Friday, June 26, 2009

When is a Monopoly & Price Fixing a Good Thing?

I am starting this posting differently because in the process of writing about the hypocritical economic policies being advocated by the Obama administration and the liberal members of Congress related to the Cap and Trade and socialized medicine proposals, I have realized that capitalism must be thoroughly defended and explained. It has become popular to vilify, denigrate and blame the free market for all of society’s economic problems in order to gain support for new policies that concentrate on government planning. As such, I will begin a series of blog postings related to capitalism/the free market and the fallacies and effects of government planning on our economy and individual liberties. Here are a few of the upcoming topics: (1) The Moral Justification for Capitalism; (2) Why Big Business Supports Obama’s Regulation of the Free Market; (3) Pres. Obama’s Policy of Planned Competition/Capitalism. But, these topics are for another day; back to the topic at hand.

President Obama’s health care reform rhetoric and proposed policy agenda has proposed a clever, yet dangerous twist on applying government control within the framework of competition: Obama proposes to create a public health care option operated and funded by taxpayer funds that will compete with private health insurance companies. On the surface, it sounds like a good idea to many people because it sounds like you still have competition and the free market available to all with the government merely competing as a new member of the group for the benefit of all Americans. However, as pointed out by many economists, the government insurance plan will have many political and economic advantages over private insurance companies (gov’t agency has no need to make money and can run at a loss for decades at the expense of the taxpayer, as well as exclude itself from harsh regulations imposed on the private sector – thereby placing the private sector at a distinct disadvantage) that will ultimately create a government-run health care monopoly.

The health care proposals of President Obama are merely an example of a broader point I am attempting to make: Why is a monopoly and the practice of price fixing a criminal act punishable by prison time when a private business is involved but instantly becomes admirable policy enacted for the “public interest” when instituted and directed by government?

In order to understand why the public accepts such a hypocritical argument by bureaucrats, we have to understand that, over time, the public has accepted a baseless statement: businesses operate solely on a basis of “excessive greed and irresponsibility” and policies enacted by bureaucrats are admirable attempts by “public servants” with “good intentions” to look out for the common people.

It is useful to consider the government’s own arguments against the use of monopolies and price fixing (Anti-trust laws) when determining the government’s culpability. The logic behind the Sherman Act and other anti-trust laws as expressed by the U.S. Supreme Court was that business decisions “directed to (take) control of the market by suppression of competition” should be made illegal. “The end sought (by anti-trust laws) was the prevention of restraints to free competition in business and commercial transactions which tended to restrict production, raise prices, or otherwise control the market to the detriment of purchasers or consumers of goods and services, all of which had come to be regarded as a special form of public injury.” The primary purpose of the Sherman Act and similar laws was to protect the consumer from manipulation of the market by businesses that would result in higher prices and the squeezing out of competitors, thereby limiting the effectiveness of the free market. Additionally, the Sherman Act was so concerned about the effect a monopoly would have on the consumer and other competitors that it made it a felony to show “intent to monopolize,” as expressed in Section 2: “Every person who shall monopolize, or attempt to monopolize, or combine to conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony. . .”

If it has been determined by government that price fixing and monopolies are detrimental to the consumer and a “restraint to free competition,” what danger does a government program pose when it possesses inherent advantages that would have the end effect of creating an industry monopoly (a government-run health care monopoly)?

To gain a full understanding of the danger of such a government policy, it is necessary to examine the difference between economic and political power. Ayn Rand’s analysis is illustrative: “Economic power is exercised by means of a positive – offering men a reward, an incentive, a payment, a value; political power is exercised by means of a negative – threat of punishment, injury, imprisonment, alienation, destruction. The businessman’s tool is values; the politician’s tool is fear. The sole means by which a government can grow big is physical force; the sole means by which a business can grow big, in a free economy, is productive achievement.” Rand makes the insightful point that the only entity in society that holds a legal monopoly on the use of force is the government. Businesses and individuals have no legal power to force individuals to act against their own choice. However, “the nature of governmental action is coercive action.” The public must recognize that when businesses make an error of economic judgment, that business suffers the consequences; when the government makes an error of political judgment, the entire country suffers the consequences.

Perhaps the most important point to take from the government’s proposal is that just as bureaucrats consistently propose legislation from which they exclude themselves (excluding Congress from the proposed government-run health care monopoly), so too they vilify, criminalize and regulate business under the disguise of “protecting the public,” only to accept and implement the same monopolistic policies for the “protection of the public.” Which is more dangerous and capable of corruption and control, business or government?

Sunday, June 7, 2009

Social Justice: The Goal of President Obama and Sotomayor’s Application of Empathy and Race

On May 1, 2009, President Obama was very clear in his conclusion that in determining a qualified candidate for the U.S. Supreme Court, the “quality of empathy, of understanding and identifying with people’s hopes and struggles, (w)as an essential ingredient for arriving at just decision(s) and outcomes.” Pres. Obama further elaborated his thoughts on empathy as a necessary quality to justice on July 17, 2007 during a speech to Planned Parenthood Action Fund: “We need somebody who’s got the heart, the empathy, to recognize what it’s like to be a young teenage mom, the empathy to understand what it’s like to be poor, or African-American, or gay, or disabled, or old -- and that’s the criteria by which I’m going to select my judges.”

In the same spirit as her husband, Michelle Obama has voiced her views regarding race and her opinion that an “(African-American) separationist may better understand the desperation of their (Black lower class) situation and feel more hopeless about a resolution as opposed to an integrationist who is ignorant to their plight.”

In an attempt to establish a presence of empathy on the U.S. Supreme Court, President Obama has chosen Sonia Sotomayor, an appellate judge who has repeatedly asserted that she “embraces the view that ‘Our experiences as women and people of color affect our decisions’ and explicitly disagrees with Justice O’Connor’s assessment that a wise old man and a wise old woman would reach the same conclusion. According to Judge Sotomayor, ‘I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a while male who hasn’t lived that life.’ Judge Sotomayor challenges the belief that the law needs to be knowable and predictable, borrowing from the early 20th century Legal Realists who rejected the idea that judging involves the impartial application of neutral principles.”

With such a judicial philosophy in mind, the conservative Republicans involved in the confirmation hearings must focus on what Sotomayor’s ultimate goal is when applying empathy, race and economic status in the evaluation of cases. Why would empathy be required when applying the law to a set of facts? Social justice is the ultimate goal of President Obama and Judge Sotomayor.

Social justice has long been a goal of many philosophers and politicians and originated as a moral duty by each individual to assist individuals and groups in receiving fair treatment and an opportunity to an impartial share of the benefits of society. However, Socialism imposed a political duty on governments to ensure social justice to identified groups or individuals deemed to have experienced some form of injustice. Social justice, as a political duty, has long been defined by results. All of the named people groups Pres. Obama and Judge Sotomayor identified were all groups statistically deemed to have experienced some form of discrimination or stigma: unwed teenage mothers, the poor, gay, disabled, elderly, African-Americans, Latina women, etc. Additionally, Judge Sotomayor has explicitly identified which groups should receive empathy and at whose expense: wise Latina women would make better decisions than white males presumably because minority women would be able to account for how judicial decisions would affect minorities and other groups that have experienced some form of discrimination or injustice.

What the concept of social justice, as applied in the judicial context, truly means is that judges must, in the words of the renowned liberal constitutional law professor Lawrence Tribe, “get into the kind of controversial substantive choices that the process components are so anxious to leave to the electorate and its representatives.” More specifically, the written law is “neither irrelevant NOR all-determining and the U.S. Constitution is to be interpreted broadly as moral values to be applied rather than as explicit rules to follow.” Under Sotomayor’s view, empathy is a necessary ingredient in judicial decision-making because the decisions being made are not mere issues of law, but also issues of morality and equality.

An essential component in ensuring social justice is achieved is the belief that assistance to the less fortunate must come not through merely the means of charity, but by the transfer of benefits to the less fortunate from the more affluent of society. This transfer of wealth is viewed as a matter of justice – “individuals are entitled to some share of the wealth produced by society, simply by virtue of being members of that society, and irrespective of any individual contributions made or not made to the production of that wealth.” Empathy would be an empowering quality to an activist judge seeking social justice through redistribution of wealth and property rights in the application of the law.

Oliver Wendell Holmes opposed “confounding morality with law” and held the essential function of the law was to preserve society and strongly opposed the application of empathy or other “emotional applications,” as this quote illustrates: “The law takes no account of the infinite varieties of temperament, intellect, and education which makes the internal character of a given act so different in different men. It does not attempt to see men as God sees them.” Justice Holmes knew that to apply empathy and other emotional arguments to law was to imply a drastic change in the judicial process under the disguise of a mere preference for one group over another, with the end result being an expansion of the power of government to make “discretionary determinations in domains once exempt from its power.” Finally, to assume the judicial branch or any other branch is capable of producing specific social results is presupposing “a mastery of social details inherently beyond our ken.”

The point of this post was to point out that although the nomination of Judge Sotomayor may ultimately be confirmed due to the make-up of Congress, conservatives in Congress must use this time as an opportunity to teach and expose the true ideology behind the application of empathy, race and economic status to the judiciary. Questions should require Sotomayor to illustrate how empathy would result in better decisions and how race and an understanding of certain groups of individuals would result in more “just” decisions. If the questions are tailored appropriately, the answers from Sotomayor will illustrate that her adherence to such principles of judicial activism are the means by which she wishes to ensure social justice is achieved at the expense of the law.