Beware Big Pharma

As I reported previously, considerable evidence suggests that the most common medications in America are crocs–they either don’t work, or cause more harm than good. Among the dubious classes of medications are anti-cholesterol drugs, anti-depressants, and antacids.

Apparently, I’m not the only one with a jaundiced view of the best-selling products of the pharmaceutical industry. Dr Peter Gøtzsche, a Danish physician and author, argues that medicines kill 200,000 people in the U.S. every year, with approximately half of those deaths occurring even though the medication is used correctly.

One of the drugs that Dr. Gøtzsche strongly argues against is NSAIDs (non-steroidal anti-inflammatories) like ibuprofen. There’s actually quite a bit of evidence that use of ibuprofen–at least in the long-term–can significantly increase the risk of heart attack.

NSAIDs aside from aspirin, both newer selective COX-2 inhibitors and traditional anti-inflammatories, increase the risk of myocardial infarction and stroke.[30][31] They are not recommended in those who have had a previous heart attack as they increase the risk of death and/or recurrent MI.[32] Evidence indicates that naproxen may be the least harmful out of these.[31][33]

NSAIDs aside from (low-dose) aspirin are associated with a doubled risk of heart failure in people without a history of cardiac disease.[33] In people with such a history, use of NSAIDs (aside from low-dose aspirin) was associated with a more than 10-fold increase in heart failure.[34] If this link is proven causal, researchers estimate that NSAIDs would be responsible for up to 20 percent of hospital admissions for congestive heart failure. In people with heart failure, NSAIDs increase mortality risk (hazard ratio) by approximately 1.2–1.3 for naproxen and ibuprofen, 1.7 for rofecoxib and celecoxib, and 2.1 for diclofenac.

On 9 July 2015, the FDA toughened warnings of increased heart attack and stroke risk associated with nonsteroidal anti-inflammatory drugs (NSAID). Aspirin is an NSAID but is not affected by the new warnings.

Dr Gøtzsche argues that Big Pharma is putting profits ahead of people’s health, and that the industry basically has paid off everybody–doctors, researchers, regulators, politicians. Gøtzsche calls Big Pharma essentially a form of organized crime. That rhetoric seems a bit overheated, but I suspect it’s true that the pursuit of profit has caused drugs to be oversold, and that doctors often don’t fully understand the effects and interactions of the drugs they prescribe.

Thanksgiving Pilgrims Rejected Socialism in favor of Private Enterprise

Here is our annual Thanksgiving day post.

With the Thanksgiving holiday now upon us, millions of children will hear the story of the First Thanksgiving of 1621. The standard story as told in schools and the media depicts the First Thanksgiving as a celebration of the Pilgrims’ successful harvest and cooperation with the Indians. What the schools do not teach, however, is that a fuller account of the Pilgrims’ story reveals a failure of socialism and a triumph of private property and free enterprise.

1024px-Thanksgiving-BrownscombeThe Plymouth Colony started as a type of commune, or socialist community.

The members of the Plymouth colony had arrived in the New World with a plan for collective property ownership. Reflecting the current opinion of the aristocratic class in the 1620s, their charter called for farmland to be worked communally and for the harvests to be shared.

Interestingly, the colonists’ communist ideology was derived not from Karl Marx, who had not yet been born, but from Plato.

The charter of the Plymouth Colony reflected the most up-to-date economic, philosophical and religious thinking of the early 17th century. Plato was in vogue then, and Plato believed in central planning by intellectuals in the context of communal property, centralized state education, state centralized cultural offerings and communal family structure…This collectivist impulse reflected itself in various heretical offshoots of Protestant Christianity with names like The True Levelers, and the Diggers, mass movements of people who believed that property and income distinctions should be eliminated, that the wealthy should have their property expropriated and given to what we now call the 99%.

The experiment in collectivism failed.

What resulted is recorded in the diary of Governor William Bradford, the head of the colony. The colonists collectively cleared and worked land, but they brought forth neither the bountiful harvest they hoped for, nor did it create a spirit of shared and cheerful brotherhood.

The less industrious members of the colony came late to their work in the fields, and were slow and easy in their labors. Knowing that they and their families were to receive an equal share of whatever the group produced, they saw little reason to be more diligent their efforts. The harder working among the colonists became resentful that their efforts would be redistributed to the more malingering members of the colony. Soon they, too, were coming late to work and were less energetic in the fields.

As Governor Bradford explained in his old English (though with the spelling modernized):

“For the young men that were able and fit for labor and service did repine that they should spend their time and strength to work for other men’s wives and children, without recompense. The strong, or men of parts, had no more division of food, clothes, etc. then he that was weak and not able to do a quarter the other could; this was thought injustice. The aged and graver men to be ranked and equalized in labor, and food, clothes, etc. with the meaner and younger sort, thought it some indignant and disrespect unto them. And for men’s wives to be commanded to do service for other men, as dressing their meat, washing their clothes, etc. they deemed it a kind of slavery, neither could man husbands brook it.”

To their credit, the colonists finally realized their error and changed course. In their third year at Plymouth, the colonists re-introduced private property, and allowed families to keep or trade whatever surplus they produced. As a result, conditions for the colonists improved significantly. As Governor Bradford recorded in his diary

By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many, for which they blessed God. And the effect of their planting was well seen, for all had, one way or other, pretty well to bring the year about, and some of the abler sort and more industrious had to spare, and sell to others, so as any general want or famine hath not been amongst them since to this day.

And Governor Bradford seems to have interpreted the experience of the colony as an empirical rejection of Platonic communism.

The experience that was had in this common course [common property] and condition, tried sundry years, and that amongst the Godly and sober men, may well convince of the vanity and conceit of Plato’s and other ancients; — that the taking away of property, and bringing into a common wealth, would make them happy and flourishing; as if they were wiser than God. For this community (so far as it was) was found to breed confusion and discontent, and retard much employment that would have been to their benefit and comfort.

So there you have it; the lesson of the First Thanksgiving is a triumph of freedom arising out of a failed attempt at socialism. The story must be quite damaging to progressivism, because during the Thanksgiving season several years ago, a progressive propaganda sheet known as The New York Times attempted to refute it. The progressive counterargument is based on two main points. First, common property in the Plymouth Colony did not result in famine and the system was not a failure.

The arrangement did not produce famine. If it had, Bradford would not have declared the three days of sport and feasting in 1621 that became known as the first Thanksgiving.

Fair enough, but we also have Bradford’s own testimony, quoted above, that Platonic socialism had proved unworkable. Furthermore, if the socialist system had succeeded as progressives allege, how do they explain why the colonists abandoned it?

Bradford did get rid of the common course — but it was in 1623, after the first Thanksgiving, and not because the system wasn’t working. The Pilgrims just didn’t like it. In the accounts of colonists, Mr. Pickering said, “there was griping and groaning.”

“Bachelors didn’t want to feed the wives of married men, and women don’t want to do the laundry of the bachelors,” he said.

In other words, the system was working except that it was making people miserable, so they got rid of it. That sounds to us like a social system that has failed. And it failed for the very reason we would expect, namely, a Tragedy of the Commons that undermined incentives (“Bachelors didn’t want to feed the wives of married men…”).

Progressives’ second counterargument is that the Plymouth Colony, as a for-profit corporation, cannot fairly be deemed socialist.

Historians say that the settlers in Plymouth, and their supporters in England, did indeed agree to hold their property in common — William Bradford, the governor, referred to it in his writings as the “common course.” But the plan was in the interest of realizing a profit sooner, and was only intended for the short term; historians say the Pilgrims were more like shareholders in an early corporation than subjects of socialism.

“It was directed ultimately to private profit,” said Richard Pickering, a historian of early America…

Well, words have meaning, and a society that replaces private property with collective ownership of the means of production meets the textbook definition of socialism. If that’s not socialism, then the word has no meaning. This remains true even if the colony as a whole sought to make a profit by trading with the rest of the world. The Pilgrims may have been capitalists when it came to exporting furs, but the essential fact is that production for domestic consumption was organized as socialism.

This second argument of the progressives also underscores the weakness of their first argument, that “common course” had not failed. Because we can be sure that if common course had been a ringing success, progressive journalists wouldn’t be working to disassociate it from socialism. They’d be hailing it as a triumph of socialism.

In summary, the story of the First Thanksgiving illuminates two crucial and eternal truths. First, collectivism always fails. Second, progressives, to defend their socialist beliefs, will deploy the most appalling sophistry, specious reasoning, and intellectual dishonesty.

Happy Thanksgiving, everyone!

Surprise! Cholesterol is Good

A panel of experts recently reviewed the relevant medical literature and found that high levels of ‘bad’ cholesterol were associated with longer life and lower rates of heart disease.

Cholesterol does not cause heart disease in the elderly and trying to reduce it with drugs like statins is a waste of time, an international group of experts has claimed.

A review of research involving nearly 70,000 people found there was no link between what has traditionally been considered “bad” cholesterol and the premature deaths of over 60-year-olds from cardiovascular disease.

Published in the BMJ Open journal, the new study found that 92 percent of people with a high cholesterol level lived longer.

[…]

“What we found in our detailed systematic review was that older people with high LDL (low-density lipoprotein) levels, the so-called “bad” cholesterol, lived longer and had less heart disease.”

Vascular and endovascular surgery expert Professor Sherif Sultan from the University of Ireland, who also worked on the study, said cholesterol is one of the “most vital” molecules in the body and prevents infection, cancer, muscle pain and other conditions in elderly people.

“Lowering cholesterol with medications for primary cardiovascular prevention in those aged over 60 is a total waste of time and resources, whereas altering your lifestyle is the single most important way to achieve a good quality of life,” he said.

Lead author Dr Uffe Ravnskov, a former associate professor of renal medicine at Lund University in Sweden, said there was “no reason” to lower high-LDL-cholesterol.

Despite this evidence, we don’t expect the medical profession to change its position on cholesterol anytime soon. After all, statins are the most profitable class of drugs in history. Maybe the narrative will change once the patents start to expire.

Here at Yet, Freedom!, we strongly support free markets and the profit motive. We acknowledge, however, that the profit motive can plausibly give drug companies the incentive to sell people more medications than they really need. As with all market transactions, the caveat emptor advisory remains fully applicable.

Should the rich give back? (Revised)

In recent years, we have heard much rhetoric aimed at demonizing “the 1%” of richest Americans, who are supposedly guilty of somehow victimizing “the 99%.” We even saw a bumper sticker recently that proclaimed “I am the 99%” as if that were something to be proud of. Even more appalling, we have heard from students that some of this rhetoric has even found its way into classrooms at UD. And three years ago we all had to endure an election campaign during which we were told repeatedly that the rich were not “paying their fair share.”

Is that right? Do the richest 1% owe something to the other 99%? Should the rich have to “give back?”

Logically, the rich should only have to give back if they have taken something. But is that how Bill Gates and Steve Jobs got rich? By taking? No, clearly not. They got rich by innovating and producing products that people wanted and that greatly improved people’s lives. The fact is that virtually all progress in our economy and in our society comes from a tiny minority of talented, hard-working, and successful entrepreneurs, scientists, and engineers. The rest of the population reaps the benefit of the improvements brought about by this tiny minority. On this point, Harry Binswanger, writing recently in Forbes, quotes the famous novelist Ayn Rand:

When you work in a modern factory, you are paid, not only for your labor, but for all the productive genius which has made that factory possible: for the work of the industrialist who built it, for the work of the investor who saved the money to risk on the untried and the new, for the work of the engineer who designed the machines of which you are pushing the levers, for the work of the inventor who created the product which you spend your time on making . . .

Or as someone once aptly put it, no poor person can give you a job.

Similarly, in their classic treatise Free to Choose, Milton and Rose Friedman note that

economic and social progress do not depend on the attributes or behavior of the masses. In every country, a tiny minority sets the pace, determines the course of events. In the countries that have developed most rapidly and successfully, a minority of enterprising and risk-taking individuals have forged ahead, created opportunities for imitators to follow, have enabled the majority to increase their productivity.

The argument is also laid out clearly in the brief video below, produced by the Atlas Network. The video highlights the essential point that profits are moral, so long as they arise through voluntary exchange. Profits become morally dubious when they involve involuntary exchange, which usually involves government creating for someone a special privilege.

All the aforementioned suggests that the 99% owe a lot to the 1%. Harry Binswanger, in fact, runs with this idea and, in the spirit of Jonathan Swift, makes a modest proposal–that the 99% should give back to the 1%!

Anyone who earns a million dollars or more should be exempt from all income taxes. Yes, it’s too little. And the real issue is not financial, but moral. So to augment the tax-exemption, in an annual public ceremony, the year’s top earner should be awarded the Congressional Medal of Honor.

Imagine the effect on our culture, particularly on the young, if the kind of fame and adulation bathing Lady Gaga attached to the more notable achievements of say, Warren Buffett. Or if the moral praise showered on Mother Teresa went to someone like Lloyd Blankfein, who, in guiding Goldman Sachs toward billions in profits, has done infinitely more for mankind. (Since profit is the market value of the product minus the market value of factors used, profit represents the value created.)

We’re not sure that the rich should literally enjoy a zero marginal tax rate, but we do agree that a society that celebrates business success is healthier, and morally superior, to a society that denigrates it. A society that denigrates and demonizes the successful, will not end well. This point was made vividly by the great science-fiction writer Robert Heinlein.

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as “bad luck.”

Are young people today learning to celebrate success, or to resent it? Do they respect rich people for their success, or do they feel instead that the rich owe them something? Adam Carolla, in the following epic rant, suggests that resentment of achievement is on the rise. If he’s right, it does not bode well for the future.

Language Warning: Not appropriate for children. Also, for Campus Crybullies: Trigger Warning.

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Videos: “I, Pencil” and “I, Smartphone” (Revised)

We recently posted video of Milton Friedman discussing Leonard Read’s famous essay, I, Pencil. A good video adaptation of the essay, embedded below, was made by the Competitive Enterprise Institute.

See also below the video I, Smartphone, a brilliant take-off on I, Pencil. The video runs through a lengthy list of just some of the many diverse and far-flung countries–on several different continents–that are involved in producing various inputs and components of the phone. Just this hint at how many countries and inputs are involved in the process makes clear how utterly impractical is Donald Trump’s recent proposal to force Apple to produce its phones in the U.S. The idea really is completely absurd.

Can we put a price on human life?

Much of the controversy surrounding the Ford Pinto (see the post below) focused on the infamous ‘Pinto Memo,’ a confidential cost-benefit calculation performed by Ford. Mother Jones magazine got hold of the memo and reported that Ford had used the calculations in the memo to justify not making safety improvements to the Pinto’s fuel tank. Specifically, the magazine reported that Ford assumed the cost of safety improvements to equal about $11 per vehicle. The company argued that this cost could not be justified because it would exceed the value of the lives lost in gas tank fires. Ford assumed the value of each life to equal $200,000.

Americans were outraged to find out that Ford had put a monetary value on human life. But before we address that point, it’s worth pointing out that Mother Jones got many of the specifics wrong.

  • The memo was not an internal Ford memo, but was prepared at the request of regulators at the National Highway Traffic Safety Administration (NHTSA).
  • Regulators requested the analysis contained in the memo because they were considering new regulations for the auto industry as a whole. The calculations applied not to Pintos specifically, but to vehicles in general. Ford therefore never used this particular memo to make design decisions regarding the Pinto.
  • The memo pertained to gas tank fires caused by roll-overs, not by rear-end collisions, which were the focus of the Pinto controversy.

But leaving all that aside, why would Ford be so crass as to put a monetary value on human life? Well, one answer is that the government told them to!

[H]ow can the value of those individuals’ lives be gauged? Can a dollars-and-cents figure be assigned to a human being? NHTSA thought so. In 1972, it estimated that society loses $200,725 every time a person is killed in an auto accident (adjusted for inflation, today’s figure would, of course, be considerably higher).

Here’s how NHTSA broke down the cost of a death from a vehicle fire.

pinto_memo

We’ve seen some reports that, by the time of the ‘Pinto Memo,’ NHTSA was using a figure of $275,000, and that other federal agencies were using $350,000. So maybe Ford’s figure was a bit too low, but regardless, the principle remains the same: putting a price on human life. Is that the right thing to do?

Yes! The fact is that, as a practical matter, to treat each life as priceless would be far too costly. We would go broke trying to save lives in just one area (say, traffic safety) at the cost of lives in other areas (say, medical research).

Under the principle that life is priceless, we would have to approve an auto safety measure, regardless of cost, if it saved even one life. But if every car design had to include every safety feature that saved even one life, the cost of a car would become astronomical. A car that valued safety regardless of cost would look something like an M1-Abrams tank, or perhaps the fictional EM-50 ‘urban assault vehicle’ from the 1981 movie Stripes. The car might easily cost over a million dollars, and only rich people could afford to buy it. Moreover, almost nobody would want to pay so much just to be a bit more safe.

32b3ae48-87c7-4632-af44-02d596347781

As an example, consider one safety measure: bulletproof glass. Very important people like the president ride in limos with bulletproof glass, but for ordinary people, the small increase in safety is not worth the cost. Sure, bulletproof glass could save a life here and there. Never know when you might get caught in crossfire while driving through a sketchy neighborhood. But nobody would want to pay for this small measure of additional safety. Nobody buys a Ford Focus and says, “I can’t believe those cheap bastards didn’t install bulletproof glass,” and then pays extra to have the bulletproof glass installed.

How can we tell if a safety device is worth installing, or like bulletproof glass, not worth it? The only way is to determine how many lives would be saved, maybe by doing crash tests, and then multiplying the number of lives by some finite value of each human life. That gives us the total safety benefit, which we must compare to the total cost. For the typical American, economists estimate that the appropriate value is no more than a few million dollars per life. It might sound crass, but it’s the rational way to proceed.

Economists accept that we must adopt a finite value for human life, and so does the government. As alluded to above, regulatory agencies assume a value of human life when determining the merits of new government regulations.

While the controversy behind the use of the value of human life in risk-benefit analysis still persists, it has become not only a common practice but an expected practice. In fact, most federal agencies actually require companies to carry out risk-benefit analysis using their predetermined values of human life. For instance, the Food and Drug Administration requires pharmaceutical companies to conduct risk-benefit analysis on the safety of their drugs; the Environmental Protection Agency requires chemical companies to conduct risk-benefit analysis on the extent of the effects of their air pollution.

When you put a price on human life, however, people freak out because they don’t understand the issue. Even so-smart (they think) Ivy Leaguers don’t get it. In the video below, the famous economist Milton Friedman gets challenged on the Pinto issue by an audience at Cornell University. The encounter occurred in 1978, at the height of the Pinto controversy. A key excerpt (at 1:55):

Friedman: Suppose it would have cost 200 million dollars. Per life saved. Should Ford still have spent that 200 million dollars?

Young questioner: You mean per…

Voice from the audience: That’s not the question!

Young questioner: That’s not really the question.

But that is, in fact, the question. On safety, you have to draw the line somewhere.


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Economic freedom: Hong Kong vs. India (Bumped)

In the first chapter and episode of Free to Choose, Milton Friedman spotlighted Hong Kong as a prime example of a relatively free economy. In the second chapter and episode, Friedman discussed the baleful effects of economic planning and control in India. In the video below, John Stossel makes the contrast between Hong Kong and India explicit and direct. Whereas Friedman focused primarily on the freedom to engage in international trade, Stossel asks the simple but very revealing question: How easy is it to start a business?

This ABC special dates from 1999, and includes a cameo appearance by an 87-year-old Friedman. The show runs over 40 minutes, but the best and most relevant portion is Part One, which consists of just the first 16 and a half minutes.

This show makes the case for economic freedom more powerfully than almost anything else we have seen. Indeed, Part One is perhaps the greatest 16 1/2 minutes in the history of television. Or at least the most truth-packed. And the rest of the show is pretty great too, in particular the point near the end when Stossel tells the Calcutta politician to his face that his policies are “stupid.”

Update: Another highlight was when Stossel explained the difference between freedom and democracy. India has more democracy than Hong Kong, but Hong Kong has more freedom.

Remembering the Ford Pinto Myth

Those of us of a certain age remember the controversy of the late 1970s surrounding the Ford Pinto, a subcompact economy car. The Pinto was alleged to be a death trap due to a design flaw that would cause the gas tank to explode in the event of a rear-end collision. Everybody of a certain age is familiar with this story. But like a lot of things, what we think we know, isn’t so.

fordpinto

The attack on the Pinto started with an article in the leftist rag, Mother Jones.

The article claimed that Ford was aware of the design flaw, was unwilling to pay for a redesign, and decided it would be cheaper to pay off possible lawsuits. The magazine obtained a cost-benefit analysis that it incorrectly claimed Ford had used to compare the cost of repairs (Ford estimated the cost to be $11 per car) against the cost of settlements for deaths, injuries, and vehicle burnouts… The Mother Jones [article] claims of [sic] 500 to 900 burn victims due to the gas tank design. The actual number was found to be around 27 and it was not clear that number would have improved with the modifications Ford was alleged to have avoided.

As the great Robert Bork noted, “the left is not known for telling the truth.”

The truth about the Pinto was only much later revealed by a 1991 study in Rutgers Law Review by Gary Schwartz.

[T]he number who died in Pinto rear-impact fires was well below the hundreds cited in contemporary news reports and closer to the 27 recorded by a limited National Highway Traffic Safety Administration database. Given the Pinto’s production figures (over 3 million built), this was not substantially worse than typical for the time. Schwartz said that the car was no more fire-prone than other cars of the time, that its fatality rates were lower than comparably sized imported automobiles[.]

The flames of Pinto hysteria were further fanned by the 1978 decision of an out-of-control California jury to award $125 million–roughly half a billion relative to today’s incomes–in a wrongful death suit. A judge had to reduce the award to $3.5 million. This case incited a media frenzy about the dangers of incendiary Pintos, even though the autopsy concluded that the deaths occurred due to the crash impact and not the subsequent fire. Moreover, in this case, the deaths were not attributable to any sort of design flaw.

The supposed design flaw of the Pinto, according to Byron Bloch, was that in a heavy enough rear end accident, the front of the gas tank could come in contact with a bolt on the differential, rupturing it, and allowing fuel to spill out, with the potential for a fire. It is, however, extremely hard for the gas tank to come in contact with any bolts that might be able to accomplish this, unless the car is hit from behind at over 50 mph. And as was shown in the autopsy for the initial accident in ’78 that started this controversy, the occupants died from the impact, not from the fire (caused by an inattentive driver in a chevy van driving onto the shoulder and hitting their parked, but running Pinto from behind at over 50 mph).

Then network television did what it does best–put out some propaganda.

ABC’s 20/20 decided to really heat things up in a 1978 broadcast containing “startling new developments.” ABC breathlessly reported that, not just Pintos, but fullsize Fords could blow up if hit from behind.

20/20 thereupon aired a video, shot by UCLA researchers, showing a Ford sedan getting rear-ended and bursting into flames. A couple of problems with that video:

One, it was shot 10 years earlier.

Two, the UCLA researchers had openly said in a published report that they intentionally rigged the vehicle with an explosive.

That’s because the test was to determine how a crash fire affected the car’s interior, not to show how easily Fords became fire balls. They said they had to use an accelerant because crash blazes on their own are so rare. They had tried to induce a vehicle fire in a crash without using an igniter, but failed.

ABC failed to mention any of that when correspondent Sylvia Chase reported on “Ford’s secret rear-end crash tests.”

As if to prove Mark Twain’s adage that “a lie gets halfway around the world before the truth gets its boots on,” the Pinto myth became inextricably implanted in the minds of Americans. The myth was so widely believed that even six years after the controversy ignited, David Zucker used it as the basis of a gag in his 1984 movie Top Secret!, a parody of WWII spy films. Funny gag, but based on a myth.

The false and misleading campaign against the Pinto reminds us of Ralph Nader’s famous but fallacious attack on the Chevrolet Corvair. The story is recounted by Milton and Rose Friedman in Free to Choose (p.192).

Ralph Nader’s attack on the Corvair, the most dramatic single episode in the campaign to discredit the products of private industry, exemplifies not only the effectiveness of that campaign but also how misleading it has been. Some ten years after Nader castigated the Corvair as unsafe at any speed, one of the agencies that was set up in response to the subsequent public outcry finally got around to testing the Corvair that started the whole thing. They spent a year and a half comparing the performance of the Corvair with the performance of other comparable vehicles, and they concluded, “The 1960-63 Corvair compared favorably with the other contemporary vehicles used in the tests.”

We’re no fans of the domestic auto industry, but like a lot of people, they have over the years been the victims of some pretty outrageous lies told by the political left and its media wing.

More here.

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Video: The Power of the Market (Revised)

This first episode in the Free to Choose series follows a somewhat different narrative than does the corresponding chapter in the book, although the general thrust of ideas is quite similar.

(This post has been bumped since our students are currently reading the book.)

Some highlights:

15:50. The Lesson of the Pencil. Producing even as humble a product as a pencil requires an incomprehensible amount of cooperation and coordination among thousands of people all over the world. Remarkably, the price system effectively coordinates their activities without anyone planning or overseeing the entire process.

21:40. History shows that the best system for reducing poverty is the free market.

25:20. Dr. Friedman summarizes the three major functions of prices in incentivizing and coordinating economic activity.

The ‘socially responsible’ lifestyle: A chimera

Our post below about electric vs. internal combustion cars serves as a reminder of just how difficult it can be to correctly determine the social consequences of available choices. Most people would never even imagine that an electric car could produce more air pollution than a gasoline powered car. Yet that’s what the science indicates. It follows that someone interested in making the ‘socially responsible’ choice would generally make the wrong decision. Moreover, this dilemma is not unique; the overall social consequences of lifestyle choices are generally difficult or impossible to accurately determine.

As another example, consider the choice between two specific vehicle models: a Prius (hybrid, not strictly electric) and a Hummer. This choice involves two seeming extremes. The Prius is widely considered to be among the most environmentally-friendly vehicles on the road, whereas the Hummer is considered to be one of the most damaging to the environment. Indeed, the Hummer guzzles several times as much fuel per mile as does the Prius. From the point of view of protecting the environment, the Prius seems the obvious choice. And yet, several environmental factors weigh against the Prius and in favor of the Hummer.

  • People who drive a hummer, or any car with a very low mpg, will drive their car less since it is so expensive to do so.

  • Manufacturing costs are lower and not as energy intensive.

  • Lower routine maintenance costs.

  • The life span is longer lasting nearly 100,000 miles on average longer than a Prius before being scrapped.

  • Lower disposal costs, since there is no battery to worry about.

The question of whether the Hummer or the Prius is better for the environment hinges on whether the Hummer’s advantages listed above outweigh the adverse effects of its excessive fuel use. Accurately evaluating this trade-off is not easy. A 2006 study by CNW Marketing stirred controversy by concluding that the better vehicle was the Hummer. This result was contradicted by a 2007 study by the Pacific Institute that supported the Prius. The Hummer vs. Prius debate has now been raging for years.

So, which vehicle is better for the environment? Here at Yet, Freedom! our position is that we have no idea. We have never made a careful reading of the relevant studies. Doing so would require a considerable amount of time and effort. Moreover, investing all that time and effort might not clarify the issue very much. All studies rely on assumptions and tendentious claims that we cannot evaluate definitively, simply because we do not possess the necessary expertise. Deciding this issue with a considerable degree of confidence would be difficult or impossible.

But if the seemingly easy choice between the Prius and Hummer turns out to be unclear, the social consequences of other life choices are equally if not more unclear. For instance, would it be more socially responsible to work for a non-profit or a for-profit firm? Before you say non-profit, keep in mind that the pursuit of profit often has the unintended consequence of improving the well-being of society. Before Henry Ford revolutionized the auto industry, a car cost more than a house. After just a few years, Ford cut the price in half, making cars available to millions of people who previously could not afford them. Indeed, one would be hard pressed to find examples of non-profits providing as much value to society as was provided by profit-seeking entrepreneurs like Ford, Walt Disney, or Bill Gates.

Finally, consider the great diaper debate. Some people got the idea that cloth diapers, being reusable, might be better for the environment than disposable diapers. But while cloth diapers create less solid waste, they create more wastewater. So which is better, cloth or disposable?

A three-year study by the London-based Environmental Agency concluded that there was “no significant difference” between the environmental impact of cloth and disposable diaper.

This conclusion doesn’t mean that cloth and disposable had the same effects so much as that the uncertainties surrounding all the relevant costs gave no reason for preferring one diaper over the other. Again, these environmental questions are typically very difficult to answer definitively.

The bottom line is that trying to live a fully ‘socially responsible’ life is simply not practical. Almost any career or lifestyle choice involves innumerable and potentially far-reaching consequences that are difficult or impossible to identify and evaluate. Every decision would turn into a daunting research project, and time and effort devoted to gathering relevant information might do little to resolve uncertainty or to avoid mistakes. Hipsters who wash cloth diapers in organic soap and drive their Prius to their non-profit job might feel that they’ve attained the moral high ground, but that view is unsupported by the evidence. Life is not so simple as they imagine.

The following parody by College Humor underscores the hopelessness of trying to make personal choices on the basis of their social consequences.

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