20th-century liberalism, which reigned unchallenged over the city throughout its financial death spiral. When a city is named the most liberal in America, as Detroit was by the BayAreaCenter for Voting Research, political philosophy becomes the prime suspect at its post-mortem.

Still, there have been prominent dissenters. Former Michigan governor Jennifer Granholm called Detroit a victim of “free trade.” Presumably, she refers to the international trade in automobiles that increasingly brought foreign models – especially Japanese cars – to prominence in the U.S. Even more significant were the comments of Nobel laureate Paul Krugman, economist and columnist for the New York Times. In his column of 07/27/2013 entitled “When It Comes to Detroit, Greece Is Not the Word” and subtitled “Victims of Creative Destruction,” Krugman lamented the fact that Detroit’s bankruptcy would occasion comparisons to the financial default of Greece.

Greece’s circumstances were unique and not comparable to those of other countries, Krugman contended. Moreover, Greece’s small economy – “about 1 ½ times as big as metropolitan Detroit” – did not affect the rest of the world much. Consequently, it was wrong to use Greece’s problems as an excuse to cry wolf about government deficit spending. Thus, it must be just as wrong to cite Detroit as a model for municipal excess. For example, U.S. state and local government-employee pensions are only underfunded by about one trillion dollars, Krugman contended. He cited a BostonCollege study as his source for this figure, which is only about one-third the size of conventional estimates.

Having established Greece as an isolated case, Krugman appears poised to do likewise for Detroit – but no. “So was Detroit just uniquely irresponsible? Again, no. Detroit does seem to have had [sic] especially bad governance, but for the most part, the city was just an innocent victim of market forces.” Reading Krugman on Detroit’s political leadership suggests that, had Krugman strolled through Hiroshima the day after the atomic bomb was dropped, his reaction would have been that an especially large bomb seemed to have fallen in the middle of the city.

Krugman plays it coy about just which “market forces” victimized Detroit, but he has no scruples about reminding us that they can be brutal. “…Sometimes whole cities…lose their place in the economic ecosystem…,” he lectures sternly. And when that happens? That is when we pull out the big gun in the liberal arsenal: we need to “have a serious discussion about how cities can best manage the transition when their traditional sources of competitive advantage go away. And let’s also have a serious discussion about our obligations, as a nation, to those of our fellow citizens who have the bad luck of finding themselves living and working in the wrong place at the wrong time.”

Detroit, according to Krugman, isn’t “fundamentally a tale of fiscal irresponsibility and/or greedy public employees…it’s just one of those things that happen now and then in an ever-changing economy.”

It is deeply ironic that, of the two commentators, it was the politician who referred explicitly to international trade. After all, Paul Krugman won his Nobel Prize for work in the field of international trade theory. Yet he referred to that subject only obliquely in his column. That is the clue to the profound intellectual dishonesty of these two commentaries. The politician lied about a subject on which politicians lie reflexively. The economist avoided a subject in which he is supremely qualified because he had no intention of telling the truth and could not bear to trash his reputation by lying outright.

America’s Unfree International Trade in Automobiles
The effects of international trade in automobiles can be seen daily zooming across the roadways of America. The Toyota is one of the most popular automobiles in America. But this is hardly the outcome of free trade in automobiles. Free trade is defined as the absence of such impediments to international trade as tariffs (taxes) and quotas. No sooner did foreign-car makers such as France’s Renault and Sweden’s Volvo enter the U.S. market in the 1960s than they were besieged with tariffs at the behest of Detroit.

When Japanese automakers like Honda, Toyota and Nissan began to loosen the stranglehold of the Big Three on the U.S. market in the 1970s, Congress erected a tariff wall against foreign-car imports. This was even extended to include a quota of one million Japanese-car imports. Amazingly, tariffs remain in force to this day in the form of a 2.25% tariff on Japanese-car imports and a 25% truck tariff.

Doubtless Ms. Granholm was relying on the notoriously poor memories of Americans when she cited free trade as the cause of Detroit’s woes. But it isn’t necessary to be a student of U.S. commercial policy in order to know she is lying. Today, nearly two-thirds of Toyotas sold in America are not shipped to America from Japan. They are assembled right here in the USA in places like Tennessee and Alabama. Why did Japanese automakers take the time and trouble to build auto plants here in the U.S.? In order to escape our import barriers. Direct foreign investment is a classic ploy to overcome tariffs and quotas. Honda was the first Japanese automaker to build a U.S. plant, followed soon by Toyota in the early 1980s.

Not only do domestic manufactures escape the penalties levied on imported goods, they also escape the criticism often leveled at purchases of foreign goods. The same people who scream and holler about American jobs being exported to Japan by “globalization” (today’s pejorative buzzword for free trade) can hardly complain when the Japanese build a U.S. plant that employs U.S. workers. The same chauvinists who demand that we “buy American” can’t very well complain when we buy American-made Toyotas.

It is true that production tends to migrate to its least-cost locus. But transport costs have been falling, not rising, for decades – that is why containerization has become so popular. Before tariffs, the Japanese made cars in Japan and shipped them here. Only after tariffs were imposed did it become efficient to move production to the U.S., where the Japanese had to strain to acclimate U.S. workers to their legendary production methods.

Sharp-eyed readers noticed the word “assembled” used to describe the process by which automobiles are made. Today, the hundreds of parts that comprise an automobile are manufactured throughout the world. They are shipped to automobile plants for final assembly into the finished product. So-called “American” cars like Fords, Chryslers and GM products may well contain fewer American-made parts than do Toyotas and Hondas. To an economist, what matters is that the final product be produced at least cost and that all trade reflects the comparative or “opportunity” costs of producing the products traded. Free trade reflects those costs while tariffs and quotas distort them.

No, it wasn’t free trade that drove General Motors and Chrysler to virtual bankruptcy. It was a combination of factors, one of which was the ability of competitors to overcome the protectionist barriers thrown up by Detroit’s political influence.

Similar logic defeats the comment made by another left-wing onlooker that “capitalism failed Detroit.” The Big Three benefitted from numerous federal-government bailouts even before 2008. Chrysler enjoyed one of the very first federal-government bailouts in 1980, thanks to the charisma and clout of Lee Iacocca. Of course, this was the antithesis of capitalism (but the epitome of “crony capitalism.”) Really, what Ms. Granholm means by “free trade” is freedom itself; e.g., the absence of government coercion and constraint. As we discover below, this is exactly what Detroit did not experience during its painful decline.

Why Krugman Could Not Say What He Implied
Krugman’s comments about “just one of those things” and “an innocent victim of market forces” conjure up images of Detroit buffeted by random shocks from outside the city involving supply, demand and prices of things like oil, raw materials, labor, machinery and technology. Of all the possible “market forces” involved, what could Krugman possibly mean if not the market for automobile production and sale? Surely Detroit and Battle Creek didn’t wage war over breakfast cereal dominance? The Great Lakes weren’t blockaded by Canada at some point, were they?

Krugman’s vague references are intended to allow his readers to believe that he means that the effects of international trade in automobiles are what did Detroit in. But he is not going to come right out and say that. For that would expose him as incompetent in his Nobel-Prize specialty. The problems experienced by the Big Three automakers couldn’t possible have caused Detroit’s bankruptcy and Krugman knows it. There is no alternative to conceding that the right wing is right – liberalism’s bankruptcy caused Detroit’s bankruptcy. And Krugman knows that, too.

Automobile companies located in Detroit certainly suffered losses of sales and profits from (mostly) Japanese competition. But these losses were not felt by “Detroit,” either by the citizenry at large or by municipal government coffers. Corporate profits and losses accrue to shareholders. In this case, that means a few million people who mostly don’t live in Detroit but rather are dispersed throughout the nation. They include private individuals, households, investment-company fund shareholders and pensioners. Some executives lost jobs and income, but they were comparatively few when mingled among the nation’s fourth-largest city. In principle, workers could suffer job and income losses – but in practice the UAW saw to it that they didn’t. The union’s unwillingness to make wage and benefit concessions to management was proverbial. Its legacy-benefit accumulations to retirees were legendary. To this very day, Japanese auto-plant workers continue to assemble cars more productively than do UAW workers in Big Three auto plants. Consequently, the Big Three were bled dry. This even continued during the Obama Administration’s bankruptcy bailout, when General Motors’s shareholders were stiffed in favor of the UAW, which split the spoils with the federal government.

Not only did municipal government not suffer, it was among the vampires. For years, the automakers paid millions to the city for so-called “riot insurance.”

That is not all. The losses suffered by auto-company shareholders must be counterbalanced by the greater gains in real income. After all, international trade produces gains that more-than-offset losses; that is why international trade is just as beneficial as intranational trade. Once again, those gains are dispersed throughout the nation. But there were surely more foreign-car drivers in Detroit than auto-company shareholders – UAW parking lots were often sprinkled with imports! – and the gains of the former were larger than the losses of the latter.

Upon analysis, the notion that foreign-car competition wrecked Detroit is ludicrous on its face. And Paul Krugman’s curiously oblique column now makes sense. He couldn’t endorse Jennifer Granholm’s ridiculous claim, thereby becoming the first Nobel Prize-winning economist to make himself a laughingstock in his own specialized niche. But his liberal credentials, syndicated-column status and unshakable personal arrogance demanded that he not concede even the clearest victory to the enemy. He cannot acknowledge a truth uttered by the right wing even when validated by the logic of his own profession.

Detroit’s Downfall Was Not Random
Krugman’s description of Detroit’s fate as “just one of those things” triggers memories of a popular song from Detroit’s glory days: “Just one of those things; just one of those crazy things; one of those bells that now and then rings; just one of those things.” In short, it implies randomness rather than the result of purposive acts, incompetence, bad judgment or corruption.

That is exactly the opposite of the truth.

Detroit’s political leadership was not a random variable. Its liberal pedigree was impeccable. The city’s last Republican mayor served from 1957 to 1961. His successor, Jerome Cavanaugh, was a young New Frontier Democrat cast in the mold of John F. Kennedy. Cavanaugh was determined to use government to lift up the poor and impoverished. He accomplished half his objective; he used government. But the poor and impoverished did not decline. Instead, a city that boasted America’s highest per-capita income in 1960 went steadily downhill to a household income of $26,000 in 2010. Unemployment stands today at 16%.

Krugman’s description of Detroit as “an innocent victim of market forces” is classic liberal rhetoric. Whereas liberals usually create “social wholes” or collectives from politically malleable blocs and cast them as victims, Krugman has escalated the use of this technique to encompass an entire city. As noted above, his unnamed market forces must refer to international trade. But as explained above, the widely dispersed losses suffered by the Big Three automakers from Japanese competition cannot begin to explain the highly concentrated losses felt by the fourth-largest and most prosperous city in the world’s wealthiest nation. When the gains from that international trade are factored in, Krugman’s implicit case disintegrates.

International trade does not explain the fact that one-third of Detroit’s acreage is either vacant or horribly blighted. Trade cannot account for the fact that houses sometimes sell for $500 or less. International trade did not cause Detroit’s population of nearly 2 million to shrink to roughly 700,000. These things were caused by the 20-year reign of a black-separatist mayor who declared that only white could people could be racist. When whites reacted by fleeing the city for Detroit’s numerous suburbs, Mayor Coleman Young continued to direct imprecations at the “racists in the suburbs.” The more whites left the city, the more politically potent Young’s black base became. This tactic of deliberately encouraging out-migration through ineffective government has been dubbed the “Curley Effect” (after Boston’s notorious Mayor James Curley) by economists Andrei Shleifer and Edward Glaeser.

International trade did not give Detroit the worst crime rate in the nation and a murder rate eleven times greater than New York’s. It was Mayor Young who polarized the police force by laying off white officers to change the racial composition of the department. It was the mayor who refused to treat black and white criminality alike and called rioting “rebellion” when committed by blacks. International trade did not make 47% of Detroit’s citizens functionally illiterate, nor did it set Detroit’s public education system trudging toward the bottom rungs of the national achievement ladder despite an per-student expenditure of over $14,000.

Random market forces did not create a vast municipal bureaucracy, at one time comprising nearly 10% of the city’s working population. Market forces did not arrange for public-employee retirees to have 80-100% of their medical costs paid by their city retirement benefits. International trade did not cause 75% of municipal revenue to be devoted to salaries, benefits and legacy (retirement) obligations of municipal employees. Japanese competition did not force Detroit to burden its citizens with the highest per-capita tax burden in the state while still borrowing and spending lavishly enough to drive the city into bankruptcy.

International trade did not compel two of Mayor Coleman’s closest aides to separately steal over $1 million dollars, crimes for which they served jail terms. Trade did not seduce the “Hip-Hop Mayor,” Kwame Kilpatrick, into violating 24 federal statutes, including racketeering and mail fraud. The Japanese did not make the municipal bureaucracy virtually impervious to all attempts at reform, streamlining or simple day-to-day functional improvement.

International trade did not compel Detroit city government to smother small businesses with regulations such as the licensing requirements that threaten the existence of over 1,000 small businesses that make up some 10% of businesses and serve over two-thirds of Detroit residents. International trade did not dictate a city-imposed minimum wage exceeding $11 per-hour for public employees and businesses contracting with the city.

Krugman’s call for a “serious discussion…as a nation…about our obligations…to our fellow citizens…who have bad luck” is a thinly-veiled call for a bailout. But that was exactly the road Detroit followed under Coleman Young, whose explicit strategy was to “go to war with the city’s major institutions and demand that the federal government save it with subsidies.” Sure enough, up to one-third of Detroit municipal salaries were paid by federal-government salaries, according to researcher and write Tamar Jacoby. As Steven Malanga pointed out in The Wall Street Journal (7/27-28/2013), this strategy acquired the nickname “tin-cup urbanism.” Today, we are all holding tin cups and the federal government is robbing most of them in order to replenish favored cup holders.

No, there is absolutely nothing random about Detroit’s descent into bankruptcy. The forces causing it had virtually nothing to do with international trade. They were the forces of anti-capitalism, not capitalism. It is easy to see why Paul Krugman could only hint that international trade was involved without actually mentioning the subject, and why he had to distract his readers with the non sequitur of Greece. Detroit’s bankruptcy was caused by everything Paul Krugman believes in and continues to advocate today except for free trade. In other words, the fate of Detroit is Krugmanism in action.

DRI-248 for week of 1-6-13: Rights vs. Power

An Access Advertising EconBrief: 

Rights vs. Power

Two recent examples of an endlessly recurring debate afford the opportunity to revive one of the most vital distinctions in political philosophy – between rights and power.

One example popped up at the Indiana University Health Goshen Hospital. Eight of its employees were fired for refusing to submit to flu vaccination via injection. Three of the eight were veteran nurses.

The hospital cited recommendations by the American Medical Association, the American Nurses’ Association and the Center for Disease Control that all Americans over 6 months of age undergo flu shots. One of the nurses, 61-year-old Ethel Hoover, insisted that “this is my body. I have a right to refuse the vaccine.” Website coverage of the incident by ABC News reporter Sydney Lupkin portrayed the dispute as a classic debate over “…which should come first: employee rights or patient safety.”

The other case occurred in Kansas City, MO, where Rockhurst High School, prestigious local Catholic high school, announced a policy of testing all students for the effects of drugs and binge drinking. A columnist for the Kansas City Star condemned the policy as “intrusive” and “unfair,” opining that experienced staff should be able to detect habitual users without the need for testing everybody.

The endless stream of back-and-forth debate over these cases suggests that the true governing principles have been long forgotten.

The Economic Implications of Political Rights

Few things arouse American ire as quickly as the subject of “rights.” The term is as old as the nation itself, appearing prominently in the Declaration of Independence and the Bill of Rights to the U.S. Constitution. And those references inform our understanding of the term.

Take the Declaration’s famous assertion that we possess the “right to life, liberty and the pursuit of happiness.” Why confer the right to pursue happiness – why not happiness itself? We sense the presence of a vital distinction. Our intuition tells us that government cannot very well grant a legal, constitutional right to happiness. Why not?

Of course, we realize that happiness is a subjective term and that it is impossible for one person to gauge whether another is happy or not. But we can make this point much more concrete by importing economic logic into the discussion. Economists gauge an individual’s happiness as a function of his or her real income or utility. This, in turn, depends on the consumption of life’s good things, both tangible and intangible.

Now we reach the nub of the problem. Goods are limited or finite in quantity while wants are infinite. Governments cannot promise happiness to everybody because governments cannot assure the supply of an unlimited volume of goods to satisfy wants. Again, this refers both to physical goods and services and to aesthetic wants such as beauty, truth and justice.

Although we may not realize it, we are all competing with each other for the limited supply of means with which to satisfy our unlimited wants. Naturally, we find it expedient to cooperate in order to serve our mutual interest in enlarging the volume of those means. Free markets and the price system are the evolutionary systems that have evolved for that purpose.

The Declaration of Independence enshrines the notion of the Rule of Law – or equality before the law – by granting to all alike the right to engage in the pursuit of happiness. But that does not imply that we all will achieve it. Indeed, stating the issue in this form makes it clear that we will not. Nonetheless, freedom allows everybody a shot at it and promotes cooperation not only in enlarging the size of the economic pie but in dividing it voluntarily through charity to help those who are least successful in fending for themselves.

The Economic Definition of Rights

A right is defined as something that can be enjoyed by one or more individuals without reducing the amount available for others to enjoy. This removes economic goods and services from the list of things to which a political right can be granted. Giving one person a guarantee of an economic good implies the necessity of denying a right to it (or, equivalently, to alternative goods) for others, since the good is not available in infinite quantities.

Guaranteeing a right to life means that others are not permitted to arbitrarily end your life unless you threaten theirs. Guaranteeing your liberty – and your right to pursue happiness – can be done without threatening the liberty of others. Indeed, the right to liberty must be guaranteed on equal terms for all law-abiding citizens in order to maintain the Rule of Law. That is why government exists in the first place.

The same reasoning applies to the other freedoms granted in the so-called Bill of Rights. It is vital to heed the Constitution’s explicit reminder that our rights are not limited to those explicitly listed in those first ten amendments. On the contrary, the Constitution limits the power of government by limiting it to its explicitly stated duties. (More than every, we are now coming to appreciate the wisdom of those who opposed ratification of the Constitution because they feared that the Bill of Rights would eventually come to be seen as limiting rather than reaffirming our rights.)

The Key Role Played by Competition

The case of nurses ordered by their employer to take flu shots is being treated by mainstream media as weighty and imponderable, a legal version of the clash between the irresistible force and the immovable object. But the principles outlined above – political and economic – provide the answer to this seeming quandary.

The nurses have committed no legal infraction and denied nobody their rights. Patients do not have an absolute right to good health any more than they have an absolute right to any other good or service. Ethel Hoover’s insistence that she owns her own body is impeccably correct. She has the right to refuse the flu vaccine. The government cannot force her to take it – not for the good of her patients or even for her own good.

But the government is not the entity requesting that she get a flu shot. Her employer is requesting that she do so as a condition of her employment. This request is perfectly valid and legitimate. The hospital chain serves customers. Those customers do not want to catch the flu while in hospital; they have just as much right to pursue happiness as nurses do. Hospitals compete with other hospitals. If some hospitals are forced to employ nurses who successfully resist flu shots, those hospitals may go out of business. Hospital owners have just as much right to pursue happiness as nurses do.

Are nurses being forced to take the flu shots by their private employer? No, because private employers cannot force employees to do anything. Employees can exercise the sovereign right of all employees – they can quit. Nurses are not guaranteed a particular job by law any more than they are guaranteed the right to a consumption good or service.

In this particular case, as it happens, the nurses in question apparently have lots of reasonable alternatives. They can pursue administrative jobs where their contact with patients is limited or nonexistent. They can pursue teaching opportunities within nursing. They can leave the profession and go elsewhere.

One other thing the nurses can do is pursue nursing employment elsewhere. Perhaps the fear of patient contamination is overblown, in which case competition between hospitals will provide an incentive for another hospital to exploit their veteran talents. Competition between hospitals works in their favor as well as working against them.

The pertinent distinction is between government action, which is coercive and allows no room for maneuver or escape, and marketplace action, which presents voluntary choices and alternative possibilities. When the government nails you, you either comply or go to jail. When an employer makes a request, you choose from a range of alternatives that normally offer much smaller decrements of loss.

By definition, competition means the presence of alternatives. By definition, government means their absence.

The All-Important Distinction: Rights vs. Power

Nurse Ethel Hoover wants to assert a “right” to refuse her employer’s request that she take a flu shot while at the same time retaining her job. In effect, she wants the right to hold her job in spite of her employer’s insistence that she is unsuitable to perform it.

This is not a right. The only way she can retain her job under these circumstances is by forcing the employer to give up his right to pursue happiness by producing health care profitably and safely and by forcing consumers to forego their rights to purchase good health. Nurse Hoover is demanding power – the power to force other people to forego their rights. Of course, she is cosmetically beautifying her claim by cloaking it in the faddish language of “rights.”

The debate over freedom vs. power goes back a long time. In the 20th century, it was wages between F.A. Hayek on the right wing and John Dewey on the left wing. Dewey defined freedom as the “power to do effective things” while Hayek defined it as “the absence of external constraint.” Hayek observed in his classic polemic The Road to Serfdom that Dewey confused freedom with power. Modern political philosophy has continued to observe the distinction with the dichotomy between “positive liberty” (Dewey’s version, which is really power, not liberty) and “negative liberty” (Hayek’s version).

The left wing has traditionally conflated power with freedom. It has tried to salvage its position by insisting that only government can solve cases like those of Nurse Hoover. Employers are unable and/or too venal to judge the safety of flu shots; consumers can’t choose safe health care for themselves. Thus, allowing markets to work will wrongly exile Nurse Hoover from her profession and stick us with inferior health care. Governments must objectively determine the safety of flu vaccines, once and for all and for everybody. Government must give Nurse Hoover her rights; otherwise, she won’t have any since markets always do the wrong thing.

The left’s position is untenable. It is logically absurd to contend that consumers not only make wrong choices about their own health but also continue to persist in those choices. It is absurd to maintain that bureaucrats somehow possess both the expertise and the wisdom to make life choices for people about whom they know nothing. It is absurd to suppose that bureaucrats – notoriously insulated from the consequences of their own mistakes – can judge safety better than doctors and managers whose livelihoods are on the line.

The Non-Sequitur of Childhood

The Rockhurst High School case is also being wrongly perceived. Here, the confounding factor is childhood, a factor that nowadays invariably puts the brain in neutral while shifting the emotions into forward gear.

Once again, the issue is being put as a conflict of “rights.” Does a high school have the “right” to “force” students to undergo drug tests? Do students have the “right” to refuse them? In this case, the presence of childhood in the equation turns some people into paternalists and others into public defenders.

The paternalists insist that kids cannot possibly perceive their own interests and that it is therefore up to us to step into the breach. Of course, this places overwhelming importance on the content of “us” – is that parents, teachers, administrators, judges, doctors or some artfully contrived mixture of the above? The public defender insist that children are helpless victims of the high school/teachers/administrators/judges/doctors (take your pick) and require the services of advocates provided by government or the press (to the extent that those two differ).

Economics has long realized that consumption decisions are made jointly within families and nominates “the household” as the family choice unit. As a practical matter, this means one or more parents with varying degrees of input from children. There is no reason to think that a system that makes choices on food, clothing, housing, entertainment, transportation and communications cannot also handle education and personal privacy.

Of course, households choose among competitive suppliers of food, clothing, housing, etc. And this particular situation actually deals with personal privacy rather than education, doesn’t it?

Yes and no. Large numbers of households are hamstrung by quasi-monopolies in secondary education; that is, they cannot afford to pay twice for the competitive alternative of private schools. In that sense, they are actually in the “government” case as outlined above. The law requires them to send their kids to school but doesn’t allow them the luxury of choosing alternative suppliers of public education if their school’s policy on personal privacy is obnoxious to them.

As it happens, Rockhurst High School is one of – perhaps the – most exclusive private high schools in the Kansas City metro area. There is little doubt that its families can afford to search out alternatives if necessary. Thus, Rockhurst should certainly have the alternative of offering drug testing to its students and parents. While the policy may well be unpopular with students, parents may just as well like it. Parents who don’t like it can enroll their children elsewhere.

If the policy proves unsuccessful, we all benefit from having learned this truth. Certainly it would have been better to have known it in the first place and avoided the hassle and unpleasantness of testing, but it isn’t always possible to know everything in advance. Sometimes we have to try things. That is one of the things that free markets are all about. If the policy proves successful, that will vindicate it in spite of initial objections – provided the objectors weren’t forced to undergo it.

But what about a policy of drug testing in the public schools? That’s a lab specimen of an entirely different color, to suit the metaphor to the occasion.

Time and again, this generic problem arises. Should public schools have a dress code? If so, which one? Should they teach evolution – or creation? And what does “teaching” either one of those mean, anyway? It turns out, then, that drug testing is not a unique issue at all. It is the same old issue in different guise.

There is no “solution” to questions like dress codes or religion in schools – no unique, one-size-fits-all solution, that is. The solution is competition. The solution is to allow different families to choose the alternatives they like best – and to change their minds when things don’t work out.

There is only one route to that solution. It lies through a free, privatized market in education. Mirabile dictu, this just happens to be the same economic solution to the decades-old problem of rising education spending and falling educational quality. Education reform dates back to the early 20th century, but results have been dismal. Economists know the source of the problem and they know that the answer is not more money spent on education. The bromide “you get what you pay for” is correct only when there is competition for the product being purchased.

Thus, a policy of drug testing in public schools should be rejected for the same reason that Nurse Hoover should be allowed to reject flu shots. Government has no right to force students to undergo drug testing against their will because public education is a quasi-monopoly provider. But the monopoly provision of public education should be ended, for this reason among a multitude of others.

Drug testing may be a good thing or a bad thing. Indeed, it may be a good thing for some people, in some environments or cultures, and bad for others. The only way to find out is to allow competition to prevail. And the only way to do that is to get government out of it.

The Politicization of Practically Everything

Today we face the Balkanization of American life, with interest groups facing off in the legislatures and courts. The executive branch of government (mayors, governors and the U.S. President) has come to view as a prerogative the ability to decide questions involving “rights.” In effect, this means deciding which people will have more goods and services and which people will have fewer. This is not the promotion of true rights. It is the exercise of power.

This abrogates the Rule of Law. It erodes respect for the law. It turns republican government into a form of totalitarianism called absolute democracy. Under that system, we vote to elect political representatives and they grant “rights,” or entitlements, to their supporters while depriving their opponents of true rights. This is what comes of elevating politics above all and ignoring economics.

The most recent manifestation of this aberrant democratic virus is the obsession to punish the rich. The party in power – the Democrats – has essentially unlimited power to write rules through legislation, regulation, executive order and judicial interpretation. That allows them the luxury of writing rules that reward their supporters and punish their opponents. Their supporters include plenty of rich people, but they are predominantly those who gain real income from foundations and carried interest. So Democrats write tax rules that favor those practices. Democrat rules define the “evil rich” as those who earn high annual incomes from entrepreneurship and salaries; i.e., Republicans. So Democrats raise taxes on “the rich” in the name of fairness by increasing marginal rates of taxation on high incomes. (Democrat entrepreneurs are granted waivers from Democrat rules and regulations such as ObamaCare legislation.)

Meanwhile, Republicans sit dazed and sullen. They await their return to power. At that point, they can implement their agenda by elevating the interests of their supporters and punishing the Republican analogues of the “evil rich,” such as immigrants and homosexuals.

George Orwell characterized a totalitarian society as one in which everything is politicized; everything is either mandatory or forbidden. The reflexive tendency to turn employment conditions and student privacy policies into political firefights is a symptom of neuropathy in the body politic. We have become insensitive to the freedoms of others.

The inherent purpose of government is to coerce, to promote conformity. Markets are not all-or-nothing propositions. They accommodate variety. They move incrementally. They promote diversity. By insisting that government do more and more, we are allowing markets to accomplish less and less. We are methodically chipping away at the zone of human freedom.