Vox Gets it Wrong: the Left is Abandoning Free Speech

Vox Gets it Wrong: the Left is Abandoning Free Speech

03/19/2018Tho Bishop

Last week Matt Yglesias over at Vox tried his best to deflate the notion that America was becoming increasingly hostile to free speech. Unfortunately, as Daniel Bier over at Skeptical Libertarian noted, Yglesias's own charts indicate that support for free speech among "Liberal" and "Slightly Liberal" Americans is at the lowest point in over 40 years. 

Utilizing data from the General Social Survey, Yglesias shows that the US as a whole has demonstrated a growing willingness to defend the freedom of homosexuals, communists, militarists, and anti-theists to speak freely. Of course none of this should be particularly surprising. Prominent politicians on the left have actively praised communist leaders, militarism has received bipartisan support for decades, and social trends have become increasingly more tolerable for homosexuals and atheists.

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Meanwhile, the GSS data shows a drastic drop in support for the free speech rights of racists. 

It should go without saying that defending the rights of racists to speak is not the same thing as defending those ideas. In fact, one's commitment to free speech matters most when it involves ideas you strongly oppose. As Andrew Syrios wrote for the Mises Wire:

Discerning what exactly free speech is can sometimes be challenging, as in cases of libel, slander, and direct threats. But these are really not the issues at heart here. The vast majority of speech being “regulated” today is simply that of an unpopular opinion. Yes, many ideas are bad. And they should be refuted. Moreover, resorting to the use of political force to silence adversaries is a sign of the weakness of one’s own position. But, in using force to silence others, anti-speech crusaders are making another argument. They’re arguing that political force can and should be used to silence people we don’t like. What idea could be worse than that?

By this measure, the support for using force to silence the thoughts of others is growing in this country. In fact, if we use Vox's own data, they are declining most dramatically among those who identify as "Liberal" and "Slightly Liberal." 

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In conclusion, Vox gets everything wrong, in their article titled "Everything we think about the political correctness debate is wrong."

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Jeff Deist on "Part of the Problem"

On this episode of Part Of The Problem, Dave Smith interviews Jeff Deist. Dave and Jeff discuss the future of a Post COVID-19 world; how rights once taken are rarely given back; and how a free market would be better prepared for a crisis than our system of regulation.

Part Of The Problem #570 - The Great Jeff Deist

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Can "Special Drawing Rights" Save the World?

04/15/2020Robert Aro

On Tuesday in an interview with Reuters, the chief economist of the International Monetary Fund (IMF), Gita Gopinath, said that one hundred countries seek pandemic aid. This was only a few weeks after the managing director of the very same IMF, Kristalina Georgieva, said in an emergency statement that the IMF is ready to deploy all of its $1 trillion lending capacity. So far they have been making good on their promises, providing $114.49 million to Niger, $115.3 million to Burkina Faso, and $389 Million to El Salvador in just one day, as an example of financial aid packages to come.

This poses various economic problems, namely the impossibility of economic calculation under socialism, which Mises talked about in Human Action. Under this scenario, the question one must ask is: why did Niger “only” get $114 million while El Salvador received $389 million? Whether this was determined by a single economist or was a decision by an "expert committee," we must consider how such an allocation could have been made in a way that was not completely arbitrary or simply based on guesswork.

Supranational organizations such as the IMF and the World Bank raise numerous questions about sovereignty, freedom, and liberty; however, the economics of these organizations also deserve attention. What happens when the IMF runs into a liquidity issue and finds that it is short on funds to lend to member countries?

Enter the SDR

For those unfamiliar with precisely what special drawing rights (SDR) are, a definition can be found on the IMF’s factsheet. The problem is that this definition is not very enlightening:

The SDR serves as the unit of account of the IMF and some other international organizations. The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.

According to the IMF, the SDR is not a currency, but like a currency it can be created out of thin air and exchanged for the currencies of other countries. The exchange may be voluntary, but not always, because “if required, the IMF can also designate members to buy SDRs.”

Per Georgieva’s emergency statement:

And we are looking at other available options. Several low- and middle-income countries have asked the IMF to make an SDR allocation, as we did during the Global Financial Crisis, and we are exploring this option with our membership.

If the IMF does exhaust its $1 trillion lending capacity, it could simply issue more SDRs and allocate them among member nations and then instruct some nations to buy SDRs from others using their own currencies. A Financial Times article agrees that a new issuance of SDR is vital to helping poor countries, using an argument that can only be described as anticapitalist in nature:

Help must indeed be forthcoming. This is a moral duty and a practical necessity. The pandemic and its economic outcomes will only be defeated if they are defeated everywhere. But how? A large part of the answer is “with money”, as in rich countries. Worries about moral hazard are absurd.

What does this all mean for the average American? According to the same article, it probably means nothing, since:

Some will argue that a big new issue of SDRs would be inflationary. Yet, set against the monetary expansions now under way, even SDR 1tn is negligible.

In 2020, it does not matter if the economic advice comes from the head of the IMF, a prominent economist, or from a financial news article. The answer is always the same. Whatever the issue is, the economic panacea championed by anyone unfamiliar with Austrian economics is always creating more money. Whether it be a housing crisis, a debt crisis, or global pandemic, the only real question is “How much?” In 2021, when central bank balance sheets across the world are at unfathomable levels and interest rates are still zero bound, will the masses finally learn, or will they just demand more money?

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Las Vegas's New Football Stadium Is on Its Way to Becoming the "Bailout Bowl"

04/14/2020Doug French

The stadium naming curse is well known. Enron Field, Adelphia Coliseum, and MCI Center are just a few examples of bankruptcy following a company's name adorning its home team’s stadium or arena. Financial trouble typically comes after the name is attached and the team plays some games.

In the newest case, the company is struggling before a game has been played. Last August, Allegiant Airlines inked a deal with the NFL’s used-to-be Oakland, used-to-be Los Angeles, used-to-be Oakland (again), and now Las Vegas Raiders for the naming rights to the new 65,000-seat and partially taxpayer-funded stadium, which sits along I-15 in Clark County, Nevada.

Terms of the deal were not disclosed, but the Las Vegas Review-Journal (LVRJreported, “experts with experience on similar deals say Allegiant is likely paying between $20 million and $25 million in cash and in-kind services a year to put its name on the building.”

Raiders owner Mark Davis let this slip at the time, “I look forward to learning a lot more about the Allegiant brand. We’ve got 30 years ahead of us, so let’s make the best of it.”

Allegiant may be wishing it hadn’t made a thirty-year deal. Eli Segall writes in today’s LVRJ that “Allegiant Air’s parent is burning through at least $2 million in cash per day and hundreds of workers are taking two-month leave at half pay as the carrier grapples with the fallout from the coronavirus pandemic.”

March revenues were down 40–45 percent from a year ago and its prospects are likely to get much worse. The company is applying for funding from the federal government’s Paycheck Protection Program to keep its doors open. Meanwhile, “management expects flying capacity for April and May to drop 80 percent to 90 percent from the same period last year and is ‘continuously’ re-evaluating its flight schedule ‘in light of low demand for future bookings,’” Segall reports.

Allegiant (ALGT) stock has fallen from $183 plus per share in December to a close below $80 today. The company sported over $457 million in cash at year end: a couple hundred days' worth at the current burn rate, excluding a payment to the Raiders, of course.

Allegiant Stadium may work out like New York’s Citi Field, known in the years after the 2008 financial crisis as Bailout Ballpark. CNBC reported,

On the heels of announcing a naming deal that cost Citigroup $20 million a year over 20 years, the company was forced to take $45 billion in government bailouts and saw its stock price drop nearly 94 percent from its November 2006 levels. Because of the heavy taxpayer support given to Citigroup, lawmakers began urging the company to scrap the names rights deal. But the company stuck with its plans, and has managed to avoid bankruptcy.

Allegiant Stadium will likely be the Bailout Bowl, with construction requiring $750 million of taxpayer largesse and now more government bailout money required for the Bowl’s name holder to pay its Raiders bill.

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Americans Have No Savings. Thank (in Part) the Fed.

04/13/2020Jp Cortez

Two weeks ago, during a March 17 address to the nation in response to the COVID-19 outbreak, President Donald Trump asked that Americans work from home, postpone unnecessary travel, and limit social gatherings to no more than 10 people.

And last week, on March 27, Trump signed a stimulus package of over $2 trillion dollars to provide relief to an economy on the precipice of collapse.

The aid package includes handouts and loans to individuals, small businesses, and other distressed industries.

Despite Trump’s allegedly “having created the greatest Economy in the history of our Country” just before the markets tanked, massive and immediate government intervention was the only thing left to forestall a total collapse.

Or so we were told.

So why can’t the greatest economy in the world handle a temporary shock without needing trillions of dollars injected just to stay afloat?

Central banks’ war on savers is one reason.

Using central bank–created fiat money introduces a dilemma. Because of inflationary monetary policy, Americans have long been forced to select from among three undesirable options:

A) Save. Hold the central banks’ paper money and be guaranteed a loss of at least 2 percent in purchasing power every single year (assuming the 2 percent inflation standard).

B) Consume. Spend Federal Reserve notes on immediate goods and services to get the most out of current purchasing power.

C) Speculate. Try to beat the central banks’ planned price inflation, seeking a higher return by investing in higher-risk asset markets.

With businesses and Americans defaulting on their rent and other obligations only days into the collapse, the problem is clear: few have any savings…and why should they, when saving their money at negative real rates of return has been a sucker’s game?

Lack of sound money, or money that doesn’t maintain its purchasing power over time, has discouraged savings while encouraging debt-financed consumption.

American businesses and individuals are so overleveraged that once their income goes away, even briefly, they are often left with no reserves at all.

Meanwhile, small-time savers who can’t get big returns from making high-risk investments have a lot to lose. Although it is true to some that small 2 percent-per-year losses can go easily unnoticed, over just ten years 2 percent price inflation amounts to a loss of nearly 20 percent in purchasing power.

Needless to say, this makes it harder to save and maintain one’s standard of living.

Now, with central banks slashing short-term interest rates even more, and with the Fed moving rates to zero, the dollar has been further destroyed as a method of preserving savings. (And negative nominal interest rates could be coming next.)

Inflationary economic policy, absent the guardrails of sound money, has created a situation with an obvious and deadly conclusion: that many Americans lack savings to protect themselves against downturns.

This situation isn’t necessarily the fault of the people, but rather of a system in which discouraging and punishing savers is a crucial tenet.

The Federal Reserve, the US Treasury, and the White House are trying to reassure the public that everything is “under control,” that “the U.S. economy’s fundamentals are still strong,” and that the economy will skyrocket once COVID-19 is taken care of. What if they’re wrong?

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Five Ways Policymakers Get Cause and Effect Backward

There are many reasons why socialism fails everywhere and every time it is tried. One primary reason is the propensity of socialists to confuse the cause and effect relationship. Due to this confusion, the remedies put forth by socialists and Keynesians try to solve the effect instead of tackling the cause. It is analogous to treating symptoms instead of the disease.

In this article, I will highlight this tendency with a few examples and show how government does damage to society through misguided actions arising out of this confusion between cause and effect.

One: Economic Growth Is Stimulated By Increasing the Circulation of Money

In a healthy economy, more money circulates in the economy because consumers buy more products and businesses invest more to produce new products and services.

Cause = healthy economy

Effect = higher circulation of money

Keynesians, however, assume the relationship holds in reverse. That is, they think that higher rates of economic growth can be generated by promoting faster circulation of money. Thus follows the misguided Keynesian prescriptions of ultralow interest rates, quantitative easing, capital injections, bailouts, and deficit spending to combat recessions.

Two: Eliminating Cash Transactions Leads to Higher Economic Growth

Recently, the government of India imposed on its people a misguided policy called “demonetization” in an effort to promote a “cashless economy.” The logic is as follows: in developed nations, people mostly use electronic monetary transactions with relatively few cash transactions. Therefore, eliminating cash transactions and forcing people to use electronic transactions will lead to healthier economic conditions similar to those of developed nations.

In truth, in poor nations people predominantly use cash because monetary transactions are too low in value to justify investment in infrastructure to support electronic transactions. As an economy grows and people get wealthier, the average cash transaction will be high enough to justify electronic transactions. So, the relationship is the other way around. Higher economic growth leads to elimination of cash transactions.

The misguided policy of the Indian government is leading to disastrous economic consequences for poor people in India, who rely on small cash transactions in their daily lives.

Three: Deadly Diseases Lead to Poor Economic Growth and Higher Poverty Rates

In what regions of the world are people least affected by diseases like malaria, dengue and cholera? Developed nations. Even in nations with high poverty rates, people who are well off are less susceptible to these diseases, because they can afford medicines, hospital care, and prevention measures such as mosquito repellents and environments free of stagnant water, where mosquitos can breed.

Eliminating diseases does not lead to economic growth. Many deadly diseases such as smallpox and polio have been eliminated. Many charitable organizations invest in disease prevention and health improvement initiatives. The Gates Foundation invests heavily in reducing infant mortality in India. Jimmy Carter has been successful in raising billions of dollars for health education and disease prevention in Africa. Yet these initiatives and billions of dollars make little difference in improving the macroeconomic conditions in poor nations.

What Africa and India need are conditions that stimulate rapid economic growth. As people become richer they can afford better medical care and better living conditions that help them fight diseases and stay healthier.

Diseases do not cause poverty. Poverty is the reason for the higher prevalence of deadly diseases.

Four: Proliferation of Small Firearms is Impeding Economic Development in Africa

Peter Thum, an American entrepreneur and “humanitarian,” was so appalled by the proliferation of guns and other small firearms in Africa that he started a company called Founderie 47 to tackle the problem. His company buys small firearms from Africans, destroys them, and uses the recycled parts to make high-end designer watches and jewelry that sell at prices ranging from $25,000 to $200,000. The funds thus obtained help in the procurement and destruction of thousands more weapons.

Behind Thum’s venture is the assumption that the proliferation of firearms is causing the youth of Africa to participate in destructive civil wars instead of engaging in economic activity that will improve the well-being of Africans.

Brilliant idea? Not so fast! Peter Thum’s got it backwards. The reason the youth of Africa are picking up firearms is because they don’t have jobs. In other words, lack of economic development is the reason for the proliferation of firearms, not the other way around.

Believe it or not, given a choice between a decent job and joining a group of militants, almost all people will choose jobs.

Five: Illiteracy leads to Poverty

What is the most important thing that India needs to eliminate poverty? “Education,” replied a friend of mine. By “education” he meant formal school and college education.

Most people in India believe that lack of education is why poor people are unable to escape poverty. So, the Indian government, which is always dominated by socialists regardless of which party is in the majority, allocates billions of rupees towards providing schooling and college education at a highly subsidized cost. As people get better education, they can get jobs and thus escape poverty. Right?

Wrong! Take Cuba and Nicaragua, for example. The communist governments of these countries launched massive campaigns to eliminate illiteracy. They were successful in almost eliminating illiteracy decades ago. Yet, Cuba and Nicaragua today are among the poorest nations in the world, with per capita GDP rankings of 128 and 165.

This is another example of socialists confusing the cause and effect relationship. Illiteracy in Cuba and Nicaragua was high because of poverty. As people's economic conditions improve, they prefer to obtain better education for their children. This is what happened in the four Asian tigers—Korea, Taiwan, Hong Kong and Singapore—over the latter half of the twentieth century.

Treat the Disease, Not the Symptoms

Illiteracy, the prevalence of deadly diseases, violent civil wars, and uncontrolled population growth are all effects of poverty, which stems from low economic growth. They are not the causes of low economic growth. All of them can be eliminated by creating conditions for rapid economic growth.

The easiest and fastest way to achieve high economic growth rates is through free enterprise systems and free markets. Let’s create free market conditions, such as less centralized government control (democratic and dictatorial), and more free trade. Good things will follow.

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Medical Mask Resellers Punished in Canada

04/10/2020Milton Kiang

Recently here in Vancouver, Canada, medical mask resellers were punished by authorities, with their inventory seized and fines imposed. This is the second time resellers have been punished in recent weeks. This action is the exact opposite of what the government should do if it wants to see an increase in supply of medical masks to people who need them.

A local mayor, Brad West, has called the acts of the resellers to "egregious, so irresponsible, so selfish and so motivated by greed." It is this writer’s contention that unless the resellers stole those masks, it is the actions of local authorities which are egregious and irresponsible. West is presuming that those who buy those masks have no legitimate need for them. The CDC now states that wearing masks helps reduce the risk of COVID-19 exposure. How is it that the voluntary selling, and buying, of medical masks to protect you and your family is considered egregious and irresponsible?

The commercial actions of resellers, if anything, help boost supply of those masks to the consumer market. Retails stores and pharmacies are out of inventor,y because their supplier can’t ostensibly meet retail demand. Now, a reseller, through his own resourcefulness and researching of the wholesale market, has come upon a supplier who is willing to provide inventory to him. The reseller contacts the supplier and arranges for the purchase and shipment of those masks. He allocates time and energy to make this transaction, taking certain risks that the masks might not arrive in a timely manner or might be withheld by customs, or otherwise might not be delivered by a deceitful and unscrupulous wholesaler.

For his time and effort, the reseller is paid a profit (i.e., wages) over the wholesale price. His customers get hold of masks in a time when all store shelves are empty. The more resellers there are, the more orders are given to wholesalers and manufacturers, and the more of the product is made available to the consumer market. As demand gets satiated, prices eventually come down.

What the government has done is effectively shut down productive distribution and reseller channels, which are vital and very necessary in ensuring that retail customers get what they want. They have disincentivized entrepreneurs from going out and sourcing suppliers who can help satisfy demand.

And to make a bad situation even worse, the government has shut down a source of income for entrepreneurs who are now out of work due the lockdown and must now rely on employment insurance and other forms of government welfare, putting an even greater strain on government coffers (i.e., taxpayer money).

When will government ever learn?

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The Fed's New Asset-Buying Programs: Nationalization of Financial Markets?

04/10/2020Goghie Alex

That central banks are distorting markets is no longer a surprise to anyone. But the current pandemic succeeded in what the financial crisis of 2008 failed to achieve, namely to put the Federal Reserve’s balance sheet under political control. The Federal Reserve aims to intervene in financial markets to limit losses caused by the coronavirus pandemic, but the collateral risks of such a decision outweigh the benefits pursued.

With the supply shock caused by the forced shutdown, the Federal Reserve felt the need to intervene decisively in the functioning of the markets. If reducing the interest rate by 150 basis points only temporarily calmed the markets, the Fed decided to use all the instruments at its disposal. Thus, it initiated repo programs worth about $1 trillion dollars a day and new quantitative easing (QE) programs. But in addition to all this, new programs have been introduced that will be used to act directly on some segments of the financial market.

In this way, we have seen the introduction of "Secondary Market Corporate Credit Facility," marking the first time the Fed has included exchange-traded funds (ETFs) in the purchasing programs; the "Primary Market Corporate Credit Facility," buying corporate bonds directly from the issuer; or "Main Street Business Lending Program," which aims to loan directly to small-to-medium enterprises, most probably through an agency of the state. But in order to carry out these operations, the Federal Reserve needed a "waiver," which it obtained after concluding a collaboration with world's largest asset manager, BlackRock, Inc. BlackRock Inc. will act as an investment manager for two special-purpose vehicles (SPVs), these being legal entities created for a specific purpose. Since the Fed does not have the legal right to purchase securities that do not have government guarantees, BlackRock and special-purpose vehicles were a solution. At the same time, BlackRock will be the investment manager of a vehicle responsible for the acquisition of mortgage- and commercial property–backed assets issued by certain government agencies, as Fannie Mae, Freddie Mac, and Ginnie Mae.

In this way, BlackRock will act through SPVs in both primary and secondary markets of corporate bonds or ETFs. The problem is represented by the way these acquisitions are financed, here being the danger of nationalization of financial markets. The New York Fed will fund these vehicles on behalf of the Treasury, with the Treasury actually owning these securities. In this way, the Fed's balance sheet will come under political influence, the Treasury having the decision-making power, determining what exactly will be purchased and in what volume. Thus, the involvement of politics in the acquisition of corporate bonds, besides the fact that it will accentuate the misallocation of resources, with many bonds being purchased from companies considered too big to fail, will create all the premises of a nationalization, the price system being severely affected. In this way, we will witness sharp increases in capital market indices and the continuation of speculative bubbles facilitated by the extremely low interest rates. The lack of an economic readjustment, together with the direct financing of capital-consumption companies, will lead to serious economic imbalances.

Not all the technical details of the Fed-Treasury-BlackRock collaboration are known, but one thing is certain: the financial market will not be the same, and Japanification will eventually reach the American economy.

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Mayor "Kane" Questions Lockdown after "Utterly Shocking" Suicide Spike

04/10/2020Nick Hankoff

Knox County mayor Glenn Jacobs, known worldwide as Kane, recorded a heartfelt video message for his constituents after eight of them committed suicide within forty-eight hours. His sober take on the human cost of the COVID-19 lockdown is too rare in today’s politics.

The coronavirus crisis and the government’s response are not going away anytime soon. Every day that is becoming clearer.

Last week in Knox County, Tennessee, within a forty-eight-hour period, eight suspected suicides were reported. That amounts to nearly 10 percent of 2019’s total of eighty-three for the county.

“That number is utterly shocking,” Jacobs said in a weekly video update. “It makes me wonder: is what we are doing now really the best approach? How can we respond to COVID-19 in a way that keeps our economy intact, keeps people employed, and empowers our people with the feeling of hope and optimism, not desperation and despair?”

Jacobs, who has libertarian tendencies and a very impressive grasp of Austrian economics, explained to his constituents that many so-called experts are offering them a false choice: healthy people or an open economy.

“In fact, we must have a healthy economy if we expect to have healthy people,” Jacobs said. “We don’t have a choice.”

In the same week that Knox County experienced its uptick in suicide, the jobless claims across America reached a record-shattering 6.6 million. That broke the previous record by a factor of five.

Flattening the curve may (or may not) be preserving hospital beds and resources, but as Jacobs keenly observes, “The unintended consequence is that we are creating another massive curve, a tidal wave that will overwhelm social services.”

Jacobs may be the most well-spoken politician on this impending national tragedy. In a saner society, he would be heralded as “America’s mayor.” Maybe one day he’ll have a bigger influence on Washington, DC.

Unfortunately, there is a growing stereotype of those who are against the lockdowns around the world. Such a person must not care about the elderly or sick, but only about economic growth. This caricature is based in some truth, sadly, but not at all in the case of Jacobs.

Jacobs does not conceive of the economy as figures on a graph or merely bodies working to keep dollars circulating. Rightly understood, the economy is about people, complete with their hearts and free will.

Two social commentators who get this are Brendan O’Neill and Peter Hitchens, both of the United Kingdom, where a similarly extreme stay-at-home order is in place.

“The problem with catastrophe is actually that you survive it,” Hitchens told O’Neill on the latter’s podcast. “It’s not like nuclear war where everybody’s dead. Economic catastrophe leaves people alive, staring into space, ghosts of their former selves wondering what on earth has happened.”

O’Neill remarked that the economy isn’t about a line going up on a chart, but about how people live, and sometimes whether or not they live.

“What they say is that this is a question of lives versus the economy, and they talk about the economy as if it’s just some kind of abstract machine, just numbers and money and profits, when in fact, the economy is people’s lives,” he said.

Killing the economy is killing people. Those who insist on social distancing and closing down everything “nonessential” should no longer be allowed to defend their position from an untouchable moral high ground.

This article originally appeared at The Advocates.

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A Parable for Our Time

04/09/2020Patrick Barron

One of my fondest books as a child was Doctor at Timberline, by Charles Fox Gardiner. Gardiner was a doctor early in the settlement of western Colorado in the nineteenth century. Each chapter of the book is a self-contained story of his experiences tending to the ailments of mostly men in mining towns, ranches, and lonely cabins high in the Rockies. The book was a gift from my father, who spent his teenage years before the war in Mintern, Colorado, where his father owned and ran a saloon. I passed it along to my son, who enjoyed it, too.

The book has been lost for some time. A pity, since I would love to read it out loud to my grandchildren. There is only one story that I remember distinctly. It involved taming a temperamental horse. A good horse was very valuable property in the that era as long as it was, shall we say, docile. This horse was not. The doctor needed the horse and, instead of trying to sell it, he decided to break its spirit.

The doctor was not a horse trainer or bronco buster, so he decided on a plan to teach the horse who was boss. The first thing he did was separate the horse from his other horses into a small corral, where the horse could not see others of his kind. He did not let the horse out of this small corral. Then he cut the its water and feed ration so drastically that the horse almost starved. The doctor slowly increased the horse's ration, eventually leading it out of its solitary confinement to graze and to rejoin the remuda.

Needless to say, the doctor broke the horse's rebellious spirit, and it became completely willing to do whatever the doctor demanded.

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What Governors Can Do

04/08/2020Jeff Deist

Which state has the courage to become the Sweden of the US, and take a different (read: better, freer) approach to coronavirus?

As of yesterday, five US states remain at least reasonably "open" in terms of their implemented measures to fight the pandemic. Arkansas, Nebraska, and South Dakota have no state orders in place closing businesses and forcing residents to stay home, while Iowa and North Dakota shut down "nonessential" businesses but have not issued stay-at-home orders.

Three states, Oklahoma, Wyoming, and Utah, have partial lockdowns in place.

The other forty-two states have varying orders in place, and some regions such as the San Francisco Bay area have issued their own stricter shutdown policies. Population-wise, nearly 95 percent of all Americans today live under some kind of restrictions on movement and business, decreed either statewide or by counties and cities.

There is a tremendous opportunity here for state and local politicians to distinguish themselves. South Dakota governor Kristi Noem in particular has been steadfast in resisting political pressure to order a statewide lockdown, and surely most Americans readily understand how sparsely populated Western states might approach a pandemic very differently than big urban cities.

What should that approach look like? Here are some broad brushstrokes: 

  • First, one brave governor (or county supervisor, mayor, etc.) gets the ball rolling by forming an impromptu coalition of states interested in staying open or reopening. Political pressure to go along with other states is strong, and the federal government has a long and sordid history of bullying states into compliance with national edicts using the carrot and the stick. The Trump administration thus far has been surprisingly reluctant to issue a nationwide shutdown, and governors looking for daylight should seize on this. They will need each other to stand against the tide—see, e.g., this broadside, against Noem.
  • Hold a press conference to announce the coalition, pick a marketable name for the effort (something like "South Dakota—Open for Business!"), and hold weekly calls open to media. Discuss conditions, options, and ideas, but make it clear that each state is wholly independent and that decisions are necessarily localized—this is not an interstate compact.
  • Announce guidelines, not orders, to citizens along these lines: people over seventy are strongly encouraged to self-quarantine in a strict manner. Those over fifty who have existing medical vulnerabilities to the virus are encouraged to do the same. Healthy people under fifty are welcome to return to daily activities but are strongly encouraged to wear masks (proven to be effective in several Asian countries). Of course many residents will self-quarantine regardless, and some businesses will choose to shut down regardless, per their individual choices. 
  • Reopen government courts, and set a deadline of sixty or ninety days hence for resumption of contract enforcement (including evictions). Ask the state bar association to set up statewide centers for landlords and tenants to meet and renegotiate—using realistic numbers—rental agreements. Hard-line landlords can go to court, and hard-line tenants can refuse payment, but evictions benefit neither party in the immediate term.
  • In stages, reopen public schools and universities based on local conditions. Hold parental votes online to determine whether each school district will continue online classes or revert to physical attendance.
  • Announce that restaurants, bars, and retail outlets are open as usual, with the strong caveat that provable cases of virus transmittal will be heard in state courts under a broad doctrine of premises liability. This will encourage the kind of measures by owners that have been seen in Taiwan and Singapore, ranging from using digital thermometers at store entrances to relentless scrubbing of surfaces in restaurants.
  • Immediately bid out a statewide insurance claims facility for coronavirus deaths so that in worst case scenarios families will be compensated for loss of loved ones. Insist that payments are retroactive to cover deaths prior to the bid, and use the model of airlines after crashes (quick payouts, little paperwork, claims personnel with good bedside manner). Payouts of $1 million would not be impossible to insure against in low-population states, where deaths likely will remain well under five thousand. Insurers themselves can go to the reinsurance markets, and insurance companies would have every incentive to test, treat, and take measures necessary to keep citizens alive. They would become de facto partners when it comes to securing medical equipment, hospital beds, and personnel. Insurance companies also would have a strong incentive, unlike politicians, to determine what constitutes death "from" the virus as opposed to death with the virus simply present in the body. Use bond revenue (discussed below) to cover premiums.
  • Immediately bid out to pharmaceutical companies for a supply of hydroxychloroquine, azithromycin, and other promising drugs. Eliminate unnecessary state restrictions on prescribing and dispensing such drugs, and consider making them available over the counter until infections subside. Distribute them widely across the state, and charge break-even (cheap) prices for generic versions.
  • Issue state bonds for sale to private equity investors, hedge funds, foundations, and individuals. Take a deep breath, and secure them with real estate owned by the state—make government, rather than taxpayers, sacrifice for once! Price them aggressively, with higher than market rates of interest (but not junk bond rates). Make these bonds nontaxable by the issuing state itself, both with respect to income and capital gains. Use the funds to provide insurance, medical equipment, hospital capacity, testing centers, and protective gear as needed.  
  • Encourage regional airlines, or major airlines serving the state, to relocate aircraft there and resume "domestic" flights (and/or flights between "open" states). 

None of these ideas is particularly difficult to implement per se, but do any governors have the political will to do so? They should if they take an honest look at the landscape of a country that is coming unglued. Every day there is less and less to lose by trying something different. In a crisis, bold usually wins. So the choice at present appears to be bold freedom or bold tyranny.

Americans are reconsidering federalism and even nullification in an era of intensely polarized anti-Trump sentiment. The Left argues for soft secession in the form of "Bluexit" from the hated red states; conservatives such as Angelo Codevilla call for strategic defiance of the feds in what he terms a "Cold Civil War." Golden State governor Gavin Newsome even recently referred to California as a "nation-state," and why not? With 40 million people, a huge economy, tourism, Hollywood and Silicon Valley, ports and coastlines, and major universities, not to mention beaches, deserts, and mountains, the state easily could be an independent nation.

We were already in uncharted territory, but the coronavirus truly laid bare the deep and intolerable political divisions wracking our country. Governor Noem and others could begin the healing process now, literally and figuratively, by showing us a way forward without DC. The virus could be the catalyst for a new map of America.

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