Price Sensitivity in Healthcare

“$14,322 for my x-ray? Those doctors are crooks.” Family members utter government propaganda from time to time, and it is up to us to debunk their bunk.

Forget that it is immoral to force people to subsidize programs, forget that health care is a product– no more mystical than any other. These things are true, of course, but let’s look at why exactly health care is so expensive.

When you see prices that are bananas, you just know there is something wrong with the pricing of the product. The whole idea of the market is that consumers drive prices down because they always want to get a deal– nobody wants to get screwed– and prices reflect what they will pay for the product today. But how much they are willing to pay is much higher when they are not really paying it.

Why Healthcare is so Expensive

Although it is always fun to rail against service providers and especially doctors, who wear those ridiculously presumptive costumes, it is not the doctors that we need to blame.

Vijay Boyapati, a former Google engineer, illuminated four causes of rising costs of healthcare.

1) Employer Health Insurance

Employers are expected to pay for healthcare in the United States because people “need” healthcare. People need to eat and most need to drive, yet employers don’t furnish their workers with Subway sandwiches and Chevy Cruzes.

Employers didn’t provide insurance for their employees until a 1943 tax law made this kinds of insurance tax-free. And besides, employers needed a lure for workers during World War II– a period of evil price controls and wage caps. Employers could sell the benefit of insurance to workers rather than offering better wages.

Employees take advantage of company expense accounts, whether they have to do with travel or healthcare or anything else. Using company money liberalizing their spending habits; whereas paying for themselves would promote a more salubrious atmosphere of spending sanity.

And it is not just on the consumer side that people tend to spend more– doctors too favor far more expensive treatments for only marginally better services. Boyapati noted, “This is the opposite of how the price mechanism works in a free market, where consumers (who are paying out of their own pocket) search for the cheapest prices and providers work hard to provide services that are equally efficacious but less costly.”


2) Licensure

Licensure limits supply of providers, supposedly to protect patients. It also happens to maintain high wages for providers. Consumer-driven prices would allow medical houses to find the most efficient uses of their personnel. Unfortunately, the American Medical Association (AMA) makes rational allocation of resources impossible by restricting what each medical worker can do. You can argue that this regulation makes people safer, but you must admit that it shoots the costs up into space.


3) Obesity

Obesity is perhaps the biggest health problem of 21st century America. Boyapati blamed the US government’s subsidizing of corn production for the fact that Americans consume 73 pounds of corn-based sweetener per year per person. Americans eat 10% more calories than they did in 1977, due in part to mass subsidies given to food-producers. Increases in obesity numbers cause a corresponding increase in demand for “fat” doctors- who spend their time helping out people with the diseases of fat.


4) Intellectual Property

Pharmaceutical companies enjoy government-sanctioned monopolies on their medical patents. Thus they can charge as much as they want without worrying about competing producers. Although patents might well be a legitimate cost of business put on consumers to protect innovators, it is clear that patents drive up prices by excluding competitors. The government heavily regulates patents in the healthcare industry, sharply diminishing the ability to compete.



It is not a mystery why medical costs are so high. How could it be otherwise with such a pronounced level of state intervention? Without the price sensitivity associated with free markets, companies and governments just set whatever prices they want.


A Dictionary for Economics Students

In the Lexicon of Economic Thought, readers can find simple single-page entries on 176 economic or social topics, ranging from bailouts to Sunday shopping laws to academic tenure. Walter Block and Michael Walker give the perspective of a serious economist, not just a political pundit. So, in the case of academic tenure, they go through the arguments for and against tenure, and then look at how a truly free market would operate in the world of higher education. There would be freedom of choice. Students might get vouchers instead of money going directly to universities and then entrepreneurs would put out different types of schools for the students to choose from. All universities would have to be privatized for this to work. Some might have tenure, others might not – who cares? The point is that in a free system universities would be responsible to the end users: students and those who are paying for the students, meaning parents and taxpayers (who would use politics to keep the schools responsible for their particular programs). Block concluded that “only on the basis of the free marketplace” could we find a real answer to the viability of university tenure.

It is really helpful to have a dictionary of economic issues to bring you up to speed on the definition of the issues so you can formulate an informed opinion on the matters and a solid starting point for further study.


Block, Walter and Michael Walker, Lexicon of Economic Thought, The Fraser Institute, 1989


Do People Really Have a “Scale of Values?”… Was Rothbard Wrong?

Walter Block and William Barnett’s answer is NO! And there reason is simple: scale of values is incompatible with Singularism, which must be true.

This idea of Singularism is a big deal to Block and Barnett; the two scholars had previously co-authored a paper positing that the Austrians start going by the clunky name “the Singularity School of Thought.” Basically, the singularity principle means that all of our actions are based on choosing one option above all others.

Scale of Values

Two of the most prominent Austrians in history, Murray Rothbard and Carl Menger, supported the idea of a scale of values. And it makes a lot of sense. The idea is that each human actor has a hierarchical scale of values out of which he makes every decision. He values A more than B, values B more than C, and so on. They see people as making decisions based on, not just one value ranking—that would be simple, but many separate value rankings all at the same time. Carl Menger also adds to the decision-making process an added layer of complexity: levels of utility. So that, people are making decisions based on maybe hundreds of distinct value rankings simultaneously.

Block and Barnett wonder if humans are really going through such a complex process for their every decision or if there is something simpler, more limited going on.

Singularism: One Choice at a Time

The authors saw a “contradiction” between Rothbard and Menger’s scale of values and Ludwig von Mises’ theory of singularism. The core issue for Mises (and now Block) is that only one single human action can take place at one time. Therefore, a person cannot make multiple decisions/actions at the same time. Block concedes that such a hierarchy of values might well exist in the form of “preferences,” but says that this is outside the domain of economics, which is only concerned with choice. Block and Barnett conclude, “Economic action consists of choosing one thing, and setting aside all others. It is logically impossible to do more than one thing at a time. Yet, that is precisely the implication of the scale of values” (91).


What Makes the Austrian School Different?

Walter Block explains that, what is truly unique about the Austrian School of economics its particular methodologies and its radical policy ideas.

Truths You Can’t Deny

The Austrian School is based on the insights we get from knowing that man acts purposefully. The lovely thing about this argument is you can’t deny it! To deny it would be in itself a purposeful act. Boom!

Block writes, “For Austrians, economic theory is correct if and only if it starts with correct principles, and utilizes a logical chain of reasoning. Statistics can illustrate economic axioms, but can never test them” (17). The clearest way to think about it is to understand the problem is that economists often wish they worked in a hard or empirical science. But Block likens economics more to mathematics: “No one goes out and tests the Pythagorean theorem, or measures triangles to see if they really have 180 degrees.”

Beyond the basic principle, there are many additional undeniable insights derivative of purposeful action. All voluntary trade is done for mutual benefit. We know this from the very fact they are making the trade. People act in such ways as to make their futures more desirable. Some implications are more specific: “The minimum wage causes unemployment for unskilled workers with productivity levels below that stipulated by the law” (16).

These are simple truths. The Austrian School depends on these simple truths.

Radical Policy Ideas

With regard to the private political positions of individual economists, Block gleefully catalogued the Austrians as the most “extreme advocates of economic freedom, free enterprise, property rights, etc” (18).

Just what are these radical ideas?

1) Highway and Road Privatization

Many Austrians want to privatize roads. Tens of thousands of Americans die on roads every year in a system of what Dr. Block calls “road socialism.” “Traffic congestion is to highways as long queues were to Soviet groceries,” he wrote. “At zero price, the tragedy of the commons comes into play” (18). This is not an obscure issue for Dr. Block to bring up; he has written an entire book on the topic. He argues that the profit and loss system would incentivize road managers to do a better job with traffic flow and safety.

2) Anti Trust

Most Austrians are against all anti trust legislation. Not only does Block disagree with the very idea of monopoly market failure, but there is another problem here beyond anti trust itself. Companies can be guilty of “crimes” no matter what they do. They can charge too much and be a price gouger, charge too little and be a predatory pricer, or charge just the right price and be a price fixer.

3) Market Failures

It is not failures in the market that cause poverty, say the Austrians, but rather government itself. And, furthermore, it is the government’s welfare programs that exacerbate the problem of poverty by making poor people dependent on something fickle (politicians) instead of something perhaps slightly less fickle (themselves).

4) Property Rights

Austrians emphasize the moral or ethical aspect of property rights, whereas most other free market economists emphasize the material importance of property in the creation of wealth.


The Austrian School is different from other schools of economic thought by emphasizing the importance on a strong theoretical framework—and not endless empirical models. In consequence, the Austrians diverge from even many free-market economists on important fundamental topics, like property rights.


A Comparison of Economic Correctness and Political Correctness, Humanomics, Vol 20, No 3 – 4, 2004, pp. 14 – 25


State of the Family, Worldwide

Child Trends published its annual international report World Family Map 2014: Mapping Family Change and Child Well-Being. The World Family Map Project “monitors family well-being and investigates how family characteristics affect children’s healthy development around the globe.” It follows trends in the family because it is “the core institution for child-rearing worldwide.” Strong families produce “positive child outcomes.” Not earth-shattering truths, but truths nonetheless. The latest annual report looks at 16 indicators to measure changes in family structure, family socioeconomics and family processes.

I Family Structure

The number of parents and extended family members in a child’s household influence the human and financial resources available to the child.

It should not be surprising that the ideal household for a child is the married two-parent household wherein the child gets lots of attention and more financial resources. Changes in the family structure around the globe have decimated the two-parent household in some regions. Yet, despite an overall decline in the two-parent household, the majority of global households still have this traditional composition.

Who’s Taking Care of the Children?

Children thrive in two-parent households. The regions with the highest rates of these households are Asia and the Middle East, with nearly 90% of children living in two-parent households. The highest rate is 94%, in Jordan. These are more traditional societies compared to those in the West, where a significant minority (20%) of children in North America, Europe and Oceania live in single parent households. Only 69% of American children live with both parents.

Children in South Africa have the worst parental contact rates: 43% live with one parent and 20% live without either parent. AIDS orphans fill the South African landscape.

Decline of Marriage

Marriage has played a lavishly important role in the families around the world throughout all of time. But there have been some dramatic changes in recent history, triggering great variation in family structure. Cohabitation, divorce and non-marital childbearing have seen nontrivial increases in the last generation, at least in Europe, the Americans and Oceania.

The World Family Map measured the number of individuals in their reproductive years (18-49) in either marriage or cohabitation relationships: the most “coupled” countries were India, Indonesia and Egypt; the most “single” countries were South Africa, Singapore and Chile. South Africa was the lowest, with just 43% in unions of any kind.

The highest cohabitation societies were found in Canada (19%), Sweden (25%), France (25%), and Peru (38%). Cohabitation is a dramatic change from the previously strong marriage culture in Europe and North America, but this kind of union is not such a new phenomenon in South America, where couples have chosen non-marital unions for a long time. The United States cohabitation rate is at 9%, according to the report.

Kids Without Married Parents

The kids who do the best in a litany of performance areas, from academic success to social behavior, have two parents who are married to each other. That is why the World Family Stats report measured the number of children in homes with unmarried or single parents. Unmarried parents are a huge problem in South America, where the majority of children grow up in such homes. One of these countries, Columbia, places 84% of its children in this situation. France and Sweden are two European countries where the majority of children are born in homes without married parents. A particularly telling statistic, in many European countries the average age at first childbirth is actually lower than age at first marriage. There is a range in North American homes, from 27% in Canada to 41% in the US to 55% in Mexico. Africa displays far more variety, ranging from 6% in Nigeria to 63% in South Africa.World Family Stats Report

Fewer, and Fewer Kids

Unless you have been listening only to propaganda from environmentalist fear-mongers, you are probably aware that people in the developed world are not having enough children. Rich societies are not replacing themselves in adequate numbers to continue the economic growth they have enjoyed for centuries. Immigrants can provide short-term solutions, but not without transforming the cultures which require them in the long-term.

The report said that European fertility rates are under the replacement level, despite gains since hitting their lows in the early 2000s. Using the report’s numbers from 2011, the Middle East is replacing itself just fine, with the exception of Turkey which, at a fertility rate of 2.1, has fallen to the minimum replacement level— close to that of the United States (1.9). Sub-Saharan Africa has mostly high fertility levels, ranging from a low of 2.4 in South Africa to a high of 6.1 in Uganda.

Lower fertility is not just a problem of Europe and the United States; the fertility rate in every country in East Asia is 1.6 or lower. And Eastern Europe is even lower than Eastern Asia, when comparing regions. But the lowest rates for individual countries are found in Asia. The Koreans have very low fertility rates (1.4) and so do the Chinese, regardless of where they live: 1.6 in China, 1.3 in Singapore and 1.1 in Taiwan. That means Chinese low fertility rates might have very little to do with the one-child policy on the mainland.

 II Family Socioeconomics

Socioeconomics measures the resources that support child well-being. These include material resources as well as human resources and government resources. In other word: how much money and education do kids have?


Poverty is particularly bad for children: it hurts their physical and emotional health. The World Bank measures absolute poverty by numbering how many people live on less than $1.25 (USD) per day. Incredible improvements have been made worldwide in lifting children out of poverty in the past few decades. But poverty today is still a major problem in several areas. The highest poverty rates were, unsurprisingly, found in Africa, with 88% of Congo in poverty and 68% in Nigeria and Tanzania. The lowest African poverty rates were in Ghana (29%) and South Africa (14%). Some parts of Oceania also have high levels of extreme poor. Asian countries range from 0% in Malaysia to 13% in China to 33% in India—an incredibly high number for such a large country. Central and South American countries have international poverty rates under 10% for the most part, although Bolivia has 16% living on under $1.25 per day. The Middle East, Mexico and Eastern Europe have less than two percent of their peoples beneath the international poverty line.


First, check out the amazing progress: in 1990-92 the world had 23% of people undernourished; by 2010-12 the number had fallen to 15%.

Undernourished children are more likely to have physical problems (blindness, stunted growth) and mental developmental problems. It is a cyclical and societal problem. Malnourished mothers give birth to malnourished children and, according to the report, undernourishment in a country’s children can cause up productivity losses of up to 3% GDP, just from this lack of nourishment. Countries with the worst numbers on undernourishment for 2011-13 were Ethiopia (37%), Tanzania (33%), and Uganda (30%). The other countries with major nourishment issues, in order of percentage, were Kenya, Paraguay, Nicaragua, Bolivia, India, Philippines, Peru and China.

Parental Education

Another socioeconomic indicator of children’s overall well-being is the education level of a child’s parents. This is one of the complexities that show you how impossible it is to simply give money to families in an effort to lower inequality. What would it matter how much money a child’s parents had if his parents were total dummies? Successful parents give their children far more than money: they pass on culture and education and a love of learning. The World Family Stats report said that well-educated parents are more likely to give to their children “extracurricular activities, books, cognitive stimulation, and high educational expectations.”

The measure used to indicate parental education is simple: the percentage of kids living in households wherein the head has finished secondary education (high school or equivalency test). Note that the household head does not have to be a parent; it could be the grandparent, as is the case in one out of five Russian households.

Using date ranging from 2000-12, the report found that the highest rates of household heads with at least a secondary education were Japan and South Korea at 88% and 87%, several Western European countries at over 80%, the United States at 85% and Israel at 77%. China had 34%, India 18% and Malaysia only 12%. The Malaysia figure is striking when you consider its extremely low poverty rate. In the Middle East, a particularly low parental education country was Turkey, with only 31% of household heads graduating high school. The lowest rates worldwide were found in sub-Saharan Africa, ranging from 1% (!) to 26%.

III Family Processes

Measures the level of interaction within families by examining communication patterns, satisfaction levels and time spent together.

Measuring family processes is harder to quantify than other indicators of family health. One of the problems is that the surveys ask subjective questions. The other problem is that it only asked questions of seven or eight countries, giving a less than global picture of family processes.

A subjective survey of “family satisfaction” found that somewhere between about one-half and two-thirds of Western European and Asian families were satisfied in their family life. The highest satisfaction level is in Chile (74%) and the lowest level is in the region of Eastern Europe, with only 31% feeling satisfied.

Russia seemed to fare badly in these surveys, scoring last out of eight countries on the question of how many feel “completely or very satisfied” with their family life (31%), and also on how many couples report low levels of disagreement about household work (only 55% reported low levels). Apparently 88% of couples in the Philippines understand their respective roles in the household and don’t complain about them.

Another survey gauged the amount of quality time families were spending together by researching how commonly 15-year olds eat their main meal with their families. The least talkative teenagers in the study were in South Korea, where nearly less than two-thirds socialize with their families at dinnertime; Italian teenagers cannot shut up, however, with 94% of them sharing that main meal. The research showed that children who ate meals with their families more frequently enjoyed higher scores in reading literacy.


The fundamental makeup of the family is shaping up to be far more traditional in Asia and the Middle East. Wealthy Western countries are seeing fewer and fewer two-parent households, which does not bode well for the future generations in the West. The family in the west is crumbling: fewer couples are having kids, and fewer couples are getting married. The children who do arise in the West, do so in an environment freer of commitment. Latin American children are being born into families without married parents. Asians are not having children. Africans are having children, but too many of them are in extreme poverty—living on less than $1.25 a day. The Middle East, Mexico, Eastern Europe and Malaysia are doing surprisingly well on poverty numbers. Impressive and life-saving improvements have been made over the last 20 years on the problem of undernourishment; the numbers are still way too bad in places like Kenya and India and China and several parts of South America. The recipe for family success is always in the fundamentals: get married, spend quality times with your children, make sure they get enough to eat. The World Family Stats report showed some positive improvements in poorer countries and worrying trends in wealthier countries.


Responding to State Worshipers

In a 2006 issue of The Journal of Corporate Citizenship, Walter Block and William Barnett II teamed up to defend liberty in the article “Rejoinder to Critics of Laissez-Faire Capitalism.” They were responding to critics who took issue with their controversial thesis: The key to promoting prosperity for people and for the environment is to “reign in government to the greatest extent possible.”

Is Walter Block himself a state-worshiper?

Upon first reading of this essay I was a bit confused, as it the authors seem to be distancing themselves from anarchistic ideas, denying accusations that they had said they favored a “stateless social order” in their previous thesis. Walter Block IS an anarchist and I will note at the start that Block made sure to footnote that “greatly regrets” the kind of language he and Barnett II had used.

State Worshiper #1

Nevertheless, Block and Barnett objected to J.A. Batten and P.G. Szilagyi’s claim that large corporations have the ability to “impose” their will on people. Economic and moral power, yes, for a time, but not political power to impose against human wills. Block and Barnett noted that the demise of creepy private companies like Enron and WorldCom testify to the health of the markets because these jerks no longer exist. And yet governments, who make these Enron-types look like “petty thieves,” remain intact.

Batten and Szilagyi worship the state so fully that they argued on the grounds that the most interventionist governments “all have the highest individual incomes.” Block cited his own research in his 1996 book Economic Freedom of the World, 1975-1995 against this idea, adding that, even if it were somehow true, it would be ­“despite government interventionism, not because of it” (18). One wonders how they could have such blind faith in the positive effects of government interventionism. Pure state worship.

State Worshiper #2

The next state-worshiper, C. Higgins, repeated the tired idea that income-inequality has increased in the places where the free market has flourished.

In fact, the opposite is true, according to Block and Barnett. The markets actually promote income equality. It is a positive-sum game. “In contrast, when a politician or bureaucrat prospers, he does so at the expense of the long-suffering taxpayer, as this is a coercive, zero-sum game” (19).

In reality, it is the dictator and his fellas who steal off the largest proportion of wealth in society. The people in such societies are quite equal and quite poor.



Stan Evans: Conservatives Coming to Save the World

Conservatives typically laugh at those who want to save the world. But that is exactly what Stan Evans and other founders of the modern conservative movement wanted to do: save the world from communism. They wanted to take over the Republican Party, then take over the nation and thereby defeat communism in the world. Anti-communism was the defining issue of the time for conservatives. Evans wrote a book defending Wisconsin Senator Joe McCarthy and his crusade against domestic communist, a 600-pager called “Blacklisted by History: The Untold History of Senator Joe McCarthy and His Fight Against America’s Enemies.”

Stan Evans, who died at 80 on March 3, 2015, played an important role at the beginning of the modern American conservative movement. He authored the Sharon Statement in September 1960, a defining document of the conservative movement which laid out the guiding values for the Young Americans for Freedom (YAF). The Heritage Foundation summarized the principles in the Sharon Statement:stan evans

“Free will and moral authority come from God; political and economic liberty are essential for a free people and free institutions; government must be strictly and constitutionally limited; the market economy is the economic system most compatible with freedom; and Communism must be defeated, not merely contained.”

Evans worked a journalist in Indianapolis in his 20s and later taught journalism at Troy University. He also headed up the conservative-backed National Journalism Center in Washington for 25 years.


What Should We Call “Austrian Economics?”

In their 2008 essay “Economic Singularism,” William Barnett, II and Walter Block wondered if there wasn’t a better label we could have for “Austrian Economics.” As evangelists of the Austrian School know all too well, when we mention Austrian economics to non-economists, they typically crinkle their face and ask if we are talking about economists who happen to live in Austria. The confusion is understandable; it could probably use a different name.

Here are some potential names Block and Barnett came up with (from my favorite to least favorite):

  • Property Rights School of Thought
  • The Praxeological School of Thought
  • The Methodological School of Thought
  • The Spontaneous Order School of Thought
  • The Information School of Thought
  • The Either Success or Error School of Thought
  • The Subjectivist School of Thought

I really like the Property Rights School of Thought because property rights are the basis for any other kind of rights for a libertarian. If you don’t own your property, including your person, what benefit is any other so-called right?

Praxeology is Mises’ term for the study of human action. I do prefer it when people ask me, “What the HELL is praxeology,” to when they ask, “Are Austrian economists all from Austria?” So calling it the Praxeological School would lead more people to understand the theoretical framework of praxeology and more people to ask about it.

Block and Barnett came up with their own top choice for a new name: The Singularism School of Thought.

The Singularism School of Thought

Austrian economics is all about deducing from the idea that people act purposefully. Each choice is some action A over alternative actions B,C and D to achieve goal X,Y or Z. Different people prefer using different means to achieve the same goals, and, quite often, prefer different goals.

Singularism is the idea that a person has only a “single” choice at any given time – he can either do A, or not A (B,C,D or F). His choice, A, was not necessarily the best choice by everybody’s standards, but it was his best choice in the moment, given what he knew and what he valued.

In Human Action, Ludwig von Mises talked about a principle called Methodological Singularism:

Praxeology asks: What happens in acting? What does it mean to say that an individual then and there, today and here, at any time and at any place, acts? What results if he chooses one thing and rejects another?

A man never chooses between “gold” and “iron” in general, but always only between a definite quantity of gold and a definite quantity of iron. Every single action is strictly limited in its immediate consequences. If we want to reach correct conclusions, we must first of all look at these limitations.

Block and Barnett define Singularism as the idea that “all of human action consists of choosing one option and setting aside all others” (22).

The Escalator Dilemma

To show how the singularity principle plays out, Block and Barnett applied it the example of walking on an escalator. They mocked their colleagues at the University of Rochester who couldn’t figure out the answer to this question: “If people stand still on escalators, then why don’t they stand still on stairs?”

The Singularism Analysis:

Let’s assume that the goal, X, is to get to the top of the stairs. The binary either/or choice is clear: either do X (get to the top) or do non-X (don’t get to the top). These are different situations with distinctive opportunity costs. Only in the stair situation does he really have this binary decision to make. If he doesn’t walk on the stairs, his opportunity cost is that he won’t get to the top. If he doesn’t walk on the escalator, he will still get to the top, just not as quickly.

Thus there are two separate choices: first, he must decide whether he will use the stairs, escalator or even the elevator, and then he must decide to walk or not to walk.


Block and Barnett might not actually want to rename the Austrian School of Thought with the Singularity School of Thought. Their purpose, rather, was to highlight this important aspect of choice so we don’t make bizarre errors that lead to unnecessary interventions into the economy.




Who Owns the Future: China or India?

China and India are the two most populous countries in the world. Both have the potential to become the most important economy in the next generation or two. Both are highly bureaucratic, but, as economist Gary North pointed out, India is a Keynesian bureaucracy and China is a Communist bureaucracy. North argues that India has a brighter economic future than China because its Keynesian bureaucracy is more in line with Western bureaucracies. But what exactly does this mean?

Keynesian Bureaucracy vs. Communist Bureaucracy

Both kinds of bureaucracy gets funding by extracting money from the taxpayers. But only in a Communist bureaucracy do the bureaucrats actually have the power to imprison and torture citizens. In such a system, the state can do whatever it wants because it owns the courts. The state owns every individual person and all property. This is called totalitarianism. Both are systems of centrally planned economies, but only the Communists carry people off and execute them in the night.

Dr. Gary North said that the chief difference between these two systems is that Western Keynesian bureaucracies respect the right of self-ownership. An individual person is a separate legal entity and not just a small, insignificant part of the state, as under Communism. “Keynesianism rules indirectly, by positive incentives mostly, and by the threat of interference from time to time.” At least Keynesians are somewhat predictable in their actions and incentives.North continued, “In a Keynesian bureaucracy, the state is not the primary owner of the means of production. The government directs the economy primarily through indirect means, such as low-interest loans, certain kinds of subsidies, the regulatory system, control over the central bank, and various kinds of sanctions, both positive and negative. In the United States, the central bank is legally independent from the federal government. It usually cooperates with the federal government, but it does not have to. In a Communist society, the central bank has to cooperate.”

Legacy of Common Law

There are other reasons why North believes India has a brighter future than China. The reasons are related to the fact that India was ruled by the British for 250 years. Now, hundreds of millions of educated Indians speak fluent English and are well-acquainted with a common law system. The common law system is closer to a free and rational legal system than the tyrannical Communist system practiced by the Russians and Chinese. Common law, or customary law, is the part of law that comes from custom and judicial precedent rather than statutes written up by a legislature.

“If we’re talking about betting on the future,” North writes, “I would bet on India over China. That is because I believe in liberty. The Chinese have a degree of economic liberty, but they do not have the basics of what we in the West regard as a free society… India is bureaucratic, but it is a Western bureaucracy, not a Communist bureaucracy. That makes all the difference.”

Should We Be Impressed with China?

Perhaps Westerners are overly impressed by the economic growth numbers seen in China over the last several years. North wondered if people were impressed by the wrong things: “They are impressed with central banking, massive bureaucracy, hostility to common law, hostility to freedom of the press, rigged statistics, government-owned commercial banks, and in the case of China, the biggest real estate bubble in history. That bubble is going to pop, and there will be social turmoil in China when it happens.”


If we project out to the year 2050, when India has the world’s largest population and China’s population has stagnated, it seems likely that India will be the bigger economic powerhouse. China does have a big real estate bubble and rapidly aging population. And Dr. North’s argument about the significance of common law and the superiority of Western Bureaucracies certainly add fuel to the argument for preeminence of India.


Should You Go To Jail for Lying?

In The Journal of Libertarian Studies, Dr. Walter Block argued with his libertarian colleague Frank van Dun over the issue of lying and criminal law. In an earlier article, Van Dun had offered the case of a man under the bridge who lies to some hikers about the safety of the bridge. The poor folks die, and it’s a very sad story. For Van Dun, the lying scum should be held guilty for his cold and seemingly murderous act. Block argued, however, that it is not a crime to give bad information or even to maintain silence, which also would have resulted in the hikers’ deaths. “His analysis implies either compulsory good Samaritanism or truth telling,” Block said.

Walter Block argued that the only scenario in which the man should be guilty is if the hikers had paid him for the information and he had been “contractually obligated” to tell them the truth. “Then he would be guilty of a contract violation that resulted in death, a very serious matter indeed.”

A lie is not a threat of violence. You might use my bad information to get yourself into trouble, but, if I had no legal obligation to give you “good” or accurate information, then it is simply up to you to weigh my advice against other kinds of information. People are sometimes helpful, sometimes competitive or mischievous. This is how life works; you are responsible for your own life and property.


Block, Walter.  “Reply to Frank van Dun’s ‘Natural Law and the Jurisprudence of Freedom’” Journal of Libertarian Studies. Vol. 18, No. 2, Spring 2004. pp. 65-72.