Category: Business and Society

Check out this piece by Dr. Jennifer Roback Morse, an Acton senior fellow, in which she argues “that marriage is the cornerstone of civil society. And the images of Katrina demonstrate this, if we are willing to see.”

It’s one thing to have a great government policy put in place with intention of seeking justice. It’s quite another to continue to promote policies whose unintended consequences hurt the most vulnerable populations.

Even though Iraq has the world’s third largest oil reserves, the lack of a reliable infrastructure, sabotage, and government-imposed price controls (oil is $.05 a gallon, a holdover from the Saddam Hussein regime) make gas for law-abiding citizens hard to come by.

These price controls result in forced government rationing. Now new regulations allow driving only on every other day, depending on your license plate number. Last Tuesday was the first day of the restrictions, and only cars ending with odd numbers were allowed on the streets of Baghdad.

Reuters reports on the effect that these policies are having on Iraq’s working classes, such as they are. Taxi driver Amir al-Hameeri, who did not take his car out on Tuesday, fearful of a fine equivalent to $20 if his even-numbered licence plate was spotted.

“It’s a ruthless decision against the poor,” he grumbled. “How can I feed my family now?”

This is a prime example of how policies which may have the best of intentions (affordable fuel for all Iraqis) that ignore the realities of the marketplace have adverse consequences. And as always, it is the poor among us who suffer the most.

Here’s an NPR story with more on how motorists are “beating the system” through black markets and other means.

HT: John Powers

Blog author: jballor
Thursday, September 1, 2005
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Following the devastation in New Orleans from Hurricane Katrina, bands of looters are running rampant throughout the city. Things have gotten so bad that New Orleans Mayor Ray Nagin “ordered virtually the entire police force to abandon search-and-rescue efforts and stop thieves who were becoming increasingly hostile.”

According to reports, “Looters used garbage cans and inflatable mattresses to float away with food, clothes, TV sets — even guns. Outside one pharmacy, thieves commandeered a forklift and used it to push up the storm shutters and break through the glass. The driver of a nursing-home bus surrendered the vehicle to thugs after being threatened.”

In the newest developments, looters are taking a cue popularized in the controversial game Grand Theft Auto: San Andreas. A common strategy in that game is to wreak havoc, wait for emergency personnel and ambulances to arrive, and then kill the rescue workers as well. This tactic has been seen in terrorist activities around the world. For example, in Iraq, “insurgents had planned to detonate the car bomb first , and then the two vest bombers would target responding Iraqi soldiers, police, and rescue workers.”

Grand Theft Auto: New Orleans

The evacuation of victims from the Superdome in New Orleans has been delayed after shots were fired at a military helicopter. Other reports include that of a rescue team: “When a medical evacuation helicopter tried to land at a hospital in the outlying town of Kenner, the pilot reported that 100 people were on the landing pad, and some of them had guns.”

Richard Zeuschlag, head of Acadian Ambulance, which was handling the evacuation of sick and injured people from the Superdome, said that the pilot was “was frightened and would not land.” He said medics were calling him and crying for help because they were so scared of people with guns at the Superdome.

The Christian tradition has dealt with the question of “Whether it is lawful to steal through stress of need?” In the situation of extreme need, such as that of Jean Valjean of Victor Hugo’s Les Misérables, Thomas Aquinas writes, “If the need be so manifest and urgent, that it is evident that the present need must be remedied by whatever means be at hand (for instance when a person is in some imminent danger, and there is no other possible remedy), then it is lawful for a man to succor his own need by means of another’s property, by taking it either openly or secretly: nor is this properly speaking theft or robbery.”

This judgment is made based on a view of property rights that is not absolute, but rather limited by the Christian concept of stewardship. Aquinas states, “Since, however, there are many who are in need, while it is impossible for all to be succored by means of the same thing, each one is entrusted with the stewardship of his own things, so that out of them he may come to the aid of those who are in need.” The prerogative of individual prudence of how to manage and distrubute one’s own goods can be trumped by the extreme and urgent need of another person.

Even so, the kinds of things that are being taken by looters in New Orleans hardly qualify as meeting a “manifest and urgent” need. Taking food and water when you are on the verge of starvation and death is one thing. Breaking in to a store so you can score some more guns is quite another. Somehow I don’t think that taking a Glock or a TV set meets Aquinas’ criteria.

Today marks the 25th anniversary of the formation of Poland’s Solidarity movement. Samuel Gregg says that Solidary gives us a view of a labor union whose “stand for the truth about the human person and against the lie of Marxism contributed immeasurably to the collapse of one of the two great totalitarian evils that disfigured the twentieth-century.”

Read the full text here.

Blog author: jspalink
Wednesday, August 31, 2005
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Rev. Robert Sirico responds to Pat Robertson’s highly-publicized call for the assassination of Venezuelan president Hugo Chavez. “What is needed here, I believe, is a time of reflection. Christianity is not a national religion. It is does not regard every enemy of the nation-state as worthy of execution. It prefers peace to war. It chooses diplomacy over threat. It respects the right to life of everyone, even those who have objectionable political views,” he writes.

Read the full text here.

Hurricane Katrina passed over New Orleans and the rest of the Gulf coast earlier today, and reports of “price gouging” are already coming in.

In Alabama, when the governor declares a state of emergency, it triggers a legal barrier to “unconscionable pricing.” That is (arbitrarily?) determined by the government to be a raise of 25% or more above the “normal” price.

Raising prices for scarce commodities during an emergency situation smacks of opportunism at best. So it seems on the face of it like an open and shut case in favor of state intervention.

But a greater understanding of how markets work and the price mechanism make the case somewhat more complex. An examination of the practical effects of price controls and limits shows the unintended consequences of such laws.

David M. Brown wrote a provocatively titled piece, “Price Gouging Saves Lives,” for Mises.org following Hurricane Charley in 2004. The thrust of the argument is essentially that to limit the prices vendors can charge is to reduce the incentive for vendors to go through the hardship and risk of transporting commodities to the afflicted areas.

If someone can sell gas for the “normal price” in both northern Louisiana and in New Orleans, why would that person take on the added expense of moving gas in to a disaster area? Brown writes:

If we expect customers to be able to get what they need in an emergency, when demand zooms vendors must be allowed and encouraged to increase their prices. Supplies are then more likely to be sustained, and the people who most urgently need a particular good will more likely be able to get it. That is especially important during an emergency. Price gouging saves lives.

Brown’s entire piece is worth reading. The ability to charge more for goods ensures that those goods will find their way into the “state of emergency.” Those interested in looking for a biblical precedent for situational pricing could look to Joseph’s actions during the famine in Genesis 41 (with the added caveats that biblical narrative does not equal imperative, that Joseph was technically acting in the interests of the government [i.e. Pharaoh], and that his actions fulfilled a specific purpose within God’s redemptive history. In other words, biblical precedent doesn’t necessarily create an ethical norm).

Aah, the good old days!

In case you haven’t noticed, the price of gasoline has been going up lately. And, with all the predictability of the swallows returning to Capistrano, the cry has gone up from certain quarters of society for the government to do something about the situation. Unfortunately for consumers in paradise, the State of Hawaii has decided to respond to that demand by instituting price caps on gasoline.

The price caps, which will be instituted on September 1, are the result of a process that began with the passage of Act 77, which was enacted in June of 2002. Implementation of the act was delayed, however, in order for enough time to pass for a more comprehensive study of Hawaii’s gasoline market to be undertaken. One might ask whether it might have been better to do that before passing price control legislation, but I suppose we should be thankful that the legislature required this inquiry at all.
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Blog author: jballor
Thursday, August 25, 2005
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A commentary from the Tax Foundation looks at government subsidies for the construction of a new stadium for MLB’s Washington Nationals. Analyst Eric A. Miller writes, “Funding a new stadium in the District may be good politics, but it is bad public policy. Major League Baseball will be laughing all the way to the bank while D.C. residents will find that they get much less than they were promised — and paid for.”

HT: Townhall.com

Blog author: jballor
Wednesday, August 24, 2005
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I was wondering how long it would take for this to happen. The acceptability of Google’s politics and public persona could only insulate it from the requisite corporate suspicion for only so long.

In today’s New York Times, Gary Rivlin writes of growing distrust of Google: “instead of embracing Google as one of their own, many in Silicon Valley are skittish about its size and power. They fret that the very strengths that made Google a search-engine phenomenon are distancing it from the entrepreneurial culture that produced it – and even transforming it into a threat.”

How much of the “grousing” is merely bad sportsmanship? More than a bit, I think. After all, “Just as Microsoft has been seen over the years as an aggressive, deep-pocketed competitor for talent, Internet start-ups in Silicon Valley complain that virtually every time they try to recruit a well-regarded computer programmer, that person is already contemplating an offer from Google.”

When Google beats you at something, the proper response would be to raise your game. This would spur innovation. But instead, the Google’s competitors seem more interested in complaining rather than competing:

“Google is doing more damage to innovation in the Valley right now than Microsoft ever did,” said Reid Hoffman, the founder of two Internet ventures, including LinkedIn, a business networking Web site popular among Silicon Valley’s digerati. “It’s largely that they’re hiring up so many talented people, and the fact they’re working on so many different things. It’s harder for start-ups to do interesting stuff right now.”

Sour grapes, anyone?

Blog author: mvandermaas
Friday, August 19, 2005
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Remember that the next time you hear someone sing the praises of single-payer, government run health care programs. Canada’s system is often cited as an ideal model for the United States to emulate. The problem with that, however, is simple: if the US adopts a Canadian style system, where will Canadians go for their health care?

Canada’s National Health Service: The Sick Man of the Great White North

Recognizing their failure to provide timely treatment through the national system, some provincial governments are sending backlogged patients to the United States rather than encouraging Canada’s private sector to pick up the slack.

Demand exceeded supply in 1999 and 2000 for 1,200 Ontario cancer patients who were forced to wait an unacceptably long time for treatment. Providers on both sides of the border acted. Cancer Care Ontario (CCO) and Princess Margaret Hospital in Ontario offered patients the option of receiving radiation therapy at Roswell Park Cancer Institute of Buffalo. “This short-term measure is helping us to ensure that everyone receives treatment within a medically acceptable period,” Ken Shumak, CCO’s president, said at the time.

Pamela Germain, vice president for managed care and outreach at Roswell Park, notes that some patients had waited 14 weeks postsurgery, with eight weeks being the satisfactory outer limit. “We negotiated case rates for breast cancer and prostate cancer and cleared up a backlog of 1,110 patients in two years,” says Germain. Hospitals in Detroit and Cleveland also picked up the slack until provinces purchased new equipment and hired health care professionals to run it.

Canada’s system may be the gold standard for government-run health care, but only if you’re looking for a system that can’t provide essential medical services in a timely manner.
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