Thursday, December 29, 2005

Nobody likes a liberal

One of the most confusing words in politics is "liberal". It means so many different things to different people. But the one thing all of its definitions seem to have in common is that they are unpopular. In America, "liberal" is associated with the further political left. Practically everywhere else, "liberal" retains its classic 19th-century definition, and is largely used to refer to free-market ideology and the espousal of individual rights associated with the political right. Apple OS X's dictionary has 4 definitions of "liberal". The first one is "favorable to or respectful of individual rights and freedoms : liberal citizenship laws." The fourth one is "(of a person) giving generously : Sam was too liberal with the wine. These two definitions are the ones that politics is mostly concerned with. The best synonyms I can think of for these words are "non-coercive" (the first definition) and "generous" (the fourth definition). In Europe a "liberal" government is non-coercive, in the home and in the marketplace. In America a liberal person is deemed "generous". But not really. If you think about, an American liberal wants to be "generous" with other people's money (their taxes), and that cannot be true generosity.

The sad coincidence is that both meanings of political liberalism are unpopular in their respective homes. "Liberal" is an insult in Europe and Latin America (it's often termed "neo-liberal" in the latter). It is seen as neglecting the social good in these places. Liberal is also generally an insult in America, where the public dole is unpopular among many. In America it has the secondary definition of moral permissiveness, which is also unpopular. Oddly, the two main definitions would be quite popular if they were to just switch places. Europeans and Latin Americans who are still very much attached to their welfare state, would be proud to be called liberal, if it meant generosity with the public dole. And Americans who love freedom and individualism would quite like the classic definition of liberalism, if they would just learn to use it. I wish they would. It is more specific and accurate than "conservative" and more elegant and catchy than "libertarian".

Friday, December 02, 2005

The most powerful victims in California

An important arrow in the quiver of public and non-profit sector unions (teachers, nurses, etc) is the public perception of the professionals they purport to represent as victims and martyrs. Since the public often conflates the professionals-at-large with the unions themselves, the unions benefit hugely from the sympathy the public has for their beleaguered "constituents". The most dramatic example of this is the recent special election in California. Governor Schwarzenegger suffered a huge drop in public approval after he criticized public and non-profit sector unions. Many saw his criticisms of the unions as "attacking the teachers" and "taking on the nurses". What nerve this Hollywood millionaire had, directly attacking the underpaid teachers who teach our kids and the overworked nurses who treat our sick! Every Northern Californian who drove through Oakland on the southbound 880 freeway in the past year saw an enormous billboard with a picture of Arnold captioned, "He wheels and deals," and a picture of a weary nurse captioned, "She heals." A complicated and critical debate over how political influence is distributed became a simple narrative of a cocky top dog versus a saintly underdog. And the unions took full advantage of that role, raising and spending record levels of funds to crush the Governor like a girly-man in the polls and at the ballot-box.

The unions have certainly outdone themselves. But they may have also overdone it at the same time. The public and non-profit sector unions have always wielded tremendous political power in California. But until now, they've wielded it with some subtlety. Now after the special election, however, they are recognized far and wide as the big dogs in California politics. And it may prove difficult to blend that image with the image of the martyr and victim. When I talk to union-boosters about their crushing victory, they always seem to be little embarrassed by it.

This embarrassment will only be compounded if the unions are able to replace Schwarzenegger in two years with an "establishment Democrat." With the unions and their cronies fully and VISIBLY in the driver's seat in California, it will become much harder for them to find somebody else to blame for the woeful state of our schools, our health care system, and our state bureaucracy.

Thursday, December 01, 2005

Too important to succeed

On this Global AIDS Day, let's perform a thought experiment. Imagine erectile dysfunction was considered a global humanitarian emergency: an epidemic so terrible that the World Health Organization considered it a top priority. And say it was considered a paramount obstacle to alleviating global poverty. Naturally, any treatment developed couldn't be offered at market value, right? Sure there are thousands and thousands of citizens of industrialized nations who would be willing to pay a premium for such a blockbuster drug. But that wouldn't be fair to limp lovers in sub-Saharan Africa! Any pharmaceutical company considering an investment of hundreds of millions of dollars in research would be faced with the reality that as soon as a cure was developed, national governments and international bodies would insist on the moral imperative that, for the greater good, the enterprising company must distribute the drug at cut-rate prices. Even if they were allowed to charge full market prices to rich-world patients, the cheaper pills would inevitably find their way out of Africa. So faced with this reality along with the tremendous financial risk inherent in drug-development, no pharmaceutical company would invest in such a venture. Oh sure, there would be some research done on a humanitarian or governmental basis, but the results would pale in comparison with what competing Fortune 500 pharmaceutical companies could have produced.

Well it's a good thing, that erectile dysfunction is not considered a global humanitarian emergency, otherwise Viagra would have never been developed.

How back-asswards is that! The fight against epidemics is destined to fail, because it's "too important to leave to the market", and thereby TOO IMPORTANT TO SUCCEED. It's the same reason we don't have a universal flu vaccine, a solution to global starvation, or sufficient education systems. Things like toenail fungus, mobile phones, seasonal allergies, and 3D animation aren't that big of a deal; so we can let the market work absolute wonders in those realms. But as for the really critical problems in the world, we feel the need to hobble all efforts to solve them with regulations, subsidies, price controls, and ham-fisted government ventures.

Let's call the following situation Plan B. What if a pharmaceutical company knew it would be able to charge $20,000 for a cure for AIDS without any governmental interference? There are PLENTY of wealthy and middle class AIDS sufferers who would pay such a sum, even if they had scrimp, save, and work weekends to do it. The prospect of that kind of revenue would be a tremendously strong incentive to invest heavily in a cure.

"But wait!" says the moderate liberal would-be-do-gooder, "That's unjust! Sub-Saharan Africa is where a cure is most-needed, and people there can't afford $20,000! Are you going to let them die, just because they're poor? You have to lower the price!"

Just hold on, and put down the "Patients, Not Profits" placard for a second. What you're talking about is what we're doing now: Plan A. Let Plan B play itself out. For once, resist your impulse to solve a problem with a new rule.

Now eventually everyone who has AIDS and can afford $20,000 will buy the "egregiously priced" cure for AIDS. But there would still be lots of AIDS patients who could afford to pay $10,000 a pop. So now it's in the company's own interest to lower the price (smaller profit margins are better than no profits at all). After that market dries up, the company would lower its price perhaps to $5,000, then $2,000, then $1,000. How low would they be willing to go? As low as they can afford to and still make a profit, the level of which would steadily decline as with practice, they became more efficient at making the drug. And since the lowest economic level of AIDS patients is also the most populous level, the company (and its competitors, once its patent expires) would have extra incentive to become cost-efficient enough to offer the drug at ever-lower prices.

So let's review. Plan A (the current plan) has no cure: plenty of good intentions, but no cure. Well at least it's egalitarian. Everybody has an equal amount of AIDS cures: zero.

Plan B has those miserable fat cats in the pharmaceutical industry getting even more filthy rich then they already are. And what's more Magic Johnson gets in the front of the line for the cure, just because he's rich! Tons of impoverished AIDS victims will die before the cure becomes affordable enough for them.

But multiples more would die (which they do) if there were no cure at all (which there isn't) and Plan A were in effect (which it is).

Self-styled progressives wonder why society's priorities are so screwed up: why lawyers and Viagra get more money than teachers and AIDS treatments. Little do they realize that it's their very attempts at improving society's priorities that are distorting the market, thereby preventing it from reflecting our true priorities.

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