What Turns Big Business into an Economic Mafia

The state should never own or control major industries or enterprises. Additionally, it should not hand out favors to some companies at the expense of others. When it does, the result is almost always corruption, kleptocracy and a political culture that benefits the most privileged and criminal elements of society.

Take Ukraine for example. There are many historical and geopolitical reasons for its current predicament, but let’s focus on the economic forces at play. Andrew Roth, who writes for The Washington Post at its Moscow bureau, wrote an article last year that details the political crisis in Ukraine, fueled by corruption between those in power and the financial elites:

The Ministry of Infrastructure’s bloated portfolio of almost 300 state-owned enterprises, including a railroad, seaports and roads, funnel cash to corrupt businessmen with connections to Ukraine’s parliament, he says. For months, they have blocked his attempts to privatize them.
“If the state-owned companies suddenly disappear, if they’re privately owned, then what’s in it for them? They cannot skim from those companies anymore.”

There you have it. This is one major reason why post-Soviet Ukraine (and Russia for that matter) has had such a horrible time trying to build a stable, viable nation state. So long as its members have a personal stake in state-owned companies, the Rada, the unicameral parliament of Ukraine, will be unable to make common-sense economic reforms.

The state cannot eradicate corruption. Sure, the law has a role to play, but too much involvement makes the problem worse. People like to help out their friends at the expense of other people, no matter how awful those friends may be. The only way to end corruption would be to end friendships. Let’s do a little thought experiment to illustrate this.

The Problem of Human Frailty

Let’s say you and I live in a fictional post-Soviet country. I run a government ministry charged with prosecuting fraud and abuse. You run a state-owned freight company that ships goods by rail.
Your business is failing, your workers have connections to drug dealers and gangs, and your equipment is old and often breaks down. The worst part is, you have a competitor who can do business 1,000 times better, and may soon run you out of business.

But you don’t have to worry. Since we’re such good friends and we go way back, I’ll help you out.
I’ll have my employees bypass your company when we run an audit. Since you’re already owned by the government, we have the same boss! You’re insulated from the law, because you and I are the law. Plus, I’m friends with the transportation minister, who can give you priority access to the railroad tracks. In fact, if you give me a cut of your profits for a few months, I can slip some of that money to the head of the secret police and have your competitor framed for bribery and locked away for the next 10 years. We could even torture him if you like.

If anyone protests, we’ll have our media cronies call them “traitors” who are secretly working for “the decadent West” (with some homophobia or antisemitism thrown in for good measure).

Oh, they have a “change.org petition?” Adorable. We have tanks.

If you give me access to your mansion on the water, I’ll even have the treasury seize all of his business assets and give them to you! You’ll never have to worry about competition, innovation or investment ever again!

But maybe I won’t do this.

Maybe I have principles. Maybe I care more about right and wrong than about my screwball buddy who’s really bad at running his business. Those thugs you hired back in the bad, old days of the 90s? You’re going to have to let them go. The audit will go as scheduled, and you’re going to have to lower prices to compete with the new guy. Eventually, we may have to privatize you. We can’t just keep using taxpayer money to pay for a terrible service, especially when they can voluntarily purchase a good one (sorry, bro).

Just kidding; you should have seen your face!

A Sign of What’s to Come?

Calling for the nationalization of major industries is naive. When the state owns or runs major enterprises, it holds the population hostage to all the faults and imperfections of the people in those businesses.

This should serve as a cautionary tale to those Americans now cheering the incoming administration for the Carrier deal and proposed infrastructure projects. 
There’s nothing wrong with saving people’s jobs, but one issue with the Carrier deal is that negotiations were with a single organization.

No changes were made to Indiana’s laws and tax structure that would incentivize more businesses to stay. It was an explicitly populist move, meant to increase the President-elect’s political capital, not a broad economic reform that allows for meaningful employment for all Americans. It doesn’t help that the deal may have something to do with United Technologies, Carrier’s parent company, wanting to hold on to federal contract money.

The real danger of a Donald Trump presidency is not diplomatic rapprochement with Russia, but that he threatens to curse the United States with a similar economic mafia culture.

Consider a future where we waste spending on nationalistic vanity projects, consolidate power among the regime’s friends and loyalists, and apply endless red tape to shut out emerging competitors. The state has always had an uneasy relationship with the cultural foundations of markets, fair play and competition. But Trump’s worst impulses threaten to deal these traditions, built over centuries through common law and revolutions, a nearly fatal blow.

Maybe we’ll get lucky, and this is all just populist bravado. But we can’t base our social and economic order on luck. People don’t always do the right thing. Many people often enjoy doing the wrong thing. When businesses are state-owned or handed favors to the detriment of others, it’s easier for bad actors to get away with terrible things, because they’re connected with and insulated by those in power. It creates a culture where businesses thrive according to their connections and unearned privileges, not the crueler dictates of market forces.

J. Andrew Zalucky

J. Andrew Zalucky is a Connecticut-based writer focused on politics, history and cultural issues. Since 2011, he has run his own website, For the Sake of Argument. In addition, he writes about extreme music and is a regular contributor to Decibel and Metal Injection.

This article was originally published on FEE.org. Read the original article.

How Regulation of Private Schools Hurts the Poor

Every private school choice program in the United States monetarily benefits private schools at the expense of an increased regulatory burden.  Even decision-makers that support private school choice agree that some degree of quality control is essential for programs to be successful.  However, in attempting to control quality through regulation, bureaucrats inadvertently limit the quality of schooling options available to disadvantaged children across the United States.

Regulation Costs Reduce Supply

How can an attempt to force schools to be high-quality produce contrasting results?  In order for policy-makers to enforce a certain minimum level of quality, they must first define what educational quality ought to look like.  One problem here is that children and parents are so diverse that the selected definition is sure to fail for an enormous amount of families.  Perhaps even more problematic is the fact that adhering to the designated standards introduces additional costs to private schools without a clearly substantial quality improvement.

The 61 private school choice programs across the United States include many regulations that attempt to control quality levels such as teacher certification, financial audits, standardized testing, open-admissions and the prohibition of parental copayment.  These all serve as additional costs to private schools.  Since school leaders make the cost-benefit decision of whether to participate in a given private school choice program, regulation costs decrease the number of options available to families.

The Best Schools Are The Least Likely to Participate

And which private schools are the most likely to accept participation?  Obviously, the schools in financial distress will have the largest incentive to accept program funding.  Furthermore, the private schools that are highly-specialized and already have a successful educational model have the most to lose from regulations.  The result?  Quality controls ensure that the children most in need end up with defective schools.
Specifically, teacher certification requirements limit the supply of teachers that private schools can employ.  A supply reduction increases the price that a private school must pay for any given teacher, while simultaneously reducing the number of high-quality teachers to choose from.  Standardized testing requirements guarantee that private schools will have to change their educational model to mirror the very schools that disadvantaged children are so desperately trying to escape.  Forcing private schools to accept voucher funding as full payment is particularly costly for high-quality schools that pour large amounts of resources into the education of their students.  This regulation is equivalent to prohibiting disadvantaged people from spending resources on food above the determined food stamp amount.  Perhaps even more importantly, this provision eliminates much of the financial incentive necessary for market entry.

Why They Want to Regulate In the First Place

If the attempt to control quality harms children, why do policy-makers still try?  The ultimate reason for these regulations is that elite decision-makers believe that parents will not choose schooling options that are beneficial to their children or society.  Allowing parents to choose for their own children requires bureaucrats to have faith in the masses to make rational choices.  What if parents make the wrong decisions?  Elites would surely feel responsible for those bad decisions, and they do not want to risk experiencing guilt.

We could easily remove all of these negative consequences by adopting the optimal form of quality control: educational choice through families.  By simply allowing parents and children to choose their own educational products, we ensure that low-quality options disappear while the presence of high-quality options grows.  Besides, even if parents do occasionally make inadequate decisions for their own children, shouldn’t we prefer that to inadequate decisions made by a bureaucrat in an office, hundreds of miles away?

Corey DeAngelis

Corey DeAngelis is a Distinguished Doctoral Fellow, University of Arkansas.

This article was originally published on FEE.org. Read the original article.

How the Left's Racial Politics Backfired

Get out the Doritos. Pop the top on your Bud Light. Go down to your man cave, plop down on your La-Z-Boy, invite your friends over and turn on the Packers game.

Here come the White people.

CNN commentator Van Jones, clearly upset by the results coming in last night, claimed that Democrats got “White-lashed.” In a way, he was right. But he has only himself to blame.
The problem with liberals is that they want all the advantages of racial politics and none of the detriments. They have succeeded in weaponizing entire racial groups, but when they find that they have inadvertently weaponized the ones who vote the other way, they get upset.

Nate Cohn at the New York Times said something interesting about Trump's win to which everyone should pay careful attention. He said that “white working class voters just decided to vote like a minority group. They're [over] 40% of the electorate.”



The White Minority

In a sense, I think a large part of Donald Trump's vote consisted of people who felt like saying, “You want racial politics? We’ll give you racial politics!”

These people are not racist. They’ve got too many other issues to deal with that really matter. Under normal circumstances, white people just don't think very much about race. They have always been the default ethnic group, so they've never had to think about race. But they are now surrounded by a culture obsessed with both race and gender. And they are regularly lectured by the liberal elites who just got spanked at the polls that they should think about it all the time.

Black Lives Matter, but your little White honky life is politically meaningless. Go help your children finish their Black History Month coloring assignment from school and shut up. And don't even think about touching that Peach crayon. If your finger even touches anything lighter than Burnt Sienna we'll cut it off.

This is what many Whites think they hear. They may be wrong or right, but that is beside the point. And when other things in their lives make them feel undervalued—the loss of their manufacturing job, the collapse of their marriage, the effect of drugs on their family, the bad schools their kids have to go to—when this is the reality of their lives, then watching television and hearing about how everyone except you deserves more attention and assistance becomes just a little hard to bear.

And when you are forced toward sentiments you don’t really think you should have by a self-righteous cultural establishment that is always telling you how you should feel, you tend to get a little cranky, and when you get cranky you end up as the beer frame at the bowling alley. And you take it out on someone who represents this establishment at the polls.

So Hillary did serve some purpose.

Just look at where Trump was the strongest: in the Appalachias and the rust belt. There’s a reason J. D. Vance, author of Hillbilly Elegy, is the man of the hour. It is he who has presented the liberal Democrats with their causa mortis. He’s the one who, by mere reflection on the plight of the White middle and underclass—and its underappreciation—did more to predict what happened yesterday than all the sophisters and calculators manipulating the polling data.

Race did play a role in Trump's win, but not in the way that the liberal media thought. Through their control of what Richard Weaver called the “great stereopticon”—the media construct by which we are all propagandized—we are told that we should think about race and gender everywhere all the time. The problem is that when Whites are forced to think about race, they are also forced to act like a minority—as Cohn points out, a very large one. The problem here is that the result is almost exactly the opposite of what the purveyors of racial politics intended.

Quite frankly, it serves them right.

And when you add gender into the mix, it becomes nitro to the racial glycerin. Liberal Democrats victimized themselves on election night. They need to think harder about whether they really want the kind of culture they have been trying to create: one divided along lines of race and gender.
What they found out on election night is that it doesn't always work to their advantage.

Republished from Intellectual Takeout.

Martin Cothran

Martin Cothran, the author of Memoria Press’ Traditional Logic, Material Logic and Classical Rhetoric programs, is an instructor of Latin, Logic, Rhetoric, and Classical Studies at Highlands Latin School.

This article was originally published on FEE.org. Read the original article.

Government Schools Are No Place for Bright Kids

Sometimes, something that’s right in front of you can escape your attention.

Over the past five years I’ve looked at countless student performance numbers, and almost always, my attention goes to the large percentages of students who are performing below grade level in reading, math, history, etc. I see these numbers as evidence of the failure of the current education system.

But a recent policy brief (titled “How Can So Many Students Be Invisible?) has brought something else to my attention—something equally, if not more, damning of the education system. It’s the fact that large percentages of American students are performing ABOVE grade level.

After looking at data from five different, nationally-respected assessments of student performance, the researchers found that “20-40% of elementary and middle school students perform at least one grade level above their current grade in reading, with 11-30% scoring at least one grade level above in math.”

Most would read that and think it’s evidence to the contrary: that it means that our education system is doing a good job. But not me, and not the professors who put together the brief.

You see, because the system arbitrarily separates students by age, students of varying academic abilities get put on the same track. The low performers remain consistently behind, in a constant struggle to play catch-up. And they’re the ones who get the majority of the attention of today’s schools and education reformers.

But the high performers are suffering in this system, too. They’re forced to sit in a classroom for seven hours a day going over simple material and concepts at a snail’s pace. Eventually, intellectual atrophy sets in.

That’s what happened to me. I was bored for almost the entirety of my elementary and middle-school career because I already knew, or quickly understood, most of what was being rehashed over and over again. And it wasn’t because I’m a genius; I consider myself merely “average bright”. Over time, I went from being an intellectually curious child to apathetic and lazy about learning. I’m sure many others have had a similar experience.

In their recommendations, the professors who wrote the brief concluded that “the U.S. K-12 context, which is organized primarily around age-based grade levels, needs serious rethinking.”

I think that’s putting it too mildly.

Honestly, I’m starting to think that this education system doesn’t need to be reformed; it needs to be destroyed.

Republished from Intellectual Takeout.

Daniel Lattier

Dan is the Vice President of Intellectual Takeout. He received his B.A. in Philosophy and Catholic Studies from the University of St. Thomas (MN), and his M.A. and Ph.D. in Systematic Theology from Duquesne University in Pittsburgh, Pennsylvania. You can find his academic work at Academia.edu.

This article was originally published on FEE.org. Read the original article.

Let Stem Cell Donors Be Paid. Lives Depend on It

I’m proud to release a new report, Bone Marrow Mismatch: How compensating bone marrow donors can end the transplant shortage and save lives. The report analyses the science and ethics behind the Health Resources and Services Administration’s (HRSA) proposed rule to redefine hematopoietic (blood-forming) stem cells (HSC) as an organ. These are the cells that originate in bone marrow but are also found in the bloodstream. Today, over 70% of HSC donations are extracted from the bloodstream through a safe, non-invasive technique known as apheresis, after which the cells quickly regenerate.

In 2011, a federal court ruled compensating donors of HSC by apheresis to be legal due to the procedure’s comparability to plasma and whole blood donation. HRSA’s rule change would supersede the court and violate congressional intent, thereby making compensation to all HSC donors illegal under the National Organ Transplant Act. HRSA has until December 18th to move forward on its rule.

Why is this important?

Nearly 2% of the U.S. population is a registered bone marrow donor. And while the volunteer donor registry has grown in recent years, it remains both too small and beset by low follow-through rates. Using the best available data, this paper estimates that the gap between the actual and optimal size of the bone marrow registry leads to 1318 fewer transplants and 275 deaths per year – creating a net social cost well in excess of $100 million a year. This impact is felt disproportionately by racial minorities, for whom finding a close genetic match is most difficult. I, therefore, argue that legalizing compensation for HSC donors would help to close that gap by increasing registry size among target populations while improving follow-through rates of those who are called upon to donate.

According to another estimate, in 2012 the unmet demand for HSC transplants across the United States was 10,276 adults, out of a total demand of 16,096 for the same population. In children, the unmet need was 3,213 out of a total demand of 4,561. Together, that implies an overall shortfall in demand of 65%. The demand for HSC transplants has accelerated as the population has aged, with adults ages 51 to 64 receiving 32 percent of all transplants. This suggests the supply shortfall will only widen if no further action is taken.

HRSA is concerned that legal compensation could cause exploitation, devalue the human body, and/or reduce the altruistic motivation of donors. In a September 7, 2016, open letter to HRSA, twenty-two of the country’s most prominent ethicists argued that each of these objections are fundamentally flawed. In that time the list of signatories has grown to thirty-seven. This report goes deeper into disputing HRSA’s weak ethical objections and outlines the strong positive case for compensation. The Niskanen Center thus joins the signatories of the letter found at DonationEthics.com in demanding that this rule not be enacted. At stake are thousands of leukemia and anemia patients that face preventable death due to a self-inflicted shortage of bone marrow donor matches.

In writing this report I am indebted to the tireless work of the Institute for Justice, an early champion of bone marrow compensation; Peter Jaworski, who brought the issue to my intention and created DonationEthics.com; and Doug Grant, CEO of Hemeos, a healthcare start-up wishing to compensate donors for their peripheral blood stem cells. The research of economist Mario Macis has also been incredibly useful for building the case that compensation for blood and blood-derived cells is both safe and efficient.

This first appeared at Niskanen Center.

Samuel Hammond

Samuel Hammond is a poverty and welfare policy analyst at the Niskanen Center.

This article was originally published on FEE.org. Read the original article.