Private Prisons: Justice Department Ban Is a Bad Idea | National Review

Private Prisons: Justice Department Ban Is a Bad Idea | National Review

The Department of Justice’s recent decision that the federal Bureau of Prisons should wind down its private-prison contracting was apparently based on private prisons’ bad record of safety and security violations relative to their public counterparts. It turns out, though, that the DOJ’s understanding of private prisons’ record is informed by a serious over-reading of faulty comparative studies, in particular a recent study by the Office of the Inspector General.

As a result of this over-reading, the federal government — and any states that follow the federal government’s lead — may not be able to take advantage of the power of contracting to provide incentives for good behavior.

* * *

First, let’s look at how the IG’s report compared public and private prisons. The report took the 14 private federal prisons and matched them with “14 comparable BOP institutions.” What made the public prisons “comparable” was that they housed male inmates with “the same security level (low), similar population sizes, and similar geographical locations.”

Early on in the IG’s report, the IG compares “annual per capita costs” for public and private prisons. Over fiscal years 2011–14, these costs range from $23,780 to $25,251 for public prisons, and from $21,838 to $23,003 for private prisons — an apparent savings of about 3 percent to 12 percent for private prisons. Wisely, though, the IG’s report cautions against drawing any conclusions from these numbers. There are many reasons a direct price comparison is problematic, but the report stresses one important reason in particular:

We were unable to compare the overall costs of incarceration between BOP institutions and contract prisons in part because of the different nature of the inmate populations and programs offered in those facilities.

How different were the inmate populations? Elsewhere, the IG explains:

As of January 2014, inmates incarcerated in private facilities were primarily non-U.S. citizens with 72.1 percent from Mexico, while the selected BOP institutions had an average of 11.8 percent non-U.S. citizens.

Every prison researcher understands that the demographic makeup of a prison is important, especially in a prison environment where gangs based on ethnic or racial affiliation play an important role. This is why the best empirical studies try to compare prisons that are matched in terms of demographic makeup. The IG report didn’t control for demographics, and it recognized that this made cost comparisons inadvisable.

The report goes on to compare how the public sector stacked up against the private sector based on eight measures of “safety and security.” Private prisons did better in two of those measures: urinalysis drug testing and sexual misconduct (both inmate-to-inmate and inmate-to-staff). But in the other six areas — contraband, reports of incidents, lockdowns, inmate discipline, grievances, and telephone monitoring — “the contract prisons had more incidents per capita than the BOP institutions.”

Remember, though, that the report was “unable to evaluate all of the factors that contributed to the underlying data, including the effect of inmate demographics.” So perhaps we should refrain from drawing any conclusions from this simple comparison of raw numbers?

Moreover, some of these measures wouldn’t really tell us much even if they did lend themselves more readily to direct comparison.

Consider, for instance, the contraband measures — cell phones, weapons, tobacco, and drugs confiscated. Private prisons had more contraband confiscations than the public prisons, but that can be interpreted both ways: Are the private prisons worse because more contraband was found? Or are the private prisons better because they try harder to find contraband? The trouble is that we don’t know the true amount of contraband; we just know about contraband confiscation, and that’s something that’s particularly manipulable by prison officials. In fact, I know one great way to keep your contraband numbers down: just stop searching for it.

Same goes for grievances: If private prisons have more grievances filed than public prisons, does it mean there’s more to complain about in private prisons? Or does it mean that private prisons make grievance forms more available or that inmates at private prisons are less concerned about retaliation if they complain? Again, we don’t know the true numbers of things to be aggrieved about; we just know the numbers of grievances filed.

* * *

On balance, though, one might think that the IG report is fairly harmless. Yes, it compares prisons that probably aren’t comparable, and some of what it measures has no obvious relationship to actual quality of confinement. No, we shouldn’t take it terribly seriously as a comparative study, since there already are better studies out there. But overall it does an okay job of not overstating its results; its basic recommendation is a call for further study.

Even a harmless study can lead to harmful changes, however. The Justice Department, not sharing the IG report’s caution, went ahead and read too much into its results. Where the IG’s office hedged its conclusions with caveats about comparability and merely called for greater investigation, the DOJ memo made broad claims:

Private prisons . . . compare poorly to our own Bureau facilities. They simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department’s Office of Inspector General, they do not maintain the same level of safety and security.

Based on this slim reed, Deputy AG Sally Yates ordered the BOP to “either decline to renew” contracts as they expired “or substantially reduce [their] scope.” It’s not clear whether the DOJ was relying on studies other than the IG report, but if it was, I’d like to see those studies: All available evidence does little to suggest that private prisons are worse than public prisons overall, or that they cost more.

* * *

What will the result of this be? Let’s assume that (probable future) President Clinton maintains the DOJ’s new policy, and that BOP private-prison contracting winds down. This will affect roughly 25,000 inmates — about 15 percent of the total number of federal prisoners — who will have to be moved to BOP facilities. Of course, the DOJ’s policy is limited to the federal system — the states’ privatization policies are unaffected, except to the extent they want to follow the federal example. On average, states keep only 7 percent of their prisoners in private prisons, or 90,000 private state prisoners in all.

Will this be harmless? If private and public prisons don’t differ much on quality, that means the quality of confinement shouldn’t change much. If private prisons save some money, the cost of confinement should go up, though maybe not by much. It’s not clear whether either sector has an edge in reducing recidivism, so who knows what difference this will make on rates of re-offense.

The far greater problem is what might have been. Prisons have begun experimenting with performance measures and performance-based contracting — which, surprisingly, is almost unprecedented. These new metrics could offer substantial possibilities for improvement in prison conditions in the future. Monetary incentives could work in the public sector — think of performance-based bonuses for public-prison wardens — but the private sector is probably best positioned to take advantage of them: If there’s one thing the private sector is good at, it’s trying to make money in any way it can. The DOJ could have directed the BOP to take a “mend it, don’t end it” approach by truly making an effort to encourage higher quality through better contracting. The BOP could have taken the lead in developing state-of-the-art prison-contracting practices and helping to spread good performance measures nationwide. But that’s unlikely to happen now.

Buying TOMS shoes is a terrible way to help poor people - Vox

Buying TOMS shoes is a terrible way to help poor people - Vox

TOMS, of course, is an accessory company that markets itself like a charity: When you buy TOMS products, the company makes an in-kind donation to a person in need. When someone buys a pair of TOMS shoes in the US, for instance, the company donates a pair of shoes to a child in a poor country like Haiti.

....

But the truth is that while that kind of messaging is evidently a great way to sell trendy shoes, or to otherwise raise money, it’s not a very good way to do charity. At best, it’s inefficient: It focuses on programs that waste your hard-earned cash by failing to do the most good per dollar. At worst, it promotes a view of the world's poor as helpless, ineffective people passively waiting for trinkets from shoe-buying Americans. While the shoes themselves probably won't lead to any kind of disaster, that worldview can lead to bad policies and real, serious harm.

....

On the surface, this idea makes sense. Shoes seem important! They protect your feet and are a basic requirement for participation in a lot of public life. Not having them sure sounds like a big problem. Getting free shoes sure sounds like a great solution.

....

It might be easy to miss, but there are two really big logical leaps in the story that products like TOMS tell you: that the hardships the poor kids were facing were due to their lack of shoes, and that giving them shoes was therefore the best way to address those problems. Neither of these, unfortunately, is correct.

When TOMS worked with an outside research team to evaluate the impact of its shoe donations, the researchers were unable to find a way in which the shoes had much of a substantive impact on poor kids' lives. The kids liked the shoes, and used them to play outside a little more often. But there was no significant improvement in their school attendance or self-esteem.

In fact, the data suggested that receiving the shoes caused the children to spend a bit less time on homework. (Perhaps because they were too busy playing outside?) It also made the children slightly more likely to feel dependent on outside aid — a learned dependency that can be damaging.

....

There’s a different approach. Instead of giving shoes, why not give poor people cash? If shoes are really what the recipients need, then they can go ahead and buy them. But if not, their options are wide open: They can put the money toward medicine or a crop loan or school fees. Or they can use it to invest in some kind of income-generating venture, such as livestock or a small business.

If you’re like most people, you’re probably feeling some discomfort with that idea. If you give shoes to a kid, then at least you know the kid has shoes. But if you give money, what’s to stop it from being wasted?

The message of TOMS-style giving is that it’s fine for you to make the decision about what the recipient needs, because you (and by extension, TOMS) are smart and know what’s best. That’s an appealing message, because it carries all kinds of really flattering implications about how clever and responsible you are, and it puts you in control. But research very strongly suggests that in addition to being condescending, it’s a bad way to run an aid program.

Take, for instance, a recent study by Columbia political science professor Chris Blattman. He and his team ran an experiment that gave poor women in northern Uganda cash to start small businesses. One group got cash plus expert advice on starting a business, but a comparison group got cash alone. After a year, both groups were doing better.

Part of the point of the experiment was to see if the benefits of the expert advice outweighed the costs of bringing them on. It did not: Over the period that the study measured, the program would have achieved a greater impact if it had skipped the experts and handed out the extra cash to recipients. Likewise, the charity GiveDirectly has seen very positive — and efficient — results from its programs of directly sending cash.

TOMS hasn’t run a similar study comparing its own programs with cash. But there’s at least some evidence that recipients of TOMS shoes really want money instead: the many anecdotal reports of TOMS turning up in markets in the countries where they’re donated. Those TOMS recipients are turning the shoe-donation program into a cash-donation program on their own — just a really inefficient one, in which the costs of developing and delivering the shoes are essentially wasted.

Dear Ultra-Rich Man : The Freeman : Foundation for Economic Education

Dear Ultra-Rich Man : The Freeman : Foundation for Economic Education

You probably don’t know me, but unlike you, I am one of the 99 percent, a proud and unapologetic advocate of free and open markets. I’m writing you because your letter to other rich guys has gone viral. Each time I saw it, I thought, “Somebody should respond to this guy.” I got tired of waiting. So I hope you’ll read this. I leave your prose in italics so I can address your major points in turn.

Amazon’s “Dark Side” Is a Bright Spot for Workers and Consumers | The Beacon

Amazon’s “Dark Side” Is a Bright Spot for Workers and Consumers | The Beacon

Before the advent of Wal-Mart, rural America was a retail desert. Small shops, limited product availability and, yes, “hometown service”. But the prices of most items were high because the only alternative to shopping locally was to drive to the nearest city or order through the Sears or JC Penney catalog and depend on timely delivery by the US mail in, it was to be hoped, an undamaged package. The downside of local retail shops (limited options and high prices) fell most heavily on low-income households, which may not have had an automobile or could not afford to take time off work to shop at larger urban retailers or even at local merchants, which typically closed at 5 p.m. Wal-Mart solved both problems in one fell swoop.

Sure, local retailers suffered losses of business and some were forced into bankruptcy, but consumers (the only group whose welfare matters in a free market economy) won big-time. Amazon has generated benefits for consumers many times larger than Sam Walton ever dreamt of.

But what about the jobs that disappeared in local retail outlets as Amazon and Wal-Mart drove costs (and prices) down by inventing markedly more efficient distribution networks and negotiating lower prices with manufacturers and other suppliers on behalf of millions of consumers with little bargaining power of their own? An economic system’s chief purpose is to create prosperity (wealth), not jobs. Creating jobs—at the point of a gun, as Josef Stalin proved, or as FDR did by drafting millions of men to shoulder arms against the Axis powers—is easy; creating wealth is not. Prosperity materializes only if existing resources (land, labor and capital) can be utilized more efficiently, squeezing out “waste” and redundancy so that resources can be released from current employments and redirected by alert entrepreneurs to the production of new products that consumers may not even know they want (an iPhone ten years ago, for example) until they become available.

Hightower bemoans the working conditions in Amazon’s warehouses, a few of which literally become sweatshops during hot summer months. I am willing to bet, however, that if the people employed in one of Amazon’s “dehumanizing hives” (his phrase) were asked whether they wanted to quit their jobs, not one hand would be raised, especially so in an economy with an unemployment rate still hovering around six percent and a rate of underemployment twice that figure.

Hightower, like many before him, claims that Amazon’s ability to avoid collecting sales taxes on orders shipped out of state from the company’s Washington state headquarters or from its warehouses located around the United States gives Amazon a tax subsidy ranging “from about 4 to more than 10 percent.” That subsidy, which actually ranges from zero to more than 10 percent (four U.S. states—Delaware, New Hampshire, Montana and Oregon—impose no local or state sales taxes at all), supposedly confers a significant competitive disadvantage on brick-and-mortar retailers, who must remit sales tax receipts to the appropriate state tax authority.

But in making that claim, Hightower ignores taxes paid by FedEx and UPS, which deliver Amazon’s packages to customers’ doorsteps. Those delivery services pay, among others, state and local gasoline taxes and corporate income taxes; their employees pay state and local personal income taxes and spend some of their disposable incomes at local grocery stores and other retail outlets, purchases on which sales taxes are due. So, too, do the owners and employees of Amazon’s warehouses.

Amazon relies increasingly on the U.S. Postal Service to deliver packages to customers’ homes or places of business, especially in rural areas, a relationship that must have been seen by the beleaguered USPS as something like a lifeline thrown to someone going underwater for the third time.

It is true that, like Wal-Mart, Amazon has benefited from tax breaks (“incentives”) offered by local and state governments to lure companies to one particular geographic location rather than another. Handed out to encourage local economic development and the jobs and tax receipts associated with it, such corporate “incentives” are a national scandal, squandering taxpayers’ hard-earned money for dubious benefits. But neither Wal-Mart nor Amazon should be blamed for accepting such incentives, which are offered by politicians who want to claim credit at reelection time for attracting high-profile corporations to their home districts or states. Consumers, by and large, don’t care about the points of origin of their orders, as long as they are delivered when expected, whether from Toledo or Timbuktu.

7 Falsehoods About the Free Market : The Freeman : Foundation for Economic Education

7 Falsehoods About the Free Market : The Freeman : Foundation for Economic Education

Here are a few of the latter that I’ve recently encountered, but there are, of course, plenty more. Some libertarians may not agree with me (at least at first) on all of them.

1) The free market creates scarcity and higher prices. In any economic system—socialist, interventionist, or free market—the quantity of a good will typically not be enough to satisfy demand when the price is zero. In a free market, in which people trade their legitimate claims to those resources, prices will tend to rise or fall to the level where the quantity supplied equals the quantity demanded, and in that way prices help us to cope with scarcity.

2) The free market means the government gives businesses special privileges. This is a very common belief based on the idea that pro-market means pro-business. But the free market is free precisely because it denies special legal privileges to any person or group. People sometimes define “privilege” as any advantage a person or group may have over others.

3) The pre-Obamacare healthcare industry was a free market. Actually, it was a highly interventionist market, as John C. Goodman explains. Similarly, the failures of the housing and financial markets were hardly the result of “free-market policies,” and the same could be said for practically every other sector of the American economy.

4) The free market requires that all valuable resources be privately owned and traded on markets. Even if this was possible, and I’m not convinced that it is, it’s not always the best way to overcome a “tragedy of the commons.” Sometimes the alternatives to individual ownership just work better.

5) The free market encourages racism, homophobia, and other types of bigotry. Now, it’s true that you can be a racist homophobe in a free market, and refuse to live next to a same-sex, interracial couple, or refuse to hire someone because their looks in some way offend you. The consequences of those actions, however, mean that you will tend to pay a higher price for a house or a higher wage to your employees because you’ve deliberately narrowed the range of your choices.

6) The free market is pro-war. It’s true that besides being “the health of the State” and the enemy of liberty, war does benefit some special interests such as businesses that produce the weapons of war. But war undermines the free market in general.

7) The free market is always efficient. The real world is populated by real people who don’t have complete information, who may have bad information, and who may just make mistakes.

#7 – The Free Market Ignores the Poor : The Freeman : Foundation for Economic Education

#7 – The Free Market Ignores the Poor : The Freeman : Foundation for Economic Education

Agreement with the idea of state absolutism follows socialization, appallingly. Why? One does not have to dig very deep for the answer.
Once an activity has been socialized, it is impossible to point out, by concrete example, how men in a free market could better conduct it. How, for instance, can one compare a socialized post office with private postal delivery when the latter has been outlawed? It’s something like trying to explain to a people accustomed only to darkness how things would appear were there light. One can only resort to imaginative construction.
To illustrate the dilemma: During recent years, men and women in free and willing exchange (the free market) have discovered how to deliver the human voice around the earth in one twenty-seventh of a second; how to deliver an event, like a ball game, into everyone’s living room, in color and in motion, at the time it is going on; how to deliver 115 people from Los Angeles to Baltimore in three hours and 19 minutes; how to deliver gas from a hole in Texas to a range in New York at low cost and without subsidy; how to deliver 64 ounces of oil from the Persian Gulf to our Eastern Seaboard—more than half-way around the earth—for less money than government will deliver a one-ounce letter across the street in one’s home town. Yet, such commonplace free market phenomena as these, in the field of delivery, fail to convince most people that “the post” could be left to free market delivery without causing people to suffer.
Now, then, resort to imagination: Imagine that our federal government, at its very inception, had issued an edict to the effect that all boys and girls, from birth to adulthood, were to receive shoes and socks from the federal government “for free.” Next, imagine that this practice of “free shoes and socks” had been going on for lo, these 173 years! Lastly, imagine one of our contemporaries—one with a faith in the wonders of what can be wrought when people are free—saying, “I do not believe that shoes and socks for kids should be a government responsibility. Properly, that is a responsibility of the family. This activity should never have been socialized. It is appropriately a free market activity.”
What, under these circumstances, would be the response to such a stated belief? Based on what we hear on every hand, once an activity has been socialized for even a short time, the common chant would go like this, “Ah, but you would let the poor children go unshod!”
However, in this instance, where the activity has not yet been socialized, we are able to point out that the poor children are better shod in countries where shoes and socks are a family responsibility than in countries where they are a government responsibility. We’re able to demonstrate that the poor children are better shod in countries that are more  free than in countries that are less free.
True, the free market ignores the poor precisely as it does not recognize the wealthy—it is “no respecter of persons.” It is an organizational way of doing things featuring openness, which enables millions of people to cooperate and compete without demanding a preliminary clearance of pedigree, nationality, color, race, religion, or wealth. It demands only that each person abide by voluntary principles, that is, by fair play. The free market means willing exchange; it is impersonal justice in the economic sphere and excludes coercion, plunder, theft, protectionism, subsidies, special favors from those wielding power, and other anti-free market methods by which goods and services change hands. It opens the way for mortals to act morally because they are free to act morally.
Admittedly, human nature is defective, and its imperfections will be reflected in the market (though arguably, no more so than in government). But the free market opens the way for men to operate at their moral best, and all observation confirms that the poor fare better under these circumstances than when the way is closed, as it is under socialism.

Israel’s ‘You Built It’ Culture | FrontPage Magazine

Link: http://frontpagemag.com/2012/daniel-greenfield/israel%E2%80%99s-you-built-it-culture/ (via shareaholic.com)

Most offensively Israel's economic success has kept pace with its transition from socialist collectives to free enterprise, going from a "You didn't build that" culture to a "You built it" culture. While the Palestinian Authority and most of Israel's Muslim neighbors still operate under government monopolies, Israel's tech industry revolution has boosted its international trade while making it possible for a few army or air force veterans to cobble together a company that brings a revolutionary new product to market.
USB flash drives and instant messaging software came out of that "You built it" culture. On the other side of the border malaise and misery, bombs and fanatics, have come out of the economic monopolies wielded by military rulers, tribal leaders and religious despots.

Arthur C. Brooks

Link: http://arthurbrooks.aei.org/ (via shareaholic.com)

Only free enterprise encourages and allows each of us to define our destiny and earn our success. Only free enterprise encourages true fairness based on merit and opportunity. And free enterprise is the only system that can lift up the vulnerable and those who have fallen on hard times by the millions—by rewarding entrepreneurship and encouraging charity.



These three principles — earned success, true fairness and helping those in need — are the foundation of the moral case for free enterprise.



“The Road to Freedom” is the blueprint for defending free enterprise against the powerful forces of big government. This site will take your learning beyond the book so you can join us on the front lines of this critical movement.

The Volokh Conspiracy » Prison Vouchers

Sasha Volokh has a series on the notion of Prison Vouchers. It's associated with a book he's written where he deals with the subject:

I invite the reader to indulge in a thought experiment. What would the world look like if, instead of assigning prisoners to particular prisons bureaucratically, we gave them vouchers, good for one incarceration, that they were required to redeem at a participating prison?

Prison Vouchers: Part 1, Part 2, Part 3, Part 4, Part 5

India’s Voluntary City -- not quite Libertopia, but not Hobbsian, either

India's Voluntary City

via Marginal Revolution by Alex Tabarrok on 6/10/11

Fascinating piece in the NYTimes about a new city in India, a new city of 1.5 million people and more or less no city government.

Gurgaon was widely regarded as an economic wasteland. In 1979, the state of Haryana created Gurgaon by dividing a longstanding political district on the outskirts of New Delhi. One half would revolve around the city of Faridabad, which had an active municipal government, direct rail access to the capital, fertile farmland and a strong industrial base. The other half, Gurgaon, had rocky soil, no local government, no railway link and almost no industrial base.
As an economic competition, it seemed an unfair fight. And it has been: Gurgaon has won, easily. Faridabad has struggled to catch India's modernization wave, while Gurgaon's disadvantages turned out to be advantages, none more important, initially, than the absence of a districtwide government, which meant less red tape capable of choking development.

Gurgaon  has no publicly provided "functioning citywide sewer or drainage system; reliable electricity or water; public sidewalks, adequate parking, decent roads or any citywide system of public transportation." Yet Gurgaon is a magnet for "India's best-educated, English-speaking young professionals," it has 26 shopping malls, seven golf courses, apartment towers, a sports stadium, five-star hotels and "a futuristic commercial hub called Cyber City [that] houses many of the world's most respected corporations." According to one survey, Gurgaon is India's best city to work and live. So how does Gurgaon thrive? It thrives because in the absence of government the private sector has stepped in to provide transportation, utilities, security and more:

From computerized control rooms, Genpact [a major corporation, AT] employees manage 350 private drivers, who travel roughly 60,000 miles every day transporting 10,000 employees. Employees book daily online reservations and receive e-mail or text message "tickets" for their assigned car. In the parking lot, a large L.E.D. screen is posted with rolling lists of cars and their assigned passengers.
And the cars are only the beginning. Faced with regular power failures, Genpact has backup diesel generators capable of producing enough electricity to run the complex for five days (or enough electricity for about 2,000 Indian homes). It has a sewage treatment plant and a post office, which uses only private couriers, since the local postal service is understaffed and unreliable. It has a medical clinic, with a private ambulance, and more than 200 private security guards and five vehicles patrolling the region. It has A.T.M.'s, a cellphone kiosk, a cafeteria and a gym.
"It is a fully finished small city," said Naveen Puri, a Genpact administrator.
…Meanwhile, with Gurgaon's understaffed police force outmatched by such a rapidly growing population, some law-and-order responsibilities have been delegated to the private sector. Nearly 12,000 private security guards work in Gurgaon, and many are pressed into directing traffic on major streets.

Not everything works well, of course. Gurgaon is describe as a city of "private islands." Private oases would be a better term. Within the private oases life is good but in between lies a desolate government desert. Not only are services such as roads and utilities poor, the private oases don't internalize all the externalities so there are problems with common resources such as the water table. It would also be more efficient to have centralized sewage and electricity.
Much of the article is written as a "cautionary tale," the private sector can't do everything and the absence of government has made the city dysfunctional.  I see the situation somewhat differently. The problem is that the original developer didn't go far enough. The original developer, DLF, made a deal to build commercial buildings and apartments but:

… a state agency, the Haryana Urban Development Authority, or HUDA, was supposed to build the infrastructure binding together the city.
And that is where the problems arose. HUDA and other state agencies could not keep up with the pace of construction. The absence of a local government had helped Gurgaon become a leader of India's growth boom. But that absence had also created a dysfunctional city.

Had the original developer been responsible for both the oases and the desert it could have built the power plants, the roads and other infrastructure and made locating in Gurgaon even more desirable than it is now. It is true that a city requires public goods which local governments often do not provide. Charter cities try to get around this problem by importing wholesale a new, higher-quality government. An alternative is to avoid government all together and privatize enough to make the entire city what is in effect a hotel on a grand scale.
But what to do now?  The governments involved are inefficient and often corrupt. We can hope that they will get better in response to the well-educated populace and the incoming corporations but even today, the solution is not simply to hope for better government but to expand on what is working well. The firms that operate the private oases are "small cities," the solution is to make these cities larger.
Connect enough office parks, factories, and apartments, for example, and it will make sense for a private firm to build an efficient electric plant rather than have smaller firms use inefficient and polluting diesel as is the case now. Similarly, Will Rogers once said the solution to congestion was to have business build the roads and government build the cars. In fact, only the former is necessary. Privatize the roads and they will be quickly built and well maintained (yes, they will probably be more expensive than necessary due to some monopoly power but at this point in time that is a second-order problem).
As the private oases reach out and connect with one another most of the kinks will be ironed out. The city is only thirty years old and undergoing a growth spurt, so some problems are to be expected. The big picture, however, is that a modern city has been built from the ground up based almost entirely on private development, it is attracting residents and jobs and leading the country in economic growth. A remarkable achievement.
Addendum: For more historical and contemporary examples on the private provision of public goods see The Voluntary City.
Addendum 2: Matt Yglesias gets it and then makes some interesting comments and critiques.

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The Wheel of the Year: Now available on Amazon Kindle

The Official Manual for Spice Cadets: Now available on Amazon Kindle

Free Enterprise and Fiscal Sanity Aren’t Social Darwinism

Link: http://www.nationalreview.com/corner/295421/free-enterprise-and-fiscal-sanity-aren-t-social-darwinism-jay-w-richards#more (via shareaholic.com)

On Tuesday, President Obama denounced Representative Paul Ryan's budget proposal, which would modestly reduce the rate of growth in the federal budget. Ryan's plan is a "radical vision," says the president, which amounts to "thinly veiled Social Darwinism." Understandably, Ryan has called the comments "surreal," since the Wisconsin Republican seeks to reform entitlements such as Medicare in order to save them. That doesn't sound like Social Darwinism.

In fact, "Social Darwinism" is an old left-wing catch phrase used to disparage free enterprise. Justice Oliver Wendell Holmes reportedly said that one good catch phrase can stop thinking for fifty years. This one certainly has.
In the '80s, former Democratic presidential candidate Walter Mondale criticized Ronald Reagan's economic policies by saying he believed in "social decency, not Social Darwinism."
In the 1950s, historian Richard Hofstadter claimed that 19th-century American businessmen were Social Darwinists. Political scientist John West, however, has shown that Hofstadter's thesis is largely untrue. Such arguments were favored by Darwinist intellectuals such as Herbert Spencer and William Graham Sumner, rather than businessmen and free-market proponents.
"Millionaires are a product of natural selection," argued Sumner, a Yale social scientist. If we find survival of the fittest distasteful, he argued, "we have only one possible alternative, and that is the survival of the unfittest." He criticized welfare programs as an "absurd attempt to make the world over."
Christians and all decent people, in contrast, believe we should care for the poor, the widows, the orphans, the stranger — those who have difficulty providing for themselves. In fact, the Bible teaches this should be an essential concern. So should we oppose free-market competition? Pope Pius XI seemed to many to suggest that when he wrote, "Free competition, though justified and right within limits, cannot be an adequate controlling principle in economic affairs."
However, leading advocates of economic freedom from Adam Smith, F. A. Hayek, and Ludwig von Mises, to Julian Simon and George Gilder, do not commend Social Darwinism, but liberty, human rights, limited government, private property, the coordinating effects of prices, the win-win nature of free exchange, and the creative capacities of entrepreneurs.
The law of the jungle is that there is no law: The strong kill the weak. Economic freedom, in contrast, exists only where rule of law prevails — where people can't kill, steal, and defraud each other, where private property rights are protected and trust is widespread. These laws channel our economic behavior. In a free market, if I buy a hundred dollars worth of groceries from the store of my choice, that means I prefer the groceries to the money, and the grocer prefers the money to the groceries. That's a win-win game, not the Hunger Games.
Cooperation and coordination are just as much a part of the story as is competition. In a free market, prices fluctuate based on supply and demand. This causes goods and services to be distributed where they are most needed and wanted. The demand for sushi in Seattle raises the price restaurants can charge for it, and this "draws" sushi grade salmon and tuna to the Emerald City. For the same reason, sushi doesn't go to waste in small Texas towns where no one likes it.
Because of this market coordination, Americans take it for granted that, ordinarily, when they enter stores, products will be on the shelves. Not so in countries with government monopolies. In the former Soviet Union, extreme shortages and wasteful surpluses were a near-universal experience.
Globally, even sporadic economic freedom has allowed millions of people, in dozens of different companies and countries, to cooperate in producing technological marvels such as the iPad that no one could have built alone. Free markets have provided a greater opportunity for many to leverage their strengths and be lifted out of poverty.
Sure, in free economies, businesses compete against each other for customers. If I shop around for a giant Nerf gun for my daughter and buy it at Target, then Walmart loses my sale. By competing lawfully for customers, however, both Target and Walmart provide better products at lower prices than they would if no such competition existed.
Free markets don't create utopia. Businesses can fail and workers be displaced. In the long run, however, everyone is better off with economic freedom, which includes competition, than with the alternatives — anarchy, monopoly, cronyism, and socialism. By ignoring all this and invoking a catch phrase such as "Social Darwinism," the president is betting that the vast majority of Americans aren't thinking. I'm betting that he's mistaken.

Liberals Are Wrong: Free Market Health Care Is Possible - Megan McArdle - Business - The Atlantic

Liberals Are Wrong: Free Market Health Care Is Possible - Megan McArdle - Business - The Atlantic

Ken Arrow's critique of health care markets

Arrow identified five principal distortions in the market for health care services and products:

1. Unpredictability. Arrow points out that people's needs for health care are unpredictable, unlike other basic expenses like food and clothing. But while we can skip the occasional meal or sale at Old Navy, our need for health care can be far more urgently necessary.
2. Barriers to entry. Arrow notes that you can't just set up shop on the side of a road and practice medicine: you must have a license to be a physician, and gaining that license requires years of expensive schooling and training. As a result of this constraint on the supply of physicians, there is a constraint on the supply of medical services.
3. The importance of trust. Trust is a key component of the doctor-patient relationship; if a surgeon makes a serious mistake during an operation, for example, the patient may die or become permanently disabled. The patient must trust that the surgeon knows what he's doing and can't test-drive the surgery beforehand.
4. Asymmetrical information. Doctors usually know far more about medicine than do their patients. Therefore, the consumer of medical services (the patient) is at a serious disadvantage relative to the seller (the doctor). Patients are therefore vulnerable to exploitation. In addition, third-party payors of medical bills, such as insurers or the government, are that much more removed from the particulars of a given case and unable to effectively supervise medical practice.
5. Idiosyncrasies of payment. Unusually, patients pay for health care after, not before, it is received (that is, if they pay for health care at all). Because patients don't see the bill until after the non-refundable service has been consumed, and because patients are given little information about price and cost, patients and payors are rarely able to shop around for a medical service based on price and value. Compounding this problem is the fact that patients rarely pay for their care directly.

Arrow wasn't wrong to point out these distortions. Where Arrow goes wrong is in contending that these distortions are unusual, or unique to health care. Indeed, Arrow's prescriptions for addressing health care's distorted market involve...further distortion. 

The Failure of Market Failure | The Freeman

http://www.thefreemanonline.org/headline/failure-of-market-failure/

People object that there's no such thing as a free market.  (Therefore, I suppose, we need not worry about how unfree a market may become.) 

The proper response to that objection is, "so what?"  What's important is now how close to error-free a system is, but how good its error correcting mechanisms are.

...In the technical literature a market failure refers to any situation in which a market does not produce the "Pareto-optimal, general equilibrium" outcome.  Standard neoclassical theory argues that "perfectly competitive" markets will produce outcomes in which resources are allocated to their highest valued uses and no one person can be made better off without making at least one other person worse off.  In general equilibrium, prices of all goods are exactly equal to the marginal cost of producing them and all households maximize their utility.  In addition, all firms are profit maximizing, but the level of real profits earned is zero, as no reallocation of resources could improve on the current one.

Unreal Conditions

Strictly speaking, any market outcome short of this reflects a "market failure" in that markets have failed to produce the ideal outcome that theory predicts.  However, in the real world the conditions necessary to produce a general-equilibrium outcome are not remotely feasible: perfect knowledge, homogeneous products, and a large number of small firms in every market with none able to influence price.  Given that such a world is not possible, the charge of market failure boils down to the claim that markets don't produce a level of "perfection" that is unattainable under any realistic circumstances.

In this sense of the term, markets "fail" constantly.  It takes an Austrian perspective to understand that these sorts of imperfections (a better term than "failure") are not only part and parcel of real markets; they also are what drive entrepreneurship and competition to find ways to improve outcomes.  In other words, what markets do best is enable people to spot imperfections and attempt to improve on them, even as those attempts at improvement (whether successful or not) lead to new imperfections.  Once we realize that people aren't fully informed, that we don't know what the ideal product should look like, and that we don't know what the optimal firm size is, we understand that these deviations from the ideal are not failures but opportunities.  The effort to improve market outcomes is the entrepreneurship that lies at the heart of the competitive market.

Dear Left: Corporatism Is Your Fault

Link:
<https://www.google.com/reader/view/?hl=en&tab=my#stream/user%2F11614470787439797294%2Flabel%2FJJR>

Dear members of the moderate left,

America is suffering from rampant, run-away corporatism and crony capitalism. We are increasingly a plutocracy in which government serves the interests of elite financiers and CEOs at the expense of everyone else.

You know this and you complain loudly about it. But the problem is your fault. You caused this state of affairs. Stop it.

Unlike we libertarianish people, you people actually hold and have been holding significant political power in the US over the past 50 years. What have you done with this power? You've greased the corporatist machine every chance you've gotten. You've made things worse, not better. Our current problems are your fault. You need to stop.

We told you this would happen, but you wouldn't listen. You complain, rightly, that regulatory agencies are controlled by the very corporations they are supposed to constrain. Well, yeah, we told you that would happen. When you create power—and you people love to create power—the unscrupulous seek to capture that power for their personal benefit. Time and time again, they succeed. We told you that would happen, and we gave you an accurate account of how it would happen.

You complain, perhaps rightly, that corporations are just too big. Well, yeah, we told you that would happen. When you create complicated tax codes, complicated regulatory regimes, and complicated licensing rules, these regulations naturally select for larger and larger corporations. We told you that would happen. Of course, these increasingly large corporations then capture these rules, codes, and regulations to disadvantage their competitors and exploit the rest of us. We told you that would happen.

It's not rocket science. It's public choice economics. You recognized, rightly, that public choice economics was a threat to your ideology. So, you didn't listen, because you didn't want to be wrong. Public choice predicted that the government programs you created with the goal of fixing problems would often instead exacerbate those problems. Well, the evidence is in. You were wrong and public choice theory was right. If you have any decency, it is time to admit you were wrong and change. Stop making things worse.

You spent the past fifty years empowering corporations and the most unscrupulous of the rich. You created rampant moral hazard in the financial sector. You created the system that socializes risks but privatizes profit. You created the system that creates a revolving door between Obama's staff and Goldman Sachs. There's a reason why Wall Street throws money at Obama. It's because you, the moderate left, are Wall Street's biggest supporters. Oh, I know you complain about Wall Street. But your actions speak louder than your words.

SOURCE

Paul Ryan's Speech To The Heritage Foundation | RealClearPolitics

Paul Ryan's Speech To The Heritage Foundation | RealClearPolitics

Friedman's Four Ways

Friedman's Four Ways

via The American Spectator and The Spectacle Blog by Ron Ross on 10/5/11

Sometimes the explanation for vexing problems is clear as can be after you see it. A perfect example is an observation made by the late Milton Friedman in a 2004 interview with Fox News:

There are four ways to spend money. You can spend your own money on yourself. When you do that, why you really watch out for what you're doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well then, I'm not so careful about the content of the present, but I'm very careful about the cost. Then, I can spend somebody else's money on myself. And if I spend somebody else's money on myself, then I'm going to have a good lunch! Finally, I can spend somebody else's money on somebody else. And if I spend somebody else's money on somebody else, I'm not concerned about how much it costs, and I'm not concerned about what I get. And that's government. And that's close to 40 percent of our national income.

It would be nearly impossible to exaggerate how many of our current economic problems are explained by Friedman's four ways of spending money. Think of the four ways in the order they're presented as S1, S2, S3, and S4. As Friedman explains, the effectiveness of how money is spent declines inexorably as you move from S1 to S4.
The important demarcation line in ways money can be spent is between S2 and S3. In other words, the issue that matters most is your money versus someone else's money. If you're spending your own money on someone else, your spouse or children, for example, you still take the expenditure seriously. You still pay a price if you don't look for bargains.
A new Gallup survey finds that "Americans believe, on average, that the federal government wastes 51 cents of every tax dollar, similar to a year ago, but up significantly from 46 cents a decade ago and from an average 43 cents three decades ago." This is a good example of "the wisdom of crowds." The trend shows that the crowd is wising up regarding the implications of gargantuan government.
The survey respondents are correct in their assessment of how government spends money, and you need go no further than Friedman's distinctions of how to spend money in understanding the source of the problem.
My guess would be that many of the respondents would think the government doesn't necessarily need to waste half the public's money. The problem, however, is it's the nature of the beast. Because of the realities Friedman refers to, the government will never be able to spend money as effectively as the private sector.
The problems associated with how the government spends money are not the result of who's running the government. The problems are systemic. Unless government is seriously downsized, waste and inefficiency will remain problems no matter which party is in power.
The source of the problem can be further clarified by keeping in mind the observations of another economist, Steven Landsburg: "Most of economics can be summarized in four words: People respond to incentives." (That's the first sentence in his excellent book, The Armchair Economist.)
The incentives for spending money wisely and efficiently are simply too weak when it's not your own money. It's no skin off your nose if the benefits of the expenditure are a small fraction of the costs. When it's your own funds being used, you will not only restrict your expenditures to things having more benefits than costs, you will choose the ones you think will have the highest ratio of benefits to costs.
When it's your own money you're spending, it costs you something when you spend it foolishly. That's not to say that we never spend our own money foolishly, but it comes out of our own hides when we do. When we spend our own money foolishly, we're left with less money to spend well. It's a self-policing structure. Of course, your incentives are even stronger when you worked hard for the money in question.
When a politician or bureaucrat spends taxpayer money it's treated essentially a freebie. It's only natural that taxpayer money gets treated like monopoly money. Politicians and bureaucrats have virtually no incentive to care about the value of an expenditure or its cost. This is a profound disadvantage of public spending that will never, ever go away.
Contrary to the straw-man accusations of some liberals, conservatives do not advocate zero government expenditures. Conservatives definitely are not anarchists. Nevertheless, the inherent and inescapable inferiority of spending someone else's money on someone else is a strong argument for minimizing the size of government. The public's opinion that the amount of government waste has been increasing parallels the exponential growth of government.
The Solyndra fiasco is another recent confirmation of Friedman's observations. Despite alarm bells going off, the Obama administration pushed the doomed endeavor forward. Why not? It wasn't their money, after all. Because it has now becoming so notorious, it appears the administration may pay a political price. Nevertheless, half a billion dollars of taxpayer money has gone down a rat hole. Unfortunately, Solyndra is the rule, not the exception. Absurdly generous public employee pension plans are another predictable result of spending someone else's money.
Friedman said that the fourth spending alternative is how we spend forty percent of GDP. He was, I think, referring only to budgetary expenditures. Forty percent is a lot. Unfortunately, it understates the full extent of the problem.
The vast regulatory apparatus of the government is basically a system of spending someone else's money on someone else. It is estimated that government regulations currently cost the economy $1.7 trillion a year. For example, requiring a private business owner to spend hundreds of thousands of dollars to comply with the American with Disabilities Act is a clear case of spending someone else's money on someone else. Requiring a private business to spend a million dollars doing an "environmental impact report" is a clear example of spending someone else's money on someone else. Spending a million dollars or more on an EIR, in fact, is an example of spending someone else's money for no one and for nothing. Minimum wage laws likewise are a case of spending someone else's money on someone else.
The billions of hours Americans spend each year preparing their tax returns is a case of spending someone else's time on someone else. Time is money, as they say, and most people I know complain a lot more about a scarcity of time than they do of money.
When you spend your own money (or time) on yourself, or for your loved ones, the process is essentially self-regulating. The incentives are automatically aligned with waste minimization. When such incentives are not present, elaborate and complex systems of rules and artificial punishments must be put in their place. There can never be enough rules and regulations to match the effectiveness and elegance of the self-regulating market.

Consumer based medicine

Good or bad? People, or Rules? - Megan McArdle - Business - The Atlantic

Poverty is the norm

http://www.thefreemanonline.org/columns/pursuit-of-happiness/poverty-is-easy-to-explain/

 

Since collectivists often trivialize private property rights, they are worth elaborating. When property rights are held privately the costs and benefits of decisions are concentrated in the individual decision maker; with collectively held property rights they are dispersed across society. For example, private property forces homeowners to take into account the effect of their current decisions on the future value of their homes, because that value depends, among other things, on how long the property will provide housing services. Thus privately owned property holds one's personal wealth hostage to doing the socially responsible thing—economizing scarce resources.

Contrast these incentives to those of collective ownership. When the government owns the house, the individual has less incentive to take care of it simply because he does not capture the full benefit of his efforts. It is dispersed across society instead. The costs of neglecting the house are similarly spread. You do not have to be a rocket scientist to predict that under these circumstances, less care will be taken.

Nor is nominal collective ownership the only force that weakens social responsibility. When government taxes property, it changes the ownership characteristics. If government were to impose a 75 percent tax on a person selling his house, it would reduce his incentive to use the house wisely.

This argument applies to all activities, including work and investment. Whatever lowers the return from or raises the cost of an investment reduces incentives to make that investment in the first place. This applies to investment in human as well as physical capital—that is, those activities that raise the productive capacity of individuals.

--

The Wheel of the Year: Now available on Amazon Kindle

The Official Manual for Spice Cadets: Now available on Amazon Kindle

education freedom

Liberty For All » Six soundbites for education freedom
Responses to six issues people have about privatized education.

The Lizards Defend That Blooming Idiot, Rand Paul

The Lizards Defend That Blooming Idiot, Rand Paul

Before diving into the substance of Dr. Rand Paul's remarks on the 1964 Civil Rights Act, let's get one thing straight: Paul was a fool for blundering into that tar pit -- or allowing MSNBC's Rachel Maddow to lure him into it like a drunken farmer chasing a corpse candle into a bog. Worse, once hip deep in the big muddy, he contracted a bad case of hoof-in-mouth disease and couldn't defend his position.

But just because one shallow thinker of today was unable to defend the liberty position doesn't make indefensible a principle famously argued by Barry Goldwater in the 1964 presidential election campaign... no matter what Hugh Hewitt says.

It's hard to nail down exactly what Paul's position actually is; I think it's the same as Goldwater's: Where state or federal policy either directly discriminates on the basis of race or else mandates private racial discrimination, it is absolutely appropriate to pass a federal law overturning such "institutional racialism;" however, such a law should not and constitutionally cannot reach beyond that point to purely private and voluntary racial discrimination, which (alas) the final version of the Act did.

That's why Goldwater voted against it after having supported earlier versions that did not outlaw private, volunatry discrimination; and fair warning, that is my objection to the Act, as well.

Here's my best collage of Paul's lengthy, meandering, and unfocused response to Maddow:

MADDOW: Do you think that a private business has the right to say we don't serve black people?

PAUL: Yes. I'm not in favor of any discrimination of any form. I would never belong to any club that excluded anybody for race. We still do have private clubs in America that can discriminate based on race.

But I think what's important about this debate is not written into any specific "gotcha" on this, but asking the question: what about freedom of speech? Should we limit speech from people we find abhorrent? Should we limit racists from speaking?

I don't want to be associated with those people, but I also don't want to limit their speech in any way in the sense that we tolerate boorish and uncivilized behavior because that's one of the things freedom requires is that we allow people to be boorish and uncivilized, but that doesn't mean we approve of it.....

MADDOW: I mean, the Civil Rights Act was the federal government stepping in to protect civil rights because they weren't otherwise being protected. It wasn't a hypothetical. There were businesses that were saying black people cannot be served here and the federal government stepped in and said, no, you actually don't have that choice to make. The federal government is coming in and saying you can't make that choice as a business owner.

Which side of that debate would you put yourself on?

PAUL: In the totality of it, I'm in favor of the federal government being involved in civil rights and that's, you know, mostly what the Civil Rights Act was about.... Most of the things [Martin Luther King, jr.] was fighting were laws. He was fighting Jim Crow laws. He was fighting legalized and institutional racism. And I'd be right there with him....

MADDOW: As I understand it, what you`re saying, [is that] the portion of the Civil Rights Act that said you can't actually have segregated lunch counters here at your private business [is the one title of the Civil Rights Act you reject].... Until the year 2000, Bob Jones University, a private institution, had a ban on interracial dating at their school, their private institution. If Bob Jones University wanted to bring that back now, would you support their right to do so?

PAUL: Well, I think it's interesting because the debate involves more than just that, because the debate also involves a lot of court cases with regard to the commerce clause. For example, right now, many states and many gun organizations are saying they have a right to carry a gun in a public restaurant because a public restaurant is not a private restaurant. Therefore, they have a right to carry their gun in there and that the restaurant has no right to have rules to their restaurant.

So, you see how this could be turned on many liberal observers who want to excoriate me on this. Then to be consistent, they'd have to say, oh, well, yes, absolutely, you've got your right to carry your gun anywhere because it's a public place.

So, you see, when you blur the distinction between public and private, there are problems. When you blur the distinction between public and private ownership, there really is a problem. A lot of this was settled a long time ago and isn't being debated anymore....

MADDOW: Let's say there's a town right now and the owner of the town's swimming club says we're not going to allow black kids at our pool, and the owner of the bowling alley in town says, we're not actually going to allow black patrons, and the owner of the skating rink in town says, we're not going to allow black people to skate here.

And you may think that's abhorrent and you may think that's bad business. But unless it's illegal, there's nothing to stop that -- there's nothing under your world view to stop the country from re-segregating like we were before the Civil Rights Act of 1964 --

PAUL: Right.

It goes on an on, but the basic points are all here. Note that Paul brings up a valid analogy -- should gun owners in a gun-friendly state be allowed to bring guns into a restaurant, even against the will of the restaurant's owner?

Paul says no. But if the owner is allowed the private-property liberty to control who brings a weapon into his facility, then under what principle can he not control who he allows in, period? The analogy was valid, but it was (again) foolishly chosen: No listener not already predisposed to the Goldwater, Paul, and Lizardian point of view will understand his point.

Allow me to help Dr. Paul out of the mire; again, bear in mind I'm defending his position, not the hamfisted way he expressed it.

Rachel Maddow's fundamental confusion is shared by all liberals and about 80% of conservatives (e.g., Hugh Hewitt): Under Jim Crow, the problem wasn't that individual owners "decided" to racially discriminate; state laws required them to discriminate.

In a free market, some-but-not-all restaurants will discriminate, while others won't. Those that do cut off much of their customer base -- not just the potential customers who are black but also those whites who vehemently oppose racial discrimination; their non-discriminating competitors get the extra business instead. Thus, a discriminatory stance creates an automatic "economic penalty": Racism becomes an expensive luxury that most business owners simply cannot afford.

(The same punishment operates whenever an owner makes an economic decision on a completely non-economic basis, such as not serving old people or divesting stock from companies that do business with Israel; that's one of the magical effects of a free market!)

After a while, many racists will decide they need the money more than they need to discriminate; they will take down the "whites only" sign, no matter how much it pains them, or risk going out of business. A few will maintain their discrimination until the bitter end; so it goes.

But wait, what about the other side of the coin? Some dyed in the wool racists would only frequent those establishments that discriminate. They will boycott the integrated businesses and patronize only the racists.

Frankly, I doubt that such persons would have been the majority in any state even back in the days of Jim Crow: If they had been the majority, there would have been no need for laws to force them to do what they wanted to do in the first place. The very fact that the state legislature had to enact Jim Crow laws testifies that residents weren't discriminating, they weren't keeping blacks "in their places."

Walter Williams writes about this in his wonderful book, South Africa's War Against Capitalism: The Afrikaaners enacted Apartheid laws precisely because at the turn of the twentieth century, businesses (from railroads to mines to hotels), left to their own free will, were rapidly integrating the races. Economic necessity was breaking down the barriers; blacks offered their services for lower wages than whites, and employers snapped them up to save labor costs. Soon the whites had to lower their own wages to compete; at the same time, as blacks gained more experience, they raised their demands... eventually, the two races met in the middle, more or less.

Funnily enough, one of the first bills the Kreugerites enacted forced businesses to pay blacks and whites exactly the same wages, "equal pay for equal work." Sound familiar? The effect was to remove the financial incentive to hire blacks, because their labor was no longer any bargain.

With the market mechanisms removed, it was easy to threaten or bully businesses into hiring and promoting only whites. (Most of the racist coercion was committed by the socialist labor unions, by the way... quelle surprise!) Thus, even in Apartheid South Africa, the free market acted to integrate and equalize the races, while the government -- "for their own good" -- acted to segregate and discriminate between them -- "Apartheid" literally means "apart-ness".

In any event, I steadfastly believe that even in the deep South in the 1950s, far more potential customers would choose to patronize a business on the basis of quality and price -- than on the basis of whether that business segregated black from white. Over the long run (which would likely be only a few years), that would drive out the adamant racists: Businesses operate on such a small margin that even a small economic advantage towards race neutrality would have an oversized effect on a business' viability.

Unless, that is, the state steps in and makes such racial discrimination mandatory; that is what we mean by "Jim Crow." If the state interferes with the market, forcing everyone to discriminate, it kills the market's ability to drive behavior away from irrelevant (and offensive) absurdities like racial discrimination: I can no longer compete with a "whites only" lunchcounter by advertising "we serve everybody!" I would be arrested and my business shut down if I tried.

That robs me of my liberty, my property rights; and that is the ground on which the Civil Rights Act should have been fought. Let freedom reign, and allow the market to do its holy job of driving the fools and haters out of business.

Of course, there will always be pockets where there really are more racists than sons and daughters of liberty; in those dark nooks, they will open their whites-only swimming pools and bowling alleys and ice-skating rinks. What do we do about that?

We let them. If they want to segregate themselves away from the rest of society, let them huddle together and fester. So long as we all have freedom of mobility and association, the 99% of the country that is decent will isolate the tiny fraction who are morally putrid; and the good citizens will open their own pools, alleys, and rinks open to everyone. After all, there's gold in them thar businesses.

The racist kooks will become curiosities, monkeys in a zoo: We'll point and laugh at the funny and now-powerless haters, just as we do whenever the Ku Klux Klan musters its eight or nine hoodwinkers to stand on the corner holding up racist, and typically illiterate signs.

That's the American way, the path of liberty. Just as we don't deny Klansmen, Black Panthers, or MEChA (Movimiento Estudiantil Chicano de Aztlán) their freedom of speech, we should also not deny them their right to serve only "their own kind," if that's what they want.

Nor do we prevent the rest of us from expressing displeasure by patronizing their competitors instead.

Had Rand Paul really thought this all through aforehand, he could have answered Rachel Maddow much more powerfully and directly, like this:

MADDOW: Do you think that a private business has the right to say we don't serve black people?

LIZARDS: Sure -- if they want to cut their own economic throats.

MADDOW: What do you mean? The Civil Rights Act was the federal government stepping in to protect civil rights because they weren't otherwise being protected. It wasn't a hypothetical. There were businesses that were saying black people cannot be served here and the federal government stepped in and said, no, you actually don't have that choice to make. The federal government is coming in and saying you can't make that choice as a business owner.

How about desegregating lunch counters? Lunch counters. Walgreen's lunch counters, were you in favor of that? Possibly? Because the government got involved?

LIZARDS: The problem wasn't that Jim Crow wasn't protecting civil rights, Rachel. The great evil of Jim Crow laws was that they forced even non-racists to racially discriminate.

In a free market, I could open a lunchcounter right across the street from a "whites only" Walgreens; and in my front window, I could put a sign that says "we serve everybody!" I have faith in the American people, Southerners included. Let me compete with the racists without the state government or federal government stacking the deck, and I guarantee you I'll drive the racial haters out of business and out of town.

That way, we'll lose the racists -- good riddance -- but we'll keep liberty and the sanctity of private property, the cornerstone of America. That's the same sanctity of private property, by the way, that allows a homeowner to sell his house to a black family, no matter what the ancient, entrenched political class in the state capital demand.

MADDOW: Mr. Reptile, until the year 2000, Bob Jones University, a private institution, had a ban on interracial dating at their school, their private institution. If Bob Jones University wanted to bring that back now, would you support their right to do so?

LIZARDS: Bob Jones University didn't drop its policy as a result of the Civil Rights Act; President Bob Jones dropped the policy in the year 2000, because the adverse publicity of its racist stance was hurting the university. That's an important point, Rachel: The market was hurting Bob Jones badly enough that it forced them to change their stupid, evil policy.

The most the feds ever did to BJU was to take away its religious tax exemption. I've long argued that when an insitution requests special dispensation that amounts to an endorsement of that institution -- such as a religious tax exemption that secular private universities don't get -- the government has every right to make that privilege contingent upon meeting the base-level standards of decency that American society demands. I would just as vigorously oppose giving a tax exemption to Mohammed Atta Martyrdom University, no matter how sincerely held was its jihadist religous curriculum.

MADDOW: Let's say there's a town right now and the owner of the town's swimming club says we're not going to allow black kids at our pool, and the owner of the bowling alley in town says, we're not actually going to allow black patrons, and the owner of the skating rink in town says, we're not going to allow black people to skate here.

And you may think that's abhorrent and you may think that's bad business. But unless it's illegal, there's nothing to stop that -- there's nothing under your world view to stop the country from re-segregating like we were before the Civil Rights Act of 1964.

LIZARDS: Nothing but the justice and common decency of the American people! In the first place, this isn't the 1950s. The whole world has come a long way in the last half century, wouldn't you say? And no country in the world is less racist than the United States: Not a single state in the Union has even one pair of racists in its legislature to conspire together to re-segregate the country.

But frankly, Rachel, I don't even believe any state in the deep South had a majority of racist citizens even in 1964. What they had was an oligarchy of bitter, hate-filled, septuagenarian racists who occupied state legislatures like the Nazis occupied the Reichstag. They were corrupt, elections were rigged, and they couldn't be ousted from their seats except perhaps by dynamite... or by joining Republican Party!

But that's no longer true, and it hasn't been since I was in grade school. Oh yes, there is still racial discrimination in the United States; but today, as in the 50s and 60s, it comes from the left side of the aisle, from race-obsessed Democrats and leftists allied with radical Islam. But so long as we can keep the Left away from the levers of power, I'm confident America will never re-segregate.

I am quite certain this would have been much, much harder to spin as racist, pro-segregation, and anti-civil rights. And in any event, it sure would have made more exciting political theater!