Sunday, October 23, 2005

The State Anti-Insures

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 The State Anti-Insures

by Michael S. Rozeff
by Michael S. Rozeff

Most everyone wants security. We don’t want to die from bird flu or West Nile virus. We don’t want to run out of money in old age. We don’t want to eat bad food or take a bad drug. We don’t want to lose our jobs, be attacked by a robber, get flooded out, lose eyesight or a limb, or be blown up by a bomb. We do not want dangers. They pose risks of loss. We’d like to reduce them, eliminate them if we can.

There are hundreds of perils, and the State promises to get rid of them for us. The Constitution has as one goal to "insure domestic tranquility." Does the State do this? Michael Leavitt, the Secretary of the United States Department of Health and Human Services, says "We are not prepared for a [bird flu] pandemic." Critics say that the federal government is years behind the curve, that Bush spent more money on abstinence education than on getting flu vaccine. The State anti-insures.

Under the State, security falls. We’re not ready for bird flu because there are only four companies to make flu vaccine, down from 26 in 1957. We can make vaccines, but we don’t. The Food and Drug Administration has seen to that. To get a vaccine approved by these foot-dragging safety hawks runs the costs up too high. The State’s idea of safety is disconnected from our ideas of safety.

To the FDA, the safest vaccine is none. Then no one will ever incur the small chance of coming down with flu after being vaccinated. Then no FDA bureaucrat will feel the heat. To us who value our lives, we’ll accept one chance in a trillion or a billion or a million or even one chance in a thousand. We each value safety at its worth to us personally. The State values safety by the criteria of its bureaucrats who make up the rules. The State anti-insures.

Lawsuits scare off vaccine firms, and the State runs the justice system. The State’s Vaccines for Children Program buys cut-rate vaccines. Make the price low enough with a single dominant buyer and no one will sell. The State makes sure we do not have enough vaccines. It anti-insures.

Would you like to spray mosquitoes with DDT to prevent West Nile virus? It’s effective and safe. People in countries facing rampant malaria and other diseases could benefit from DDT. Many States say "No, you can’t use it." They anti-insure.

The answer is simple even if the solution is not. Get rid of the anti-insurer. Get rid of the FDA. Its modern form began in 1906, and that means we can live without it as our great grandfathers did. We do not need their edicts, decree, fiats, commands or rules. We can decide for ourselves by word-of-mouth, by vendor reputation, by what doctors say or aided, if we wish, by private companies that provide testing, certification, risk assessments, recommendations, labeling, or any other services the FDA supposedly gives us.

The ups and downs of business cause risks. Employees can lose their jobs. Businesses can lose money. Investors can lose wealth. Changes in price levels pose risks to investors too. One of the State’s answers is the Fed, begun in 1913.

The Federal Reserve System (Fed) has missions of a stable economy, a stable price level and full employment. Actually, it creates economic instability, inflation, and fluctuating employment levels. The Fed anti-insures.

The Act that originated the Fed called for them to "furnish an elastic currency." Instead of adjusting it up and down to keep its shape, the adjustment was one-way – loss of value. No Fed, simply using gold as money, would have been better. The Act sought "to establish a more effective supervision of banking in the United States." Depositors had seen to that before the Fed. The Fed anti-insured this nicely. It helped thousands of banks fail in 1930–1932.

As with the FDA, the answer is simple. Get rid of the Fed. Its check-clearing services can be privatized. Whatever certification of bank risk it does can be done by private companies. We don’t need it to create money. There are plenty of firms eager to do that.

Every war brings heartbreaking loss. The United States was formed in part to avoid the calamity of war. But practically the opposite of every aim in the Constitution’s preamble became reality by 1860 when North and South fought. The "more perfect union" fell apart. "Justice" went away. "Tranquility" disappeared. The "common defense" became invasion of one side by the other. The securing of the "blessings of liberty to ourselves and our posterity" became the trend toward the all-powerful State. The Constitution became the anti-Constitution. The State did its job as anti-insurer.

The United States Department of Defense (1947) started out as the War Department in 1789. Defense became offense and expansion before too long. From 1914 onwards, the United States has fought one war after another, mostly on foreign soil. The Department of Defense proudly proclaims that it is America’s "oldest company, largest company, busiest company, most successful company." Our rulers have helped by starting or provoking wars. Defense has become offense. The Bush Doctrine is the apotheosis of anti-peace, anti-security, and anti-safety. The State anti-insures.

The answers to these evils go way beyond replacing Bush. The answer is to get rid of the Department of Defense. Downsize it, then downsize it even more. If it’s doing anything worthwhile, break it up into pieces and privatize it. The ultimate goal should be free-market defense.

FEMA anti-insures emergencies. The U.S. Department of Education anti-insures education. The U.S. Department of Energy anti-insures an efficient production of energy. The State anti-insures.

Bye-bye to these agencies and the rest like them.

Freedom is a founding value. The President talks about freedom a great deal, saying "the defense of freedom is worth our sacrifice. We do know the love of freedom is the mightiest force in history." Freedom typically brings with it free markets. State laws do the opposite. The State anti-insures freedom and free markets by existing.

Every law, enforced with violence as it must be, disrupts many a person’s ability to plan his life and future freely. This directly causes losses. Law-making increases the risk of loss. Law-making reduces security. Laws anti-insure freedom.

Then too the State changes laws frequently and capriciously. This upsets plans and reduces security.

The State’s taxes prevent individuals from spending on their own. Then they are unable to buy the security they want. Taxes anti-insure security.

Whoever said "No man’s life, liberty or property are safe while the legislature is in session" was a wise man. I say, "No man’s life, liberty or property are safe while the State exists." The State anti-insures. Answer? Get rid of the State.

October 21, 2005

Michael S. Rozeff [send him mail] is the Louis M. Jacobs Professor of Finance at University at Buffalo.

Copyright © 2005


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