Can Regulation Keep Up with Accumulating Knowledge?

What some doctors say about regulating the treatment of sepsis has much broader application. Sepsis, an often lethal reaction to infection sometimes called blood poisoning, is the leading cause of death in hospitals, Richard Harris reports for NPR. Understandably, then, some doctors and regulators have a typical reaction: “A 4-year-old regulation in New York state compels doctors and hospitals to follow a certain protocol, involving a big dose of antibiotics and intravenous fluids.”

Other doctors aren’t so sure about the rush to regulation. 

Dr. Jeremy Kahn at the University of Pittsburgh believes that regulations can prod doctors to follow the latest protocol. But “The downside is that a regulatory approach lacks flexibility. It essentially is saying we can take a one-size-fits-all approach to treating a complex disease like sepsis.” Harris continues:

That’s problematic, because doctors haven’t found the best way to treat this condition. The scientific evidence is evolving rapidly, Kahn says. “Almost every day another study is released that shows what we thought to be best practice might not be best practice.”

Kahn wrote a commentary about the rapid changes earlier this month for the New England Journal of Medicine.

For a while, medical practice guidelines distributed to doctors called on them to use one particular drug to treat sepsis. It turned out that drug did more harm than good. Another heavily promoted strategy, called goal-directed therapy, also turned out to be ineffective.

These are concerns that economists often raise about regulation: that government mandates may be rigid, inflexible, and frozen in time. They don’t change easily in response to new information. They may require a specific protocol that may turn out not to be the best practice:

And a study presented last week at the American Thoracic Society and published electronically in the New England Journal of Medicine finds that one of the steps required in New York may not be beneficial, either.

The regulations call for a rapid and substantial infusion of intravenous fluids, but that didn’t improve survival in New York state hospitals….

In fact, some doctors believe that most patients are better off without this aggressive fluid treatment. There’s a study getting underway to answer that question. Dr. Nathan Shapiro at Harvard’s Beth Israel Deaconess Medical Center hopes to enlist more than 2,000 patients at about 50 hospitals to answer this life-or-death question.

But that study will take years, and in the meantime doctors have to make a judgment call.

“It is possible that at present they are requiring hospitals to adopt protocols for fluid resuscitation that might not be entirely appropriate,” Kahn says.

Somehow this reminds me of the phenomenon noted in the 1980s when Canada banned cyclamates and the United States banned saccharin. Presumably one country had banned the less dangerous sugar substitute.

Economists Gerald P. O’Driscoll Jr. and Lee Hoskins wrote about the problems with regulatory mandates in 2006:

Coercion may bring uniformity of product or conduct, but only at the expense of innovation and flexibility. Merchant law suffered when the hand of the state took it over: “Many of the desirable characteristics of the Law Merchant in England had been lost by the nineteenth century, including its universal character, its flexibility and dynamic ability to grow, its informality and speed, and its reliance on commercial custom and practice” (Benson 1989: 178).

Markets excel in adapting to changing circumstances, while legislation and government regulation are notoriously rigid. That is perhaps the strongest case for market self-regulation over government-mandated regulation.

Regulation seems to substitute the judgment of a small group of fallible politicians or bureaucrats for the results of a market process that coordinates the needs and preferences of millions of people. It sets up static, backward-looking rules that can never deal with changing circumstances as well as voluntary decisions by people on the ground, whether entrepreneurs, customers, scientists, or doctors.

Posted on May 31, 2017  Posted to Cato@Liberty

Socialist Catastrophe in Venezuela

Journalists are now reporting regularly on the crisis in Venezuela, with shortages of everything from toilet paper to food and now daily street protests. What the news reports too often miss is, Why? Why is a formerly middle-class, oil-rich country now so desperately poor?

The Weekly Standard notes a New York Times article, “How Venezuela Stumbled to the Brink of Collapse,” that spends 1800 words on the country’s “collapse into authoritarianism.” The Standard summarizes:

The strongman Hugo Chávez “ran for president in 1998. His populist message of returning power to the people won him victory.” Chávez polarized because “populism describes a world divided between the righteous people and the corrupt elite.” Now, under the late Chávez’s successor, Nicolás Maduro, “The political system, after years of erosion, has become a hybrid of democratic and authoritarian features.”

But never does the article identify what economic system could cause such disaster. It does mention specific policies: subsidies, welfare programs, money printing, inflation, and price controls. But nationalization is never mentioned. And in particular, the Standard points out, the article does not use the word “socialism” (or “socialist”). It does not mention that Hugo Chavez and Nicolas Maduro have headed the United Socialist Party of Venezuela. Socialism is the cause that must not be named.

So it’s refreshing to see a rather more forthright article in the Washington Post this weekend by Mariana Zuniga and Nick Miroff:

With cash running low and debts piling up, Venezuela’s socialist government has cut back sharply on food imports….

Venezuela’s disaster is man-made, economists point out — the result of farm nationalizations, currency distortions and a government takeover of food distribution. While millions of Venezuelans can’t get enough to eat, officials have refused to allow international aid groups to deliver food, accustomed to viewing their oil-rich country as the benefactor of poorer nations, not a charity case.  

“It’s not only the nationalization of land,” said Carlos Machado, an expert on Venezuelan agriculture. “The government has made the decision to be the producer, processor and distributor, so the entire chain of food production suffers from an inefficient agricultural bureaucracy.”

My colleague Marian Tupy notes that according to the Economic Freedom of the World Index, economic freedom in Venezuela fell from just above 7 out of 10 in 1970 to barely above 3 in this decade. Meanwhile, its GDP per capita has fallen over 40 years, while Chile’s has tripled.

Venezuela doesn’t have to be poor. But to restore its standard of living, it will have to reverse recent changes in property rights, judicial independence, free trade, and corruption.

Posted on May 30, 2017  Posted to Cato@Liberty

Dollars per Vote in the 2016 Election

In the early days of the 2016 election cycle pundits were expecting the most expensive election ever. There were predictions of a $2 billion Hillary Clinton campaign and a $5 billion total for all presidential candidates. In the end, the campaigns spent less than expected, and less than in 2008 and 2012, and the winning candidate spent much less than the runner-up. “News” is supposed to be something unexpected, yet I haven’t seen many headlines about the drop in campaign spending and the dramatic revelation that money doesn’t always win.

Of course, in every election the bigger amounts are government spending. When politicians vote or promise to give money to students, the elderly, farmers, automobile companies, defense contractors, and other voting blocs, political considerations are certainly part of the decision-making process. When presidential candidates promise free college or a trillion dollars for infrastructure construction, they are clearly understood to be appealing for votes. When Republicans vote for $60 billion in “Hurricane Sandy recovery aid,” including money for Alaskan fisheries and activist groups, aren’t they buying votes? 

But for the moment, let’s take a look at how much the candidates did spend, and how much they got for it. I’ve added Libertarian nominee Gary Johnson to the usual Clinton-Trump comparison to get some perspective.

The vote totals are from Dave Leip’s Atlas of U.S. Presidential Elections. Spending figures for the Democratic and Republican candidates are from the Washington Post and for Johnson from OpenSecrets.org.

So the first thing we notice is that Clinton and Trump spent respectively just over $9 and $5 per vote, while Johnson spent less than $3. But party and outside groups more than doubled spending for the major candidates. All told, Clinton spent substantially more than Trump. She did get 2 percent more in the popular vote, but that wasn’t much return on the extra half-billion dollars. Johnson spent about six times as much as he did in 2012 to get three times the percentage, but we can only wonder how much of “the libertarian vote” a Libertarian Party candidate might pick up if he had enough money to be heard. 

Posted on May 24, 2017  Posted to Cato@Liberty

Greek Anarchists Provide Services the State Doesn’t

In the New York Times, Niki Kitsantonis writes, “It may seem paradoxical, but Greece’s anarchists are organizing like never before.”

No. Anarchists – the sensible ones, at least – are not against organization. They are against rule – against ruling and against being ruled. Merriam-Webster explains the derivation of the word: “Medieval Latin anarchia, from Greek, from anarchos having no ruler, from an- + archos ruler.” True, as the dictionary editors note, “anarchy” and “anarchism” are sometimes used to mean something like “absence or denial of any authority or established order” or simply “absence of order.” But rational political theorists and even activists don’t advocate pure disorder; they advocate the absence of rule, which they define as the absence of government

So what is it that these Greek anarchists are organizing for? Well, in fact, the focus of the article is on how anarchists are supplying the services that the Greek state is not providing:

Seven years of austerity policies and a more recent refugee crisis have left the government with fewer and fewer resources, offering citizens less and less. Many have lost faith. Some who never had faith in the first place are taking matters into their own hands, to the chagrin of the authorities….

Whatever the means, since 2008 scores of “self-managing social centers” have mushroomed across Greece, financed by private donations and the proceeds from regularly scheduled concerts, exhibitions and on-site bars, most of which are open to the public. There are now around 250 nationwide.

Some activists have focused on food and medicine handouts as poverty has deepened and public services have collapsed.

In recent months, anarchists and leftist groups have trained special energy on housing refugees who flooded into Greece in 2015 and who have been bottled up in the country since the European Union and Balkan nations tightened their borders. Some 3,000 of these refugees now live in 15 abandoned buildings that have been taken over by anarchists in the capital.

One part of Athens seems to have been a self-governing, but not state-governed, territory for some time. Some sources say Exarchia has existed since as early as 1870. The name presumably comes from “ex-,” out of, away from, and of course “archos,” ruler.

In Athens, the anarchists’ epicenter remains the bohemian neighborhood of Exarchia, where the killing of a teenager by a police officer in 2008 set off two weeks of rioting, helped reinvigorate the movement and produced several guerrilla groups that led to a revival of domestic terrorism in Greece.

The police and the authorities tread lightly in the area.

The police have recently raided some buildings illegally occupied by anarchists, called squats, in Athens, in the northern city of Thessaloniki and on the island of Lesbos, a gateway for hundreds of thousands of migrants over the past two years….

The anarchists say their squats are a humane alternative to the state-run camps now filled with more than 60,000 migrants and asylum seekers. Human rights groups have broadly condemned the camps as squalid and unsafe.

In Exarchia, one of the squats includes a former state secondary school that was abandoned because of structural problems. Established last spring with the help of anarchists, the squat is now home to some 250 refugees, mostly from Syria, who have set up a chicken coop on the roof. Many more refugees are on a “waiting list” for other occupied buildings.

The squats function as self-organized communities, independent from the state and nongovernmental organizations, said Lauren Lapidge, 28, a British social activist who came to Greece in 2015 at the peak of the refugee crisis and is actively involved with several occupied buildings.

“They are living organisms: Kids go to school, some were born in the squat, we’ve had weddings inside,” she said.

There’s really nothing paradoxical about anarchists setting up institutions and communities outside the state to provide needed goods and services. The Greek anarchists probably don’t see businesses as part of that non-state society, though libertarian anarchists and anarcho-capitalists do. 

What is paradoxical, as I wrote five years ago, is Greek “anarchists” who object to the state reducing its size, scope, and power by cutting back on taxes and transfer payments. Anarchists who organize voluntarily to achieve common purposes are just living their philosophy.

Posted on May 22, 2017  Posted to Cato@Liberty

Government Can’t Even Plan for Its Own Survival

Economists and (classical) liberals have long criticized the failures of government planning, from Hayek and Mises and John Jewkes to even Robert Heilbroner. Ron Bailey wrote about centralized scientific planning, Randal O’Toole about urban planning, Jim Dorn about the 1980s enthusiasm for industrial planning, and I noted the absurdities of green energy planning

One concern about planning is that it will lead government to engage in favoritism and cronyism. So who would have guessed that when the leaders of the federal government set out to plan for their own survival—if no one else’s—in the event of nuclear attack, they failed?

That’s the story journalist and author Garrett Graff tells in his new book Raven Rock: The Story of the U.S. Government’s Secret Plan to Save Itself—While the Rest of Us DieAs the Wall Street Journal summarizes:

COG—continuity of government—is the acronymic idée fixe that has underpinned these doomsday preparations. A bunker was installed in the White House after Pearl Harbor, but the nuclear age (particularly after the Soviet Union successfully tested an atomic bomb in September 1949) introduced a nationwide system of protected hideaways, communications systems, evacuation procedures and much else of a sophistication and ingenuity—and expense—never before conceived….

Strategies for evacuating government VIPs began in earnest in the early 1950s with the construction of Raven Rock, an “alternate Pentagon” in Pennsylvania near what would become known as Camp David, and Mount Weather, a nuclear-war sanctuary in Virginia for civilian officials….

In 1959, construction began on a secret refuge for Congress underneath the Greenbrier, a resort in West Virginia. In the event of an attack, members of Congress would have been delivered by special train and housed in dormitories with nameplated bunk beds.

The most important COG-related activities during the Kennedy administration came during the Cuban Missile Crisis in October 1962, the closest this country has come to a nuclear war. Not only was the military mobilization chaotic—“one pilot bought fuel for his bomber with his personal credit card”—but VIP evacuation measures were, for the most part, a debacle: “In many cases, the plans for what would happen after [a nuclear attack on the U.S.] were so secret and so closely held that they were almost useless.” …

The Air Force also acquired, for the president’s use, four Boeing 747 “Doomsday planes” with state-of-the-art communications technology, which were nicknamed “Air Force One When It Counts.”…

Probably the most fraught 24 hours in the history of COG worrying occurred on Sept. 11, 2001, when al Qaeda terrorists attacked the World Trade Center and the Pentagon. COG projects and training had been ceaselessly initiated and honed for a half-century; but, as Mr. Graff writes with impressive understatement, “the U.S. government [wasn’t] prepared very well at all.”…

While Vice President Dick Cheney had been swiftly hustled to the White House bunker, “those officials outside the bunker, even high-ranking ones, had little sense of where to go, whom to call, or how to connect back to the government,” Mr. Graff writes. But there were enough people in the bunker to deplete the oxygen supply and raise the carbon-dioxide level, and so “nonessential staff” were ordered to leave. When House Speaker Dennis Hastert tried to call Mr. Cheney on a secure phone, he couldn’t get through….

When President George W. Bush heard the news about the attacks that morning, he was in Florida. He was whisked into Air Force One, which, Mr. Graff notes, “took off at 9:54 a.m., with no specific destination in mind.” It would eventually land, and the president would address the country. But “Air Force One’s limitations”—it wasn’t one of the Doomsday planes—“came into stark relief.” For one thing the plane’s communications systems were woefully inadequate for what was required on 9/11. “On the worst day in modern U. S. history,” Mr. Graff writes near the end of his exhaustingly detailed account (I sometimes felt buried alive under its mass of data), “the president of the United States was, unbelievably, often less informed than a normal civilian sitting at home watching cable news.”

Fifty years of planning for a single event, the most important task imaginable—the survival of the republic and their own personal survival—and top government officials still didn’t get it right. A good lesson to keep in mind when we contemplate having less-motivated government officials plan our cities, our energy production, our health care system, or our entire economy.

Posted on May 19, 2017  Posted to Cato@Liberty

The President Is Not the Commander in Chief of the United States, Nor Its CEO

The U.S. ambassador to the United Nations, Nikki R. Haley, told George Stephanopoulos on ABC’s “This Week” yesterday that “the president is the CEO of the country,” and thus “he can hire and fire whoever he wants. That’s his right.” Leaving aside the question of whether the president can fire everyone in the federal government, she is wrong on her main point. The president is not the CEO of the country. He can reasonably be described as the CEO of the federal government. The Constitution provides that in the new government it establishes, “The executive Power shall be vested in a President of the United States of America.”

Meanwhile, too many people keep calling the president—this president and previous presidents—”my commander in chief” or something similar. Again it’s important for our understanding of a constitutional republic to be clear on these points. The president is the chief executive of the federal government. He is the commander in chief of the armed forces, not of the entire government and definitely not of 320 million U.S. citizens. Article II, Section 2 of the Constitution provides:

The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States.

Too many people who should know better keep getting this wrong. The highly experienced former first lady, senator, secretary of state, and presidential nominee Hillary Clinton for instance, who declared last year on the campaign trail, “Donald Trump simply doesn’t have the temperament to be president and commander in chief of the United States.” (She had also used the term a year earlier, and in her previous campaign she expressed a determination to be the “commander in chief of our economy,” so this wasn’t just a slip of the tongue.)

And also third-generation Navy man, senator, and presidential nominee John McCain who declared his support for President George W. Bush in 2007, saying, the Washington Post reported: “There’s only one commander in chief of the United States, and that’s George W. Bush.”

Now Donald Trump is getting the same treatment. Perhaps it’s no surprise that the Daily Mail, a popular newspaper in a country still headed by a monarch, would write

President Donald Trump sent a message to ex-FBI director James Comey and his detractors as he told Liberty University graduates that ‘nothing is more pathetic than being a critic’ during his first commencement address as the commander-in-chief of the United States.

But how about Democratic strategist Maria Cardona, writing in a Capitol Hill newspaper to mock President Trump’s historical ignorance:

How apropos that this famous and very fitting quote was likely used by the Abraham Lincoln, the president who actually was the commander-in-chief of the United States when the Civil War happened.

Oops.

And here also Tim Weiner, a Pulitzer Prize-winning reporter and author of “Legacy of Ashes: The History of the CIA”: “Our commander-in-chief has made a serious miscalculation.”

The Military Times should know better than to write, “Business mogul Donald Trump was sworn as the nation’s 45th commander in chief on Friday, promising to return government to the people and return American might to the international stage.”

Even Joy-Ann Reid, who hates Trump, gives him a title he doesn’t possess, declaring that Trump’s “greed and neediness and vaingloriousness have made our commander in chief a national security threat.”

In this time when we worry about threats to the Constitution and our liberal republican order, we need to remember the basics. 

This is a constitutional republic, and we don’t have a commander in chief. 

That’s an important distinction, and it’s disturbing that even candidates for the presidency miss it. Hillary Clinton may well have wanted to be commander in chief of the whole country, of you and me, and to direct us and our economic activities the way the president directs the officers and soldiers of the armed forces. But if so, she would have needed to propose an amendment to the Constitution—an amendment that would effectively make the rest of the Constitution irrelevant, since it was designed as a Constitution for a limited government of a free people.

Donald Trump is not my commander in chief. Neither was Barack Obama. Each was elected president, charged with leading the executive branch of the federal government.

Posted on May 15, 2017  Posted to Cato@Liberty

Endless War in Afghanistan and Colombia

Two front-page stories in the Washington Post today tell a depressing story:

President Trump’s most senior military and foreign policy advisers have proposed a major shift in strategy in Afghanistan that would effectively put the United States back on a war footing with the Taliban…more than 15 years after U.S. forces first arrived there.

Seventeen years and $10 billion after the U.S. government launched the counternarcotics and security package known as Plan Colombia, America’s closest drug-war ally is covered with more than 460,000 acres of coca. Colombian farmers have never grown so much, not even when Pablo Escobar ruled the drug trade. 

There are high school students about to register for the draft who have never known a United States not at war in Afghanistan and Iraq. And of course the policy of drug prohibition has now lasted more than a century, though the specific Colombian effort began only under President Clinton around 1998, getting underway in 2000.

I wrote an op-ed, “Let’s Quit the Drug War,” in the New York Times in 1988. Cato scholars and authors have been writing about the seemingly endless war(s) in the Middle East for years now. Maybe it’s time for policymakers to start considering whether endless war is a sign of policy failure.

And maybe one day, a generation from now, our textbooks will not tell our children, We have always been at war with Eastasia.

Posted on May 9, 2017  Posted to Cato@Liberty

A Brief History of the Cato Institute: A Live #Cato40 Daily Podcast

At the recent Cato40 celebration, Cato’s David Boaz, Ian Vasquez and Roger Pilon discussed Cato’s history and its role in promoting liberty.

Posted on May 8, 2017  Posted to Cato@Liberty

Dentists and Freedom in Ivory Coast

I heard a report this morning on BBC Newshour on the shortage of dentists in Ivory Coast (Cote d’Ivoire). I can’t find the report at the Newshour website, but here’s something similar from CNBCAfrica, coauthored by a Unilever representative. It’s a sad story of disease, pain, and school absenteeism.

But stories like this miss the point. Why does Ivory Coast have so few dentists? Why does the Gates Foundation need to buy mosquito nets for African countries? It’s not because there’s something special about dentists and mosquito nets. It’s because African countries are poor. And they’re poor because they lack freedom, property rights, markets, and the rule of law.

Take Cote d’Ivoire. In the 2016 Economic Freedom of the World Report, Cote d’Ivoire ranks 133rd in the world for economic freedom. On page 66 of this pdf version, we see that it rates particularly badly on “Legal System and Property Rights.” You can’t generate much economic growth if you don’t have secure property rights and the rule of law. It also rates badly on regulatory barriers to trade and capital controls. 

On the broader Human Freedom Index, we see on page 63 that Cote d’Ivoire also rates low for freedom of domestic movement, political pressure on the media, and procedural, criminal, and civil justice.

African countries have severe tariff and nontariff barriers to free trade, reducing the benefits they can gain from specialization and the division of labor, even among sub-Saharan countries themselves.

The long-term way to get more dentists and mosquito nets in Africa is not Western aid or charity, it’s freedom and growth. Those who want Africa and Africans to have better lives need to encourage African countries to move toward the rule of law, free trade, property rights, and open markets. 

Posted on May 2, 2017  Posted to Cato@Liberty

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