Why Are College Tuitions Skyrocketing?

I just read this unintentionally amusing article:

http://www.reuters.com/article/politicsNews/idUSN2245020820071022

Here’s the one-sentence summary of the article: college tuitions (and student loans) are rapidly increasing and legislators are going to “do something” about it.

What exactly legislators think they will accomplish by legislating the hell out of the student loan industry is beyond me. Of course, they don’t intend to accomplish anything; they only want to appear as if they’re doing something – and distract people’s attention from the real problem. The real problem has nothing to do with student loans, or even with colleges. The real problem is that the Federal Reserve is siphoning away the value of the dollar.

In a free market with a stable money supply, prices generally fall across all industries over time. Unfortunately, we do not have a stable money supply (we don’t have a free market, either, but that’s a topic for another day). Our money supply increases at an astonishing – and increasing – rate (check out this frightening graph from the Federal Reserve), which makes the dollars in our wallets increasingly valueless; more dollars floating around means that prices get bid up commensurately.

You might be thinking that prices have fallen or stayed flat for a lot of things. This is true, but if you think about it a little more you’ll realize that prices are stable or falling only for those goods imported from countries with incredibly low costs of labor. Prices for those items we must produce domestically (either because they aren’t easily transportable, like many services, or because of legal prohibitions, as is the case with sugar) suffer the unmitigated price effect of our inflating money supply.

In other words, the cost of college in the United States (and of a whole lot of other goods and services) isn’t ever coming back down, regardless of whatever asinine laws legislators manage to cook up. Get ready for a ride.

Revitalizing Unilateral Contracts

If you hadn’t heard, Google and the X-Prize Foundation announced a new competition a month or two back:

http://www.googlelunarxprize.org/

The first private group to put a robotic rover on the moon and drive it around wins $20,000,000. Pretty cool.

Past prizes offered by the X-Prize Foundation have resulted in amazing feats of innovation. In the Ansari X-Prize competition, for instance, Scaled Composites (the winner) engaged in the first privately-funded human spaceflight. During the course of a few short years, highly-motivated individuals transformed the space industry; private human spaceflight had been the exclusive province of a few dozen government employees, but because of the Ansari X-Prize, ordinary blokes are now only a few years away from being able to experience space first-hand.

These prizes are an efficient and effective way harnessing the creative, entrepreneurial spirit of the best and brightest the world has to offer. Whatever NASA might have accomplished during its existence, what more might have been accomplished if NASA’s budgets from every year were directed to these sorts of prizes rather than to a giant, creaking bureaucracy?

Why not rely on prizes to accomplish other goals? For instance, the U.S. government currently spends tens of billions of dollars every year on medical R&D to cure cancer and various diseases. Do you think that, if this money was instead divided up into prize purses for various development milestones (e.g., the first party to develop a cure for pancreatic cancer that meets specified requirements and standards receives a prize of $X), more diseases would be cured, or fewer? The U.S. government spends over half a trillion dollars on its military every year. What if the U.S. government took just ten percent of that (still over $50 billion!) and, instead of spending it on adventures in Afghanistan and Iraq, offered it to whoever hands over Osama bin Laden, dead or alive? Do you think someone close to bin Laden would rat him out for that much money? Me too.

Prizes like these are what courts refer to as “unilateral contracts.” Unilateral contracts are contracts where only one party is obligated to perform. Google offered to pay a prize to the first person to drive around on the moon, and so it is obligated to pay the prize when the condition is met – but nobody else is obligated to do a damn thing.

Courts tend to disfavor unilateral contracts, deeming them to be unfair – and sometimes sticking the offeror with liability that, by the terms of its promise, it did not expect to have. Why are unilateral contracts viewed with suspicion? Pure paternalism: “these poor people worked so hard, but all of the time, energy, and money they expended was wasted! We can’t let them go home empty-handed!”

Never mind the fact that the performing parties know full-well and ahead of time that there was a risk involved. Never mind the fact that, if the performing party doesn’t like this risk, he or she can attempt to negotiate some type of security – or walk away from the offer altogether.

Courts should stop second-guessing our ability to look out for ourselves – doing so only discourages free people from self-organizing to solve problems in ways far more effective and efficient than can be done by central planners. And most importantly, prizes – unlike government bureaucracies – don’t depend on institutionalized theft (i.e., taxation).

Water Restrictions: A Dumb Solution to Droughts

In case you haven’t heard, a severe drought is currently blighting the southeastern United States:

http://wdef.com/news/…

Per usual, cities and counties and states are dealing with the situation by pleading for people not to water their lawns and by threatening mandatory water restrictions. These democratically-elected tormentors will NOT permit – or even mention – the one simple change that would resolve the problem entirely: removing the laws and regulations that prevent the price of water from adjusting upwards.

When prices are legally prohibited from rising in response to reduced supply, demand outstrips supply and there are shortages. However, if the price is then allowed to adjust upwards to its equilibrium price, consumers adjust (typically, reduce) the amount of the good they want to buy. In other words, if the price of water were to go up, as it would in a free market, consumers of water would wash their cars less, shorten their showers, and maybe decide against putting in new swimming pools (or against refilling existing ones). Consumers will do so because they know they will pay a high price when their next water bill shows up. Compare this to mandatory water restrictions, which involve a fine only in the unlikely even the user gets caught – people take the chance, and shortages continue.

In any event, its simply wrong to prevent, by force (i.e., law), a person from selling water at whatever price a willing buyer can be found. Conversely, it’s wrong to use or threaten force to stop people from using water they pay for. Whether the ends of these types of laws are well-intended (a questionable premise) does not erase the unavoidable fact that the means are immoral.

The Quotable Rothbard

I recently began reading Murray Rothbard’s For A New Liberty: The Libertarian Manifesto. If you’re not familiar with Rothbard, a one-sentence description of him might be “the most brilliant and articulate proponent of individual liberty the world has ever seen.” As I read For A New Liberty I am overwhelmed at the amount of wonderful, quotable material regarding libertarianism. Here is my favorite so far:

The libertarian refuses to give the State the moral sanction to commit actions that almost everyone agrees would be immoral, illegal, and criminal if committed by any person or group in society. The libertarian, in short, insists on applying the general moral law to everyone, and makes no special exemptions for any person or group. But if we look at the State naked, as it were, we see that it is universally allowed, and even encouraged, to commit all the acts which even nonlibertarians concede are reprehensible crimes. The State habitually commits mass murder, which it calls “war,” or sometimes “suppression of subversion”; the State engages in enslavement into its military forces, which it calls “conscription’”; and it lives and has its being in the practices of forcible theft, which it calls “taxation.” The libertarian insists that whether or not such practices are supported by the majority of the population is not germane to their nature: that, regardless of popular sanction, War is Murder, Conscription is Slavery, and Taxation is Robbery. The libertarian, in short, is almost the child in the fable, pointing out insistently that the emperor has no clothes.

More to follow.

Should You Be Able to Kill Someone For Talking Smack About You?

Defamation occurs when one person says something about another person that (i) is untrue and (ii) harms the other person’s reputation. Defamation is legally actionable, meaning that we each have the legal right to protect our reputation by force. Why “force”? Because we can go to a court to seek damages and use the force of law to enjoin the defamatory activity. If the defamer ignores the injunction or refuses to pay up, law enforcement gets involved. If law enforcement is resisted, the defamer can end up dead or imprisoned.

So, if you talk smack about someone, he or she has the right to kill you – in a roundabout sort of way.

You may be thinking, “well, the defamer brought it on himself by not stopping the defamatory activity, or by resisting police!” However, if the defamer actually has the right (the natural right, if not legal one) to say whatever he or she wants to say (since it is not an act or threat of violence against the property or physical person of another), then law enforcement is actually initiating unprovoked violence against the defamer. The defamer has a right of self-defense… which, if exercised, results in a bad end for the defamer.

I’d suggest that the proper enforcement mechanism against liars is to harness the internet to share information about them. Of course, that’s impossible under our current legal system because of all manner of laws, including the defamation laws I talk about above, privacy laws, employment laws, etc.

If people knew that dishonest dealings could result in ostracism (e.g., reduced job opportunities, increased costs of doing business), they would be discouraged from such anti-social behavior far more than they would be by the threat of a lawsuit; because the legal system is so expensive and unpredictable, most people don’t bother with it unless the defendant has deep pockets that the plaintiff can plunder.

In other words, existing laws muck up what would be a free, self-organizing system, which prompts the passage of additional laws, which in turn muck up the system even more, which prompts the passage of more laws, so on and so forth ad nauseum. Of course, the same could be said about virtually every area of law.

Deserted Island Albums

Sorry I’ve been absent for the last few weeks – I’ve been super busy traveling and taking care of some other business. More on that another time!

Today’s post has nothing to do with liberty or law. (Which probably makes it ten times more likely that you’re actually going to read it.)

I was in the shower this morning doing a bit of soul searching – you know, really pondering the important things in life. If I were stranded on a deserted island (presumably one that had electricity and a CD player), and I could only have five music CDs, which ones would I bring? After much contemplation, I have decided upon:

1. Depeche Mode: Ultra (1997)

Most would say that Violator is DM’s best album (and they might be right), but Ultra is my favorite. The first half of this album is untouchable, from the eery Barrel of a Gun to It’s No Good’s bad ass bass line to the textured guitar hooks of Useless. (The second half is no slouch, either.) If you liked Violator (you know, “Enjoy the Silence” and “Personal Jesus”) you’d probably love Ultra.

2. Sting: Mercury Falling (1996)

You’ve probably heard this album’s “I Hung My Head” or “I’m So Happy I Can’t Stop Crying” or their remakes (Johnny Cash remade IHMH, Sting and Toby Keith later recorded a duet of ISHICSC). I’m not sure whether this is truly as phenomenal an album as I think it is or I just have some unique personal appreciation of it, but I encourage you to give it a listen.

3. Nine Inch Nails: Pretty Hate Machine (1989)

Back in high school, I rear-ended somebody while driving around listening to PHM. As a result, I stopped listening to NIN for 10 years. Seriously. Luckily I rediscovered how frickin’ good NIN is and picked up their later albums. As a bit of trivia, Trent Reznor recorded PHM while working as a janitor – yep, PHM is where it all began for NIN.

4. Erasure: Wild! (1989)

Erasure is near and dear to my heart, and Wild! takes the crown as my favorite Erasure album. It’s moody, dancy, and timeless. Per usual, Vince Clark’s brilliant songwriting + Andy Bell’s amazing voice = pure Erasure-y goodness.

5. David Bowie: Best of Bowie

I’m a newcomer to Bowie, but I can see why he’s still a legend after nearly four decades of making music. His greatest hits albums spans about 7 genres of music, and each song equally gives the impression of being definitive and archetypal.

A close call for number 5 was Dave Matthews Band: Crash. I think Crash, of all of DMB’s albums, captures the best balance of fun and melancholy. But, so sad, too bad, it’s not going with me.

What about you, my three readers? What would be your deserted island albums?

Tasers: Old and Busted

The new hotness: pain guns.

Somalia: Anarchy Without Chaos?

I strongly encourage you to read this fascinating article on the state of affairs in Somalia, a nation that has had no central government in over 15 years:

http://www.mises.org/story/2701

Criminal Law Should Be Abolished…

…or, more specifically, subsumed into the law of torts. The law of torts addresses aggression against a party’s person or property. Force is appropriate only in response to aggression against one’s person or property, which is the exact purpose and scope of the law of torts. In contrast, criminal law – despite ostensibly protecting individuals against aggression – also penalizes actions that do not invade anyone else’s person or property (e.g., sex between consenting adults; smoking marijuana; buying alcohol on Sunday). Criminal law also further victimizes the victim by forcing the victim to pay, through taxation, for trials and imprisonment that the victim may not have even wished for but had no right to control or prevent.

Part of the fundamental problem with criminal law is that no one really agrees on what the point of criminal law actually is. To make the victim whole? To rehabilitate the aggressor? To punish wrongdoing? To prevent future crimes? Needless to say, these are four very different goals that can be (and typically are) mutually exclusive. As you might expect, our criminal law demonstrates varying levels of commitment to all of these goals and accomplishes none of them. Victims are not made whole; they are merely expected to show up to provide testimony. Rehabilitation is rare and accidental. Punishment results mainly from the sexual and other abuse endured in prison – an especially dehumanizing form of torture that is tacitly approved of by voters, politicians, and jailers alike. Prevention of future crimes is a joke; if prisons were intended to protect us from those unfit for society, prisoners would never be let out – and if almost all prisoners are sent there with the expectation that they will eventually return to society, then what exactly is prison’s purpose?

Criminal law does not fulfill any hypothetical raison d’être. Instead of making victims worse off – and creating new victims along the way – criminal law should give way to a victim-controlled process that builds upon existing tort law. More on how that might be done another time.

More Thoughts on Property Rights and Pollution

Yesterday I posted about returning to a property-rights approach to analyzing pollution. Continuing on that theme, let’s suppose that Congress abolishes all federal environmental laws and regulations (including the right-to-pollute paradigm enforced by the EPA), and that the states, given this new lack of federal preemption, all decide to treat pollution like any other trespass or nuisance by letting state courts apply common-law principles to disputes. Let’s also assume that states do the right thing and treat all legal claims as freely transferable (if I own a legal claim against someone, why does anyone else have the right to prohibit my selling it?).

Environmentalists should wish for this to happen… they could go around buying the rights of property owners to sue polluters and make careers out of making factories and farms pay for their invasions of everyone else’s property.

Let’s stop depending on government to protect our property (a non sequitur if there ever was one) and start freeing property owners to protect themselves – they’ll find creative ways to do it.