Minimum wage, again Wednesday, Jun 23 2010 

A little less than a year ago, I wrote a rather long post about the minimum wage. I explained the “textbook model” of the minimum wage, which many students just beginning to learn economics are taught. The basic neoclassical model tells us that a minimum wage set above the equilibrium wage in a market creates a surplus of labor or, in other words, unemployment. I disputed some of the assumptions on which such an argument rests, for example, elastic demand for labor, the “one-sector” model, perfectly competitive markets, equal bargaining power, etc. I also looked at empirical evidence that suggests that the minimum wage may in fact be beneficial for employment or, in the very least, may only have a modest employment effect (primarily for teenagers). Finally, I looked at some ideological or pragmatic reasons why people support the minimum wage and why it is more favorable than other redistribution policies (e.g. welfare). Rather quickly, this post became the most looked at article on this blog, and remained that way for quite some time. Today, it remains the second most-read post I’ve written.

Last month, King Banaian, a professor and chairman of the economics department of SCSU, wrote about about a study that concluded people who accept “enlightened economics” are more conservative than they are liberal. These “economically enlightened” folk were required to believe, for example, that a minimum wage necessarily decreases employment. I disputed this type “enlightened thinking.” Dr. Banaian has again made another post about the minimum wage, this time explaining why a minimum wage is bad policy (it prevents people from coming to “mutually agreed” wages below the minimum wage) and how there is a “consensus” among economists about this issue.

In the first post, I responded by saying there is quite a bit of evidence in support of a minimum wage, even if neoclassical theory provide none. One of the most famous example is research done by Card and Krueger, who found that the minimum wage had positive effects on employment. This seems quite stunning, considering the standard neoclassical model predicts just the opposite. So, quite naturally, one becomes rather suspicious of this research, but I think a careful review of the literature will show that the underlying conclusions that Card and Krueger come to are solid and are supported by additional research. Of course, one wonders how increasing wages can, in fact, increase employment levels. It seems counterintuitive. David Switzer, a professor of economics at SCSU, said it “goes against all of neoclassical economic thinking.”

Fortunately, neoclassical economics (as well as a little bit of intuition) does provide us with an answer. It isn’t, after all, beyond one’s imagination that an employer might actually pay its laborers a wage below the market clearing (i.e. equilibrium) wage. A firm seeking to maximize its profits has this incentive if it has the ability to do so. One scenario that might bring this about is one in which the labor market is oligopsonistic. Oligopsony is a fancy word to describe markets where there are few buyers and many sellers. (A related term that is perhaps more familiar is monopsony, where there is only one buyer and many sellers; this is the opposite of monopoly, which is one seller and many buyers.) In the case of oligopsony, the small number of firms can distort the wages in a market (in a similar way a monopoly can distort prices in a market), such that wages can be set below the equilibrium wage. Oligopsonistic labor markets reduce the welfare of laborers and creates deadweight loss. Under such circumstances, raising the wage that employers must pay their labor actually increases employment, reduces deadweight loss, and increases efficiency in the market. (A simplified graphical representation of monopsony can be viewed here.) So, in this case, the minimum wage has some extraordinary benefits.

The question becomes whether particular low-skilled labor markets are oligopsonistic or not. If the New Jersey fast food industry was oligopsonistic in 1992, that might explain Card and Krueger’s findings. However, as Dr. Banaian points out, the research in this area is not robust and is still “very young.” He may well be correct, in which case it would be helpful to look at empirical evidence and other areas that are more thoroughly understood. As I said earlier, a little bit of intuition might be able to help us explain why the effects of minimum wage may not be consistent with the standard model. In a 2008 study, David Metcalf explores why the minimum wage in Britain has “had little or no impact on employment.” Some of these include changes in hours, tax credits, compliance issues (part of the two sector model that Gary Fields discusses in previously noted research), productivity changes, price changes, reduced profits, and so on. He also considers the existence of “modern monopsony” (oligopsony) “very likely” in British labor markets. I defer you to Metclaf’s research for a more thorough discussion on how these variables can effect employment levels following a minimum wage hike. Suffice it to say, how these variable change does have an effect on employment, and may help explain why the minimum wage might have “minor negative effects at worst.”

In fact, that’s what most research has concluded. The conclusion that I support is that the minimum wage has a modest adverse effect on employment, primarily for teenager workers. It may even have positive employment effect for older cohorts, consistent with research by David Neumark and Olena Nizalova. (Neumark, keep in mind, is a fairly notable labor economist who opposes the minimum wage.) I think this is what a majority of the published literature out there reports (I can provide plenty of references, if needed), and the reasons explaining these findings are quite reasonable. That isn’t to say that there is a “consensus” against the minimum wage, as Dr. Banaian contends there is. He thinks I am “wrong on this point in terms of where the profession is on the literature.” A few years ago, The Economist, the main establishment journal, actually printed an interesting story on the issue. They wrote, “Overall, economists have become less worried about the job-destroying effects of a modest hike in the minimum wage. . . . Today’s consensus, insofar as there is one, seems to be that raising minimum wages has minor negative effects at worst.” There’s a wealth of research to support these views, as I stated earlier. What there is not is a consensus against the minimum wage, as Dr. Banaian contends there is.

In defense of his position, Dr. Banaian cites research by Neumark and William Wascher, which stated, in its abstract no less, “Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage.” Even more stunningly, Dr. Banaian readily confessed these facts in a post on his blog post he made in 2006, stating, “Both studies find a lack of consensus on the minimum wage, which I simply find shocking.” He finds the lack of consensus among economists “shocking,” but he at least acknowledges the fact. Today, he has shrunk from the issue and maintains that there, in fact, a consensus. He cites, for example, a 1996 survey by Robert Whaples, which suggested that there is a consensus among labor economists that the minimum wage decreases employment. That’s already been established. What Dr. Banaian conveniently does not do is refer to Whaples’ 2006 survey of PhD economists from the American Economic Association, which found that only less than 47% of them disagreed with a minimum wage policy. Though he readily mentioned it four years ago, perhaps the 2006 Whaples study is too inconvenient for the Minnesota House Representative hopeful in 2010.

The question, then, becomes less about the employment effects of the minimum wage, since there does seem to be some agreement on that issue. As one study by the U.S. Congress revealed, “Historically, defenders of the minimum wage have not disputed the disemployment effects of the minimum wage, but argued that on balance the working poor were better off.” That’s always been at the heart of the issue. Richard Freeman, one of the foremost labor economists and a professor at Harvard, writes in a 1994 study, “The question is not whether the minimum distorts market outcomes, but how its distortionary effects compare with those of other modes of redistribution, or with the benefits of redistribution.” He concludes that the minimum wage is a decent redistribution tool for four primary reasons that are typically ignored in the textbook models. I think his conclusion is consistent with what a majority of Americans believe. An overwhelming majority, usually over 80%, support the minimum wage. People support policies that help those who work (you need to work to earn the minimum wage), compared to those that help non-workers (e.g. welfare). They also are comfortable with redistributing their income via higher prices to help the most disadvantaged of workers. As Gary Fields keenly points out in a 1994 study, “One’s views about the desirability of a minimum wage ought to depend on more than the size of the unemployment effect alone.” I think he’s correct.

First Amendment Forum, again Friday, Apr 16 2010 

Today I was able to attend one of the presentations that was a part of the First Amendment Forum on campus, put together by the SCSU Society of Professional Journalists, the Department of Mass Communications, the St. Cloud Times, and others. The topic of the presentation that I attended was “Protecting Journalism in the Era of Dying Newspapers and Social Networking.” Though the topic was about the death of newspapers and the rise of online content and social networking, most of the panelists discussed how they were using or had used social media to complement their writings as journalists, reporters, or editors. However, once the discussion was opened to those in attendance, the issue of the death of traditional media was brought up.

Namely, the issue of charging for online content was brought up. This issue is the same issue that I had addressed in an earlier blog post and letter to the University Chronicle. I didn’t bring it up, but I believe the person who did was the same person I wrote my post in response to (that is, Kyle Stevens). The person asked the panel what they thought about the media charging for online content.

A salient point that one of the panelists (Ramla Bile) brought up was that charging for the news online introduces some problems in that doing so bars certain people (namely the poor) from accessing the news. Bob Collins, who works for Minnesota Public Radio (MPR), said he really wished the Star Tribune would start charging people to read online content, because he believed doing so would drive more people to MPR. Adam Hammer of the St. Cloud Times likened it to the music industry, and the challenges they faced with the digitization of music and the piracy of said music. He explained how people became accustomed to listening to music through digital media, and it was Apple who recognized this and created iTunes to provide a legal channel through which people could access this digital music.

Of course, there’s the other side of this issue. The content wasn’t produced without a cost. How are the media supposed to make money if they can’t charge people to view their content? Both views are valid. We need to balance the ability to make a profit through producing important news and the necessity of not pricing people out of the market for this important news. In other words, we want people to get paid for doing good journalism, but we don’t want to bar people from accessing this journalism simply because they can’t afford it.

Some people might just respond that if people can’t afford something, they don’t deserve it. If you can’t pay for it, why should I give it to you? The problem with this argument, however, is that important news is not just another commodity to be bought and sold. The news, as I have always said, is a cornerstone of democracy. (In economics, it might be called a public good.) Scholars and political theorists have long recognized that a free and vibrant press is the foundation of civic society and liberal democracy. This is what differentiates online news from, say, online music in Hammer’s example. Music is important, yes, but not necessarily a requisite for a functioning democracy.

The question, thus, becomes whether we want to limit the dispersion of knowledge and important news or if we want to make it as free and vibrant as possible. This is where I disagree with Stevens. He believed we should charge for online content, which would have the effect of pricing people out of the market for important news. As I said, though, we need to consider the fact that the content was not produced for free and there is a certain necessity to generate a revenue to at least cover the costs of making such important news available. The suggestion I made, basing my argument off the work of Robert McChesney and John Nichols in their book The Death and Life of American Journalism, was that there be a public subsidy for independent journalism. Both McChesney and Nichols present several convincing arguments in support of their case. A public subsidy for independent (that is, not corporate) news would solve the aforementioned balancing issue; the cost of producing important news would be paid for, and accessing this content would be kept free, allowing for the greatest number of people to access vital information.

Is Social Security in shambles? Saturday, Apr 10 2010 

The answer to this question requires some careful examination that goes beyond the platitudes that we are supposed to take as self-evident. What we’re constantly told is that Social Security is in shambles. It’s bankrupt. The elderly on Social Security are outpacing workers who contribute to it, and we’re headed for a crisis very soon. Even King Banaian, the chairman and a professor of the economics department at SCSU, says we suffer from “cognitive dissonance”; it’s “part of the angst that grips” us, though none of us “want to hear of big changes.” Ed Morrissey from the Hot Air blog says it was foolhardy to listen to those who “assured us that Social Security was safe for decades without reform.”

The reason for this maelstrom is because, as The New York Times reports, “the system will pay out more in benefits than it receives in payroll taxes” this year. The recession has claimed millions of jobs and, as a result, tax receipts are down. At the same time, the Baby Boomer generation is beginning to retire en masse and will be collecting their Social Security benefits. By 2016, “indefinite deficits” are expected. Naturally, we should be frightened.

Indeed, Social Security looks like it is in shambles. Save some major reforms, which may very well including privatizing the system, the entire program appears to be heading for collapse. In fact, we’re probably better off getting rid of it entirely.

That much seems like common sense. If you collect less than you handout, you’re eventually going to go broke and the system cannot continue as is. This common sense is what drives the usual iterations about how Social Security is doomed. But, as with everything claimed to be common sense and self-evident, we should force ourselves to ask if it’s true. The assumption, of course, is that you don’t question it. It’s easy to parrot what the demagogues and pundits are saying on television and blogs; it requires some effort to look a bit beyond the rhetoric and platitudes.

Is it true that a fiscal disaster is on its way? As it happens, it’s not. In fact, if we bother to compare our Social Security system to the pension systems of other highly developed nations, just as the OECD has done, we find that the United States has one of the least generous pension systems for the elderly. Yet the fiscal hawks keep pushing on us “the great deficit scare,” though prominent economist such as Robert Eisner have been telling us for a long time now how absurd their claims are. Eisner’s book is over a decade old now, but we can learn some valuable lessons from it. Moreover, Dean Baker of the Center for Economic and Policy Research warns that the policies deficit hawks want to push through, which are are not based on sound economics, would be much more devastating than any projected deficit.

It’s certainly true the American population is aging, and faster than the workforce is growing (or will be soon). In economics, the technical literature refers to this as the dependency ratio. It tells us the number of dependent people (children under the age of 15 and adults over the age of 65) for every 100 productive people (people aged 16 to 64). The United States does not have the largest dependency ratio—far from it, in fact. And when we actually bother to look, the dependency ratio is not currently at the highest it’s ever been (nor will it be for a long time). That was around 1965. There was a problem in the 1960s, a more significant problem than we face today, back when real GDP was almost a quarter of what it is today (i.e. when we were much poorer).

What did they do about it? Did they say the rights to a decent life in a highly developed nation simply “are not natural rights of the people,” and therefore we should just stop helping the young and the elderly find a more decent life? Actually, that’s not what they did. They increased expenditures. That’s how they dealt with the unprecedented dependency ratio, one we won’t come close to experiencing for a long time. The solution to the current “crisis” is the same. You increase expenditures to ensure disadvantaged people can still live a life that isn’t marred by poverty, sickness, and starvation—so that people’s basic needs are met. There’s a consensus in every rich and developed nation that safety nets are a society’s moral obligation. In fact, the world came together and agreed on the Universal Declaration of Human Rights, which affirms these rights, calling them “indispensable for [a person’s] dignity and the free development of his personality.”

When we actually look at the published literature, there is an almost unanimous agreement that there is no “crisis,” that the dangers of an aging society are being way overblown (it is argued, in fact, that an aging society is beneficial), and that the problems that do lie ahead are quite manageable (in the same way the bigger problems of the 1960s were managed). What’s pointed out is that any fiscal problem that might possibly arise is easily addressed. For example, the Social Security board of trustees report that future problems (because there isn’t one currently) could be remedied with a simple increase on the payroll tax. The estimated 75-year actuarial deficit for OASDI is just 2% of taxable payroll (so you increase it from something like 14% to 16%). The OECD also came out with a major report on easy solutions for any possible future problem that might occur with the pension system, none of which included abandoning the pension system. One reason is because it’s recognized that there is a moral obligation on our part and that there is in fact something that separates us from primitive animals that might simply “let nature take its course” (one of the more repugnant euphemisms I’ve heard).

So the solution, then, is quite simple. We don’t need to get rid of Social Security. Nor is there a need for “big changes” or major reform.

Unfree news Saturday, Feb 27 2010 

Note: This a much longer version of a letter I submitted to the University Chronicle in response to Kyle Stevens. It did not appear in this week’s edition, but perhaps it will next week’s in the edition following spring break (darn!). I’ll update this post with a link if it is.

Update: I was expecting my letter to be published in this Monday’s edition of the University Chronicle. It seems the opinions editor is unaware of any reason why it was not published in this edition and promised to publish in next week’s edition and upload it online as soon as possible. I’ll post another update with a link as soon as there is one.

Update 2: The letter was published in this week’s edition of the University Chronicle. You can read it online here.

In an opinion published in the February 22 edition of the University Chronicle, Kyle Stevens argues that The New York Times charging readers to see articles on their Web site is “good news.” People who do not subscribe to the newspaper will have to pay a fee to get unlimited access to NYT online articles sometimes in early 2011, according to Stevens. Though Stevens admits “this does not qualify as ‘good’ news” for the general public, he says “this is ‘great’ news” for the media industry. The reason, he argues, is that when The New York Times began to provide free news on their Web site in 2007, small papers like the St. Cloud Times had “to play the same game.” In other words, other newspapers also had to provide free content in order to effectively compete in the market. Apparently, the news industry couldn’t survive off of this model, and now with this change “maybe the news industry can be saved,” says Stevens. This “fee-to-see format,” says Stevens, “makes so much sense that I cannot believe it has happened.”

Does it make so much sense?

We know that a free and vibrant press is a cornerstone of civic society and liberal democracy. The spread of information, knowledge, discussion is essential for any healthy society. The question is whether we want to limit this dispersion or if we want to make it as free and vibrant as possible.

Knowledge is what economists call a “public good” in the technical literature. Thomas Jefferson wrote that ideas have a “peculiar character” in that “no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening mine.” In economics, that is the idea of a non-rivalrous good. Your possession of knowledge does not hamper or diminish mine. Therefore, we ought to spread knowledge and ideas as widely as possible. Yet, setting up fees to read the news does not accomplish this goal. Hampering the spread of knowledge creates an economic inefficiency. There is a better outcome, which is to make the news as dispersed as much as possible, to share it freely. Therefore, making the news more expensive does not generate a favorable outcome, and Stevens acknowledges this when he states “this does not qualify as ‘good’ news” for the general public. Yes, it might help a handful of private corporations maximize their profit (as Stevens correctly points out), but it does not benefit the whole of society.

Helping large corporations maximize their profits often does not produce the most economically efficient or socially desirable outcome. As many media critics are quick to point out, the interests of large corporate media are not aligned with the interests of a vibrant and democratic society.

In this sense, the ownership of the media has a substantial influence on the output of the media. This is a core thesis of the propaganda model developed by Herman and Chomsky in their 1988 book, Manufacturing Consent, as I’ve discussed in an earlier post. Our dominant source of information is increasingly being controlled by fewer and fewer large multinational corporations. That has an effect on the output, and we experience it on a daily basis. The propaganda model has strong explanatory power.

Explains John Nichols, “The primary one is that the people who own most of the newspapers are not interested in civic or democratic values. They’re interested in commercial and entertainment values, and primarily to make a lot of money.” And it these large oligopolistic corporations that are being subsided and supported by government, through copyrights, Communications Act of 1934, and so on. Furthermore, according to Robert McChesney, this is “encouraged by the corruption of the U.S. political system, in which politicians tend to be comfortable with the status quo and not inclined to upset powerful commercial media owners and potential campaign contributors. The dominant media firms enjoy the power to control news coverage of debates over media policies; this is a power they have used shamelessly to trivialize, marginalize, and distort opposition to the status quo.”

The pre-capitalist Framers of our nation readily understood that the media are to function as a prevailing counterbalance to corporate and state power. In other words, the media are meant to give the people an independent voice. Now, however, we cannot speak of corporate influence on the media, because the media are the huge corporations. They are one and the same. And when you think of the media as agenda setters, which they are, the result is what’s been referred to as a “democratic deficit,” namely because “it was understood that if you just let wealthy people run the media system, it would serve only wealthy people, not viable democratic self-government.”

Well, now there is a crisis that is widely recognized, especially by people like Stevens and those in the media businesses, particularly in the printed press. It’s been referred to as the “death of newspapers.” Small, independent newspapers, local papers, and even some of the big dailies, are closing down or firing thousands of journalists each month. The problem is real and it’s a threat to a healthy democratic process. The reasons for it are numerous and fairly apparent. The real question is what we should do about it. Stevens offers one solution, which is to make the big newspapers like The New York Times less accessible to the general public so that smaller papers like the St. Cloud Times can have a chance. I don’t think this is the optimal solutions for the reasons I’ve already laid out. But there remains a definite problem where the printed news media are struggling to stay alive. It seems reasonable to make people charge more for good journalistic news, because it’s not free to produce. You have to balance the budget somehow.

There are alternatives to increasing charges (which is not likely to save the printed press), and two leading media scholars offer some in their book, The Death and Life of American Journalism. The subject of their book deals with the problems of the current state of affairs in the media and journalism, and how we can overcome the current crisis that the media face. This was also the subject of a fascinating interview the two authors had that aired on PBS last month. Had I not watched that interview last month, I probably would have thought nothing of Stevens’ letter. But Nichols and McChesney offer an alternative to Stevens’ argument, which I think is both sensible and pragmatic. What they suggest is subsidizing independent journalism. I can’t do their proposal much justice here, so I implore you to listen to the interview or buy their book (both of which I linked to above).

Obviously, the idea of a government subsidy makes a lot of people uneasy, and not just right-wingers who want to see the government disappear. There are concerns by people who think the government getting involved in the media would be akin to something like state media or, at the very least, government meddling in the generation of opinions and ideas. This, too, would be very unhealthy for a democracy. These concerns are addressed by Nichols and McChesney and they offer solutions to prevent any of this from happening. And the reason they urge a government subsidy for journalism is for the same reason that the Founding Fathers were very aware of. A free press is meaningless without a vibrant press. This was instantly recognized by the key Framers of the United States. So, for example, there were debates in early American history about how to subsidize the press, to ensure the democratic process flourished. And the government offered many subsidies to the press, one of the primary ones being postal subsidies. Congress debated how little presses should be charged for postal services. James Madison, the Father of the Constitution, thought the debate was nonsense. He thought there should be no charge, that it should be completely subsidized by the government, because anything less would interfere with the free flow of ideas and opinions, which, again, was recognized as the cornerstone of liberal democracy. Madison wrote, “Whatever facilitates a general intercourse of sentiments, as good roads, domestic commerce, a free press, and particularly a circulation of newspapers through the entire body of the people … is favorable to liberty.”

In order for there to be liberty, there needs to be a free press in addition to a vibrant press that offers a whole range of ideas. Madison and other key Framers understood this well. It’s the only way that independent voices could actually challenge, for example, state power. It’s how the abolitionist press stayed alive even during the years Congress banned any debate about slavery. Journalism and democracy are intimately linked, and so it is our imperative that we support it to its fullest. If one role of government is to protect and ensure democracy, as some libertarians might agree it is, then there exists an obligation on its part to protect and ensure independent journalism, in the same way it ensured it during the early years of the republic. One idea that Nichols and McChesney offer is vouchers or tax write-offs for citizens to give money to independent news sources. Again, you can read their book or listen to their interview for a more in-depth discussion. When you look at the subsidies the early republic offered to the press as a percent of the GDP, it would translate into roughly $30 billion in today’s money. Moreover, when you look at the places recognized as the freest and most open democracies in the world, where the press is rated as the most independent and freest, it’s places like Finland, Norway, Sweden, and so on, where they also offer roughly $30 billion in subsidies. It is in this way that vibrant, healthy, and independent news is ensured and maintained. Writing for the CATO Unbound blog, Paul Starr says, “we should be open to the idea” of public subsidies for journalism. I also think we should be open to the idea as a viable and pragmatic alternative to Stevens’ solution, to ensure that independent journalism can survive, that it is vibrant and healthy, and that it can continue to challenge corporate and political power.

How do we end child labor? Friday, Feb 12 2010 

I’m in international economics this semester with Professor Ming Lo. The class is very interesting and Dr. Lo is a great professor. The topic of child labor came up in class as we were discussing globalization. Most people today agree that child labor is unethical. The question becomes, how do we stop it?

One response has been to simply outlaw it. For example, in 1938, President Franklin Roosevelt signed the Fair Labor Standards Act in an attempt to curb child labor and protect children from the horrors of industrialization, which had brought with it brutal, and often fatal, working conditions. This had an effect in domestic markets, but it did not stop similar abuses of children in foreign markets. This is why Senator Harkin (D-IA) introduced the Child Labor Deterrence Act in 1992 and several other years after that. The bill would “prohibit the importation of products that have been produced by child labor, and included civil and criminal penalties for violators.” Well this had an effect. According to Jagdish Bhagwati, the University Professor of economics at Columbia University and author of the 2004 book In Defense of Globalization, garment employers in Bangladesh laid off an estimated 50,000 child workers, fearing passage of the bill. We don’t know what happened to these children, but it is believed that these children moved to the underground economy. That is to say, they found worse jobs in worse conditions. These included, for example, unregistered garment factories. At least in some cases, however, these may have included child prostitution and being sold into the sex trade. Very few people could agree this is a positive result.

So how do we stop child labor if we agree that it ought to be stopped? Clearly, banning imported products made with child labor will likely have the effect of not eliminating child labor, but rather making it more concealed and even more dangerous and exploitative than it was before. Not doing anything doesn’t seem to be the solution either, evidenced by the fact that child labor still exists and has always existed until actions were undertaken to deal with the problems too. Dr. Bhagwati suggests in his book that we label products that are are made by child laborers. In this way, consumers can make a decision as to whether to buy the product or not. Although I agree it is a good idea to label products in this way (it increases consumer information), there are some problem. For one, many consumers still purchase goods even when they are aware of the negative aspects associated with it. People still continued to buy Nike products, for example, even after it was exposed that many of their products were produced in sweatshops and unethical working conditions. Sometimes the benefit that we receive from purchasing a product outweighs any negative thoughts we have about the ethical standards of its production. That is, even if we agree that the production of what we’re buying was done unethically, we still are inclined to purchase the product. Second, even if demand for products created with child labor does decrease because of increased awareness, the effect won’t be much different than prohibiting the import of these products. Children will be forced into other sectors, including underground markets that help conceal the true abuses to these children. While it may help us feel better, it doesn’t do much in the way of ending the exploitation of children. There does not seem to be any clear and easy solution to this problem, and I certainly don’t have the answer. I do believe, however, that a principal component needs to address the underlying causes that drive parents and their children to pick child labor as their available best option. In other words, we need to tackle the issue of world poverty and the social conditions in developing countries that lead to child labor. Decreasing our demand for these products is a step in the right direction, but clearly not enough to end this blight on human affairs.

What’s wrong with government intervention? Saturday, Feb 6 2010 

Many things, the neoliberal will answer. Many neoliberals believe government intervention in markets result in inefficiencies. Interferences make the market unfree. Of course, free markets allocate resources efficiently, so you reduce inefficiency when the government interferes. That’s a fairly typical argument. You can look at all sorts of neat equilibrium models and graphs that might show this to be the case (particularly when you accept the assumptions on which they are based).

One problem that government can introduce is the reduction of competition. Competition within markets is believed to achieve better results (economic efficiency) than when there’s no or little competition. For example, society is better off when there exist perfect competition within a market than when there’s a monopolistic firm that exerts market power. (Perfect competition doesn’t actually exist in the real world, but it does in theories, so we restrict ourselves to theoretical discussion.) So government is decried for making markets less efficient. But, quite curiously, this criticism is very selective. We can’t have government enforcing a minimum wage, for example, because that creates an outcome that diverges from the market equilibrium (i.e. creates an inefficiency). At the same time, however, we need copyrights and patents to protect our works and government needs to protect this.

As I said, it’s selective and actually fairly ideological. One opposes government when it suits one’s beliefs and one supports government when it suits one’s beliefs. When you oppose it and when you support it is often reliant on your ideology. So let’s look at copyrights, which are widely supported by anti-government right wingers. It’s a form of protection. It’s something the government provides to producers that results in less competition. In other words, it makes the market less efficient. The technical term is called a “government-granted monopoly.” It provides the exclusive right to a firm or individual to produce something. If I want to produce (or reproduce) it, I’m not allowed to. Keeping to neoclassical economic theories, society is made worse off. Those on the right like to rail against “coercive monopolies,” but not this coercive monopoly. In this case, we need government. Specifically, we need government to protect our monopolistic power. So you can’t even begin to talk honestly about “free markets” when you’ve got government enforcing monopolies, yet “free markets” remain to be hailed.

So why do right-wingers support copyright? There are reasons. One reason to support government intervention is because free markets are inefficient. (You probably won’t it hear stated in this way.) It’s stated that copyrights, patents, and so on are required for innovation. If I can’t get the sole right to write a book (or this blog post), I won’t write it. That’s the argument. If people can simply copy a song file and torrent it to everyone for free on peer-to-peer networks, then I’ve got no incentive to produce the song. (Note: I wrote a letter to the University Chronicle in 2007 in support of music copyrights.) If we accept this, then we should probably accept that free markets aren’t perfect and require government intervention to work properly. That might be reasonable to accept. But should we really accept the argument that copyrights and such are necessarily required to incentivize production? Are copyrights really what incentivized the great works of Shakespeare, Mozart, Michelangelo, or Newton? Actually, they didn’t exist back then. And when you actually look at copyrights today, particularly in the music industry, it’s the not the original creator that retains those rights. Many famous creators of “intellectual property” actually forfeit their rights to corporations, usually even before the product is created. In fact, nothing I write on this blog is copyrighted; yet, I continue to write. Maybe nobody wants to reproduce what I write, but look at Wikipedia, the content of which is not copyrighted and yet forms the basis for one of the most successful Web sites and encyclopedias in the world.

However, there can also be very dangerous aspects of copyrights. When you simply say “the market becomes less efficient,” that’s one thing. But what this might actually translate into in the real world is hundreds of thousands of Africans dieing. That’s a consequence of patents. When you simply talk of it in terms of “efficiency,” you sort of remove the moral dilemmas of what’s actually being talking about. This is one of the criticism Joseph Stiglitz, a Nobel laureate at Columbia University, levels against patents for medicines and vaccines. In his book Making Globalization Work, Stiglitz devotes a chapter for an idea he calls “prizes, not patents.” Explains Stiglitz in the Post-Autistic Economics Review, “But the patent system not only restricts the use of knowledge; by granting (temporary) monopoly power, it often makes medications unaffordable for people who don’t have insurance. In the Third World, this can be a matter of life and death for people who cannot afford new brand-name drugs but might be able to afford generics. For example, generic drugs for first-line AIDS defenses have brought down the cost of treatment by almost 99% since 2000 alone, from $10,000 to $130.” For more of Stiglitz on intellectual property and medicines, please see this video or read the article I just linked to.

Stiglitz’s proposed solution is setting up a prize for developers who develop important life-saving drugs. He writes:

There is an alternative way of financing and incentivizing research that, at least in some instances, could do a far better job than patents, both in directing innovation and ensuring that the benefits of that knowledge are enjoyed as widely as possible: a medical prize fund that would reward those who discover cures and vaccines. Since governments already pay the cost of much drug research directly or indirectly, through prescription benefits, they could finance the prize fund, which would award the biggest prizes for developers of treatments or preventions for costly diseases affecting hundreds of millions of people.

Of course, the patent system is itself a prize system, albeit a peculiar one: the prize is temporary monopoly power, implying high prices and restricted access to the benefits that can be derived from the new knowledge. By contrast, the type of prize system I have in mind would rely on competitive markets to lower prices and make the fruits of the knowledge available as widely as possible. With better-directed incentives (more research dollars spent on more important diseases, less money spent on wasteful and distorted marketing), we could have better health at lower cost.

I think it should be clear now that government-granted monopolies are not the only way to incentivize production and there a lot of problems in the way contemporary copyrights are constructed. With the greater success of copyleft and open source in recent times, I think it’s time we begin to contemplate alternatives. The dispersion and sharing of knowledge—e.g. the very purpose of university—is of paramount importance to society. We should not be trying to restrict it through government interventions.

A comment on the recent Supreme Court decision Saturday, Jan 23 2010 

Recently, the Supreme Court ruled in Citizens United v. Federal Election Commission that corporations (and labor unions) can spend unlimited amounts of their money on elections. Essentially, the Supreme Court ruled that corporations can run campaigns. Many have lauded the decision as a great defense of First Amendment rights.

Is it? “Freedom is awaking from its coma today,” declares conservative Rush Limbaugh. Dr. Spagnoli, writing on his blog, states, “there’s no reason to deny corporations [free speech].” This is because “free speech [is a human right],” he says. I agree with Dr. Spagnoli, free speech is a human right. But are corporations humans?

As it happens, corporations are not people. They are social constructs, entities created to carry out specific functions. However, as I discussed in a earlier blog post, Are corporations individuals?, corporations slowly became considered “persons” through a series of judicial rulings. There is no law that says corporations are humans. It’s not anywhere in the Constitution. The Fourteenth Amendment was passed after the Civil War to give rights to people, specifically the newly freed slaves. It declared, “No State shall … deprive any person of life, liberty, or property, without due process of law.” It affirmed the rights of people. It was there to protect blacks from the evils they had endured under the brutal regime of slavery that had oppressed them for centuries.

Well, corporate lawyers were very savvy, and they began to say, “look, corporations are persons.” Corporations deserve the protection that was meant for freed slaves. In fact, when you look at the history of it, it’s very perverse. According to work done by Doug Hammerstrom, of the 150 cases involving the Fourteenth Amendment heard by the Supreme Court up to Plessy v. Ferguson, only 15 involved blacks. The other 135 were brought by corporations. This is the exact opposite of what we would expect to happen. However, through a series of activist decisions by judges, which has no basis in law, corporations gained personhood. Richard Grossman proclaims, “600,000 people were killed to get rights for people, and then with strokes of the pen over the next 30 years, judges applied those rights to capital and property, while stripping them from people.”

So now they can say corporations deserve the rights of flesh-and-blood persons, like the right to free speech; the ability to sue others; the right to “life, liberty, or property”; the right to own other businesses; the right to run campaigns; and so on. But there’s nothing inherent to a corporation that says its a person and deserves the rights of flesh-and-blood people. That’s only come about through very perverse judicial activism (e.g. Santa Clara County v. Southern Pacific Railroad). Moreover, there’s nothing in economic theory that says corporations ought to be treated as persons. That corporations should run campaigns has got nothing to do with capitalism. There’s nothing about efficiency that says corporations should be allowed to do this. In a free and competitive market, it wouldn’t happen.

Anyone who argues that corporations should be treated as persons and have the same rights would also have to accept that corporations should also then be allowed to run for office, hold office, to vote in elections, and so on. But no one agrees with that and for obvious reasons. Moreover, Dr. Spagnoli does not say that only corporations should have the rights of persons. He also says, “corporations, trade unions etc.” should not be denied the right to free speech. Well, what does “etc.” constitute? If a corporation is a person, why not a sports team? Can a townhome association be considered a person under the Fourteenth Amendment? Why not?

What happened before corporations were granted the rights of persons? They were chartered by the state to carry out some function that was meant to serve the public good. They had a specific charter, their shareholders were accountable, they had limited rights, they were regulated, and so on. That they should be running campaigns was completely unfathomable, particularly to the Founding Fathers, who were vary wary of corporate power. Within this framework, corporations had moral obligations to the communities they served. With judges granting corporations personhood, however, the moral obligations we ascribe to flesh-and-blood persons was not ascribed to corporations. The moral obligations and social responsibility that corporations have, according to people like Milton Friedman and Ayn Rand, is to serve their own interests. The only obligation corporations are to have is to maximize profits. These are not the same type of moral obligations we think flesh-and-blood people have. Most decent people, ignoring extreme ethical egoists, believe we ought to consider what happens to other people, that we have an obligation not to harm others, that we should not rape the environment, that we should not ignore grave injustices, that we should treat flesh-and-blood people as ends rather than means, and so on. Even those who support corporate personhood do not ascribe these moral obligations to corporations. These are very special types of “persons” indeed.

Should people have the right to free speech in a democracy? Yes. Are corporations people? No.

Democracy vs. libertarianism Monday, Jan 11 2010 

One of the problems that ideologues of any persuasion probably run into is the problem of democracy. What do I mean by “the problem of democracy”? What I mean by this is that the democratic majority often does not adhere or conform perfectly to the ideology that a person or group may have. This can be a problem for the ideologue if he or she professes to be a democrat (a supporter of democracy). So, for example, the libertarian may decry the government’s role in society, despite the democratic majority wanting social programs or government regulation. Thus, any claim that we should wipe out social spending is inherently anti-democratic in this sense. My previous post on government involvement touches on this issue. Of course, the ideologue can bypass this “problem” if they do not profess to be democrats. Instead, we should simply implement the policies of our ideology, no matter how much the public is opposed to it. That is, we become authoritarians. For the libertarian or the anarchist, this is inherently paradoxical. We cannot claim to be libertarians and authoritarians at the same time—the ideas are necessarily opposed to each other. It is not possible to authoritatively implement our policies in the name of libertarianism, for example. That isn’t to say no one has tried; for example, Augusto Pinochet, in his brutal dictatorship over Chile, enacted free-market reforms in the name of “liberating.” We know that’s hypocritical, and we understand the perversity in his understanding of “liberty.” Here, “liberty” means liberty for the corporation, not for the people. Thus, the ideas of libertarianism and anti-democratic measures are incompatible.

How can the ideologue cope with “the problem of democracy”? How can we accept certain principles that the majority rejects, yet still call ourselves “champions of democracy”? I have two suggestions, and others are welcome. First, be what could be called a philosophical ideologue (cf. philosophical anarchism). That is to say, you keep your beliefs in whatever ideology you choose, but you accept the majority’s opinion as the opinion that should be adhered to. So, for example, if you’re against social spending, but the majority supports it, you continue to believe that social spending is wrong but accept the majority’s choice as the will of the people. For some, this might seem like an unpleasing solution, which I accept. It does seem contradictory to accept the choice but at the same time to not accept the choice. It would seem as if we are not truly adhering to our ideologies (that’s a common argument against anarchists who do not support the overthrow of the state—they’re not real anarchists). Do we or do we not accept that argument? The other thing I suggest is that we teach or advocate our ideology in a way that is not anti-democratic. We explain our philosophies (non-coercively) to others in the hopes that they will accept them. In this way, we can influence the outcome of the democratic choice without resorting to authoritarianism.

I accept that others may not accept this. They may say we have to cling to our ideologies, no matter what. We must reject the democratic majority. They may not say it in this way, but it is what they’re saying. I reject this argument and find it to be dangerous. Over ideology, I am a democrat.

P.S. This is a further exploration of a concept that Dr. Spagnoli explores on his blog in a post titled “What is Democracy?” In it, he explains, “Napoleon Bonaparte propelled his armies across Europe on behalf of the universal principles of liberty, equality and fraternity . . . Napoleon’s armies occupied Europe because they wanted to export French principles and French civilization. . . . France was the advance guard of the struggle of humanity for freedom and against old-style authoritarianism.” The parallels to contemporary foreign affairs are obvious enough. Claims Dr. Spagnoli, “Attacking, conquering and occupying other countries, even with the purpose of liberating these countries from oppression and archaic authoritarian forms of government, seems to be highly illogical and self-contradictory. It’s incompatible with the very principles of democracy (democracy is self-determination).” The question being raised is, “are we allowed to impose or enforce democracy in an authoritarian way?” Likewise, I raise the question if libertarians are allowed to impose or enforce libertarianism in an authoritarian way. I say no.

Is the government inefficient? Sunday, Jan 3 2010 

I found this passage somewhere on the Internet, unknown author:

This morning I was awoken by my alarm clock powered by electricity generated by the public power monopoly regulated by the U.S. Department of Energy. I then took a shower in the clean water provided by the municipal water utility. After that, I turned on the TV to one of the FCC-regulated channels to see what the National Weather Service of the National Oceanographic and Atmospheric Administration determined the weather was going to be like using satellites designed, built, and launched by the National Aeronautics and Space Administration. I watched this while eating my breakfast of the U.S. Department of Agriculture-inspected food and taking the drugs which have been determined safe by the Food and Drug Administration.

At the appropriate time as regulated by the U.S. Congress and kept accurate by the National Institute of Standards and Technology and the U.S. Naval Observatory, I get into my National Highway Traffic Safety Administration-approved automobile and set out to work on the roads built and maintained by the local, state, and federal departments of transportation, possibly stopping to purchase additional fuel of quality level determined by the Environmental Protection Agency, using legal tender issued by the Federal Reserve System. On the way out the door, I deposit any mail I have to be sent out via the U.S. Postal Service and drop the kids off at the public school.

After work, I drive my NHTSA car back home on the DOT roads, to a house that has not burned down in my absence because of the state and local building codes and fire marshal’s inspection, and which has not been plundered of all its valuable thanks to the local police department.

I then log on to the Internet, which was developed by the Defense Advanced Research Projects Administration and post on freerepublic.com and FOX News forums about how SOCIALISM in medicine is BAD because government can’t do anything right.

What this passage is getting at is the myriad functions that government serves— sometimes unbeknown to the general public—and it only begins to scratch the surface. It would, I think, be pretty safe to say government is responsible for or at least crucially linked to the development of modern society, not free markets. That’s just a descriptive statement, and I believe the main point of the quoted passage. There are some, like those “on freerepublic.com and FOX News forums,” who bemoan government and its supposed inefficiency, yet take for granted all the things it provides them (like roads and police protection).

The question, really, is an economic one. One issue that arises concerns what are called public goods. In technical terms, a public good is any “good that is non-rivalrous and non-excludable.” All non-rivalrous means is that when one person uses that good another person is not restricted from also using that good (e.g., when I log on to the Internet, this does not preclude you from doing the same). All non-excludable means is that no one wanting access to the good can be reasonably denied access to that good. A decent example might lighthouse beams that provide light to ships, regardless of which ship it might be (that is, it’s difficult to exclude other people from seeing this light). As the Wikipedia article points out, “there may be no such thing as an absolutely non-rivaled and non-excludable good; but economists think that some goods approximate the concept closely enough for the analysis to be economically useful.” (The economic idea of public goods, by the way, was developed by Paul Samuelson, the pioneering Nobel laureate who died just three weeks ago.)

The problem that arises is that public goods are not produced efficiently in “free markets.” They’re under-produced. This causes what is called market failure; the market does not operate efficiently. The reason for this is because you can’t make a profit off of it, or not very much the closer the good approaches the concept of a public good. If a good produces a benefit to society that the creator of the good cannot profit from, there’s little economic incentive to produce such a good. That’s standard neoclassical economic theory, anyway. The idea is tied to what are called externalities. A positive externality is something people benefit from, e.g. clean air, but those who benefit from it don’t necessarily have to pay for it. An example I get from Milton Friedman, the great free-market thinker, is that when I plant a pretty garden in my front yard, other people get to experience the benefit of it without having to pay or do any work for it. Again, these are under-produced in free markets, according to standard theory, because there is not enough economic incentive to produce these things.

Well, one solution has been to have the government produce goods for public use, which is where the entire passage quoted above comes from. The result is that we all get to benefit from government involvement in the market place. I get the ability to tell the precise time because the government has taken the initiative to keep accurate account of time—something theory tells us profit-maximizing corporations would be unwilling to do.

At the same time, however, as the story above illustrated, people still bemoan government and its attempts to provide for the public good. The market is great, it will provide us all the things we need, and it will do so efficiently, they might say. The socialist might respond by pointing out that this is not necessarily true, and point to things like externalities and asymmetric information, which exist nearly everywhere, and conclude the market rarely works efficiently. For this reason, we need the government to provide for the public good, particularly when the unfettered market cannot. The right-winger (if they’re not Austrian) might concede that things like externalities and asymmetric information exist but posit that the government still ought not get involved because that would constitute an abridgment of our freedom, is coercive, evil, etc. The question becomes harder. Indeed, for many the question is not only economic but also ethical. At this point, I think most people begin to ask what the right balance is between market forces and government involvement. The question is left unanswered and, in mind, the answer remains to be seen.

Organ capitalism revisted Wednesday, Dec 2 2009 

A couple of months ago, I wrote a piece supporting the sale and purchase of organs. I argued that allowing for a market for organs would get rid of the lack of supply of organs that are desperately needed to save the lives of those in need of an organ transplant (the literature tends to agree, as does empirical evidence from Iran). Every year, tens of thousands of people (about 100,000 in the U.S. alone) in need of new organs must wait because there lacks a supply of healthy organs available to them, and thousands more die because of this shortage. Every year the shortage continues to rise (demand is increasing faster than supply is). Healthy organs abound, but the shortage arises from the fact that it is a crime to sell or purchase organs. The altruistic donation of organs, while undoubtedly saving many lives, simply does not come close to supplying the necessary amount of organs. The logical conclusion seems to suggest there ought to be a market for organs.

Some people, however, detest this notion. In a recent post on his blog, Dr. Filip Spagnoli makes several nuanced arguments against free organ trade. The main arguments he makes, insofar as I understand them, are that the poor, qua the poor, will be desperate for money and therefore forced to sell their organs; the wealthy, qua the wealthy, will be able to disproportionately afford the organs and therefore be unfairly benefited; organ transplants are dangerous; solid organs donation is nonrenewable and therefore decidedly and relevantly different from blood donation; organ trade is tantamount to commodification of the body; and an opt-out system is the best solution to our problem.

King Banaian, a professor and chairman of the economics department at SCSU, made an argument similar to first listed above, back in 2005. The poor are desperate, goes the argument, and so it’s unfair they would end up selling organs (i.e. they lack informed consent). The basic underlying premise of this argument is that the poor are irrational, incapable of thinking for themselves. The government, therefore, knows what’s better for them than they themselves do. That is, they have to be protected from themselves (because they’re poor). I reject that argument. If the premise is true for the sale of organs, then it would be equally true of other economic decisions they make, including the sale of their labor or their purchase of goods. That doesn’t seem to be the case and, if it is, we certainly don’t restrict completely their involvement in the market (and even more certainly not the involvement of others).

So the argument seems to be that, if it weren’t for the money incentive being offered, the poor wouldn’t choose to donate their organs. But that’s true of basically all people. Economic agents would not do many things if it were not for the money incentive. Dell wouldn’t sell me computers if they weren’t being compensated for it. Is that exploitation (of their want for money)? I don’t think so. That’s called trade, and both the seller and buyer are made better off by it. So what the detractors have failed to explain is how the poor are made better off by ensuring they are not able to receive money that would help alleviate their predicament.

The second argument is that the wealthy, because they obtain more wealth, “will be able to benefit disproportionately from the market because prices will be high …” Dr. Spagnoli says this is true because society is aging, but admits prices will fall because of competition among suppliers, particularly from poor places like Africa. Still, the fact that the wealthy can disproportionately afford things does not suggest to me there ought not to be trade. So long as the distribution of wealth is unequal (which seems to always be the case), some people will be able to afford more than others. That doesn’t mean we outlaw trade. (The wealthy can afford more food and labor than the poor; do we therefore outlaw the sale of food or labor?) That seems to be punishing the rich merely by fact that they’re rich. And in this case, the punishment is death. Detractors of organ trade fail to explain how outlawing trade benefits the less-than-wealthy who are in need of an organ. It seems to me that as the wealthy begin to demand less organs, prices will begin to fall (allowing even the poor to afford to buy organs). By outlawing organ trade, detractors are (at best) disallowing some people from buying lifesaving organs merely because of their wealth.

The next argument is organ transplants are dangerous, so they should not be allowed. It’s true that all surgery, even the most benign, carry risk (including death). That reason alone is not enough to outlaw transplantation of organs. If it’s dangerous to sell organs for money, then it’s equally dangerous to donate organs altruistically. But we allow the altruistic kind. Clearly, danger is not the underlying factor here. Moreover, the dangers are overplayed, I think. The death rate for liver transplantation in Japan is at 0%, and 0.3% in the United States. These rates will continue to decline as advances in medicine continue and as surgeons progress along the learning curve. Kidney transplantation is even safer (people who donate kidneys live longer than those who don’t). Remember, it was Joseph Murray who won the Nobel Prize in medicine for completing the first kidney allograft in 1954. The patient in that case is still alive. While there is serious risk in many activities, including surgery (or timber cutting or smoking, which are both legal), that’s not enough to outlaw the practice.

Another argument is that blood (or sperm perhaps) is okay to sell because it’s renewable. The only defense here is that the distinction between renewable and nonrenewable is “relevant,” but without any further explanation. How is the distinction important? The fact that some goods are scarce doesn’t tell me a lot (other than that their price is going to be higher). Furthermore, modern liver transplantation in live patients consists of removing only a portion of the liver from the donor, which will regenerate and return to full functionality within a matter of a few weeks. Does the detractor now accept the trade of livers? (Similarly, the sale of bone marrow, which is just as renewable as blood, is a serious crime in the United States.)

A very common argument that also comes up is that the trade of organs is tantamount to the commodification of the body. I say, So what? It saves the lives of real human beings. That’s what matters. “Commodification is dehumanization,” they say. I counter that there is nothing more dehumanizing than simply letting people die, which is precisely what you do when you outlaw the trade of organs. So what is worse: that people might sell parts of their body or that hundreds of thousands of people are unable to get organs that could save their lives? Supporters of this argument also fail to explain how blood, bone marrow, sperm, ovarian eggs, or bearing children (all of which have markets) do not constitute commodification. Or, if they do, do they believe these practices ought to be outlawed? It’s also worth mentioning that even in altruistic donations, people are still profiting from it: the doctor, the nurses, the hospital, and so on. That is, everyone except the donor.

They might respond, We’re not letting them die because we have a solution, which is the op-out system. Opt-out, also called presumed consent, begins with the assumption that all people wish to donate their organs upon death. If you do not consent, you must specifically tell this to the state. (My contention is that this is akin to saying the state owns your body by assumption.) This is opposed to the opt-in system, like in the United States, where the assumption is that people do no wish to donate their organs upon death, unless it is otherwise specified. In that way, the hope of opt-out supporters is that people are not altruistic, but rather lazy or ignorant. I find that deeply unethical, but Dr. Spagnoli points to several studies from his country, Belgium, which show opt-out is providing an ample amount of organs (that is, people seem to be lazy or ignorant). (The rate of “donation” is marginally higher than that of the U.S.) A lot of the scholarly literature, however, does indeed seem to suggest opt-out provides higher rates of organ “donations” than opt-in. If this were necessarily true, though, Sweden and Israel (opt-out states) would not have such low donation rates. A study published in 2005 further shows that opt-out systems do not guarantee higher donation rates. The authors find that, when correcting for mortality rates, the apparent efficacy of opt-out disappears. Perhaps better than opt-in or opt-out, a better choice would be mandatory choice. All competent adults must choose whether or not they wish to donate their organs or not. Family decisions (which negatively affect the efficacy of both opt-in and opt-out) must not override the individual’s choice.

Still, it seems giving enough of an incentive to potential donors is the key to finally getting rid of organ shortages, which cause unnecessary deaths each year. As I explained earlier, Iran has been successful in accomplishing this. If detractors are unwavering, however, then perhaps markets are not necessarily the correct solution. Instead, I might propose a system wherein the government pays for the organs and then distributes these as equitably as possible. This removes a lot of the fears detractors have of unfair market allocations. Others, unfortunately, might reflexively bash the idea because it relies on (*moan*) the government. But I ask these people the same question as before: What is worse—that the government might be involved in the trade of organs or that thousands must die needlessly each year because they are unable to procure necessary organs?

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