Archive for December, 2010

Will Net Neutrality Save the Internet?

December 21, 2010

Reason TV raises important questions: Is the problem real? Will regulation fix anything?

What concerns me the most is the unprecedented expansion of government authority over the internet (infrastructure and information). Politicians are eager to control (sorry, “improve”) it, and this will inevitably attract strategic lobbying efforts (favoring big business).
As other “consumer protection” regulations in the past, it will likely result in the opposite of the advertised effect and an escalation of intervention and corruption. Once the pump is primed, an endless stream of interventions is hard to stop or slow (even for Democracy 2.0 and other transparency enthusiasts).
It is difficult to gauge which regulation will have the most un-intended effects. The regulations will seem innocuous, well-meaning and incremental, especially at first, paving the way for more outrageous ones down the road.

Find a more detailed analysis in Net Neutrality, the FCC, WikiLeaks and the Future of Internet Freedom.

George Ought to Help

December 20, 2010

The Private Production of Defense

December 14, 2010

In The production of private defense (pdf), Hans-Hermann Hoppe beautifully condenses the arguments for private protection and against government-provided protection.
He first refutes the Hobbesian theory that in absence of government men would be at constant warfare against each other, with a systematic under-production of defense services.
He then highlights the two characteristics of government that put it in a bad position to institute and maintain peaceful cooperation: it is a true monopoly and it acquires resources by force.
In contrast, Hoppe theorizes that private defense is akin of insurance and analyzes how it would probably function.

Why Health Costs Are Still Rising

December 9, 2010

In support of economic theory, the above data shows that healthcare costs rise when others pay. In contrast, when providers have to compete for the consumer’s own resources, their service gets cheaper and better.

As an analogy, the same thing would happen if we had socialized “food insurance”.

I have to caution that interpreting empirical data is difficult. There is always the possibility of some hidden factor. That said, I have yet to see some solid empirical evidence of lower costs and improved quality as the monopolistic footprint of government increases in any industry, especially in the long-term. Instead, it appears that as an industry becomes more controlled and politicized, efforts get diverted to gaining control of the political process and away from improving the production of goods and services.

Maybe we should consider some simple and drastic steps towards a healthcare solution (audio).

A Century of Failure: Why It’s Time to Consider Replacing the Fed | George Selgin

December 3, 2010

Selgin addresses a number of questions about the Fed by looking at relevant historical statistics, and shows that it failed on each count:

* Did it reduce unemployment?
* Did it stabilize prices and value of money?
* Did it kept prices more predictable?
* Did it avoid dangerous deflations? Two kinds of deflation: demand shrinkage vs. increased supply. The Fed has given us more bad deflations (demand reduction) or inflation, as opposed to good deflations before the Fed.
* Was GNP volatility reduced? The problem is with how statistics were collected and computed before 1920.
* Has the frequency and length of recessions has improved under the Fed? Those statistics remained about the same.

Overall, he adopts the mainstream economists’ point of view to evaluate the success of the Fed and illustrate its failure.
Also, he points out a number of other factors which cause his analysis to underestimate how bad the Fed performed. For instance, he takes care to discount the interwar period as “practice”, as some mainstream economists do.