As a scientist and a libertarian, I often struggle to find solutions that satisfy my seemingly adversarial worldviews. I say "seemingly" because I believe that the culture of academic science fails to think outside of the box when coming up with solutions and that sometimes the right thing to do isn't as pleasant to hear.
For instance, I'm often confronted with criticisms of my stance concerning the governmental funding of research. There are diseases out there that don't affect many people and these "orphan diseases" are not commonly researched by pharmaceutical companies because there is not a large enough market to justify the expense. Even without red tape from the FDA, getting a drug to market ethically would be expensive. Researchers who are interested in finding a treatment for this disease might appeal to the pharmaceutical company, but the incentives just aren't there. What happens next is where my scientist peers and I part ways:
"Let's get the government to fund this work!" A perfect solution! Except money doesn't come out of thin air, at least not without causing harm. The government pays for grants with taxes. In that case, people are involuntarily robbed "for the greater good". Most people are empathetic and would willingly help out someone in need. If you don't believe that the majority of people would do this, then how do you justify taking their tax dollars? Taxes aren't the only solution the government has up its sleeves. The Federal Reserve could just put more money into circulation and then it really does come out of thin air. This creates the larger problem of dollar devaluation and inflation (a leading cause of high gas prices, btw).
My solution is not as pretty. It is not as popular in academia. But my solution has the distinct advantage of not robbing anyone. Get the money to fund the research voluntarily, or don't do the research. Pharmaceutical companies get a bad rap for charging money for life-saving drugs. But at least they ask you to pay for the drugs. They never force you to buy the drugs or pay for drugs you don't need or use. Compared to the government, drug companies are saints.
But it's not as though scientists are encouraged to question this system of asking the thieves for some of the spoils. Rather, universities, research organizations, and professional science organizations actively advocate (read: "lobby") Congress for increased funding. The sad thing is, that this is a calculated investments in thousands to millions of dollars each year. Rather than spending more on research (which is a positive step), some of the money donated to these organizations is used to "lobby" for more federal funding. I assume the thousands to millions of dollars are just spent on airfare, food, and hotel stays, because giving donated money to senators and representatives would be too disgusting for me to contemplate.
Science is no place for sentimentality. By that, I mean that science progresses by maintaining skepticism toward hypotheses (remember, we are always trying to disprove our hypotheses). If one gets too attached to a pet theory or model, then one can no longer maintain that healthy skeptical objectivity. Scientists pride themselves on maintaining that critical view of new evidence and even old dogma. And yet, when it comes to how science ought to be funded, the nobler scientific side gives way to the irrational political side. How dare I begin to question the legitimacy of using tax dollars to fund science! Outrageous!
When I dare to open my mouth in front of other scientists, I get a few of these old chestnuts: "Don't you want to keep your job?" "Is it better that taxes are being used to bomb people in other countries?" "You aren't like the unwashed masses. You know better how to spend their money!" I would like to address each of these in turn:
Yes. I love my job. Science is a noble profession and one I would do even if no one paid me. The difference would be that it would become a hobby and not a way to earn a living. But that's assuming no one would pay me without the federal grant system. This is a scare tactic, not unlike many similar tactics employed by proponents of big government. I dare Chicken Little. I play chicken with Chicken Little. In time, other methods of funding science would emerge without the federal grant system. A truly free market would respond to this niche and science would continue. Of this, I have no doubt.
The idea that funding science is somehow diverting money from blowing up people is providing me with a false choice. I am against using tax dollars to fight offensive battles, so I would choose the unspoken third option: don't take money from people for either of these things.
This third tactic plays on the ego. Who wouldn't like to believe that they were special and more capable of knowing how to spend someone else's money? But I don't buy it. Am I smart? Yes. Does this justify robbing someone who isn't? No. If you're really concerned with how badly people handle money, try improving education. Also, read a book on Austrian economics. On a side note, Hayek's vision of a free market as emerging from the ground-up has a definite appeal as a biologist.
There are more questions in science than all the money in the world could ever address. The current grant system vets many different grant proposals against one another in a microcosm of a free market. But the method used to fund many of those granting institutions is an illegitimate use of government power and should therefore be usurped by the private sector. Furthermore, scientists should maintain their healthy skepticism in other aspects of life.
Friday, May 13, 2011
Sunday, May 1, 2011
Wealth inequality and what not to do about it
One of the common complaints I hear about the current economic state of the country is the large gap between the wealthy and the poor. These complaints mostly come from people who resent the very notion of being wealthy and who quickly make the suggestion to tax the rich heavily and give the money to the poor. These people suggest that "wealth redistribution" is just because the rich can afford to give "their fair share". There are several problems associated with this line of reasoning.
There is wealth inequality; that much is true. But what keeps the rich getting richer while the rest of us stay fairly stagnant? In a word, INTEREST.
The old adage is that it takes money to make money and this certainly seems to be the case. But this is not an inherent problem of being wealthy necessarily, so much as it is a problem of big government. Liberals like to suggest that big government can cure all our ills by taking from the rich and giving to the poor under penalty of law, like some kind of mafioso Robin Hood. But I argue that it is big government itself that allows for the vast discrepancies in wealth with every passing generation. Consider the fractional reserve banking system. In this system for example, a bank can loan you $200,000 for a new home. You make a down payment, say $20,000, and the bank fronts the rest. But wait? Did the bank really front that $180,000 from their own coffers? Hardly. Rather, by providing 10% of the loaned amount to the Federal Reserve, the bank is effectively getting the remaining 90% of the money in the form of an INTEREST-FREE loan. After 20 years, you might have paid back the loan to the bank, along with a hefty amount of interest. The bank pays back the capital to the Fed and keeps the interest as profit. Bankers also win the house in the event you can't pay back the difference, so they win no matter what basically. This is unjust because the bank puts no more on the line than you and gets an interest-free loan while you pay the interest. And if that bank still manages to lose money, the benevolent big government will use your tax dollars to bail them out.
To be fair to the wealthy, some individuals actually invested a great deal of time and money and risked everything on their dreams in order to get where they are today. These are not typically the individuals demonized for "not earning" their wealth. The example most used to promote the inheritance tax is the rich children of someone who did the work and died. These people didn't work for their money, they just had good luck that they were born to wealthy parents. This is the justification for taking their money and giving it to people who really had no connection to the earning of it. But what makes money so special? There are plenty of examples in which people have benefited simply because they were born to the right parents. Race, height, attractiveness, intelligence, athletic ability, healthy genes; these are all accidents of heredity. If you were born below average height, should the government step in and pay for bone lengthening surgery? What about people born with above average height? Cosmetic surgery for the unattractive and face mangling for the overly attractive? GPA leveling for intelligence? (BTW, there is an excellent consideration of GPA redistribution here). When Jefferson wrote that "...all men are created equal," he wasn't an idiot. He knew that there were some who had more or less intelligence, looks, money, etc. The best we can hope for is to ensure that children have equal access to the basics of food, water, shelter, clothing, and learning so as to provide some level of fairness when the time comes for them to accept the responsibility for their lives as adult individuals. A capitalistic society can provide equality of opportunities without guaranteeing equality of outcomes. But big government actually ensures worse outcomes for the have-nots by stacking the deck in favor of the wealthy. I have one more example.
The income tax. A code of over 17,000 pages, so complex that you'd need to be a rich person to hire the accountants required to tease it apart. Additionally, lobbyists often suggest amendments and loopholes to insert into the code so that they have legal work-arounds. And the real kicker: The income tax only applies to income and many of the wealthiest live off of dividends from investments (INTEREST!!!). So while we can talk about raising the income tax level against the wealthiest 1%, it doesn't have the impact because the taxes paid on dividends are meager in comparison. For this and many other reasons, I support a tax based on consumption rather than income (because apparently wealthy people purchase things too).
Trusting wealthy politicians to help close the gap between the haves and the have-nots will not solve our problems. Additionally, it is a mistake to base one's opinions of capitalism on the corporatism we have today (where the government actively helps keep big businesses free from competition). Changing the tax structure, ending the Fed and its ability to conjure money out of thin air (inflation), and reducing the influence of big corporations over the market (by reducing their influence over politicians and reducing government's influence over the market) will be key to setting the economy on a path toward closing the gap between the poor and the wealthy.
There is wealth inequality; that much is true. But what keeps the rich getting richer while the rest of us stay fairly stagnant? In a word, INTEREST.
The old adage is that it takes money to make money and this certainly seems to be the case. But this is not an inherent problem of being wealthy necessarily, so much as it is a problem of big government. Liberals like to suggest that big government can cure all our ills by taking from the rich and giving to the poor under penalty of law, like some kind of mafioso Robin Hood. But I argue that it is big government itself that allows for the vast discrepancies in wealth with every passing generation. Consider the fractional reserve banking system. In this system for example, a bank can loan you $200,000 for a new home. You make a down payment, say $20,000, and the bank fronts the rest. But wait? Did the bank really front that $180,000 from their own coffers? Hardly. Rather, by providing 10% of the loaned amount to the Federal Reserve, the bank is effectively getting the remaining 90% of the money in the form of an INTEREST-FREE loan. After 20 years, you might have paid back the loan to the bank, along with a hefty amount of interest. The bank pays back the capital to the Fed and keeps the interest as profit. Bankers also win the house in the event you can't pay back the difference, so they win no matter what basically. This is unjust because the bank puts no more on the line than you and gets an interest-free loan while you pay the interest. And if that bank still manages to lose money, the benevolent big government will use your tax dollars to bail them out.
To be fair to the wealthy, some individuals actually invested a great deal of time and money and risked everything on their dreams in order to get where they are today. These are not typically the individuals demonized for "not earning" their wealth. The example most used to promote the inheritance tax is the rich children of someone who did the work and died. These people didn't work for their money, they just had good luck that they were born to wealthy parents. This is the justification for taking their money and giving it to people who really had no connection to the earning of it. But what makes money so special? There are plenty of examples in which people have benefited simply because they were born to the right parents. Race, height, attractiveness, intelligence, athletic ability, healthy genes; these are all accidents of heredity. If you were born below average height, should the government step in and pay for bone lengthening surgery? What about people born with above average height? Cosmetic surgery for the unattractive and face mangling for the overly attractive? GPA leveling for intelligence? (BTW, there is an excellent consideration of GPA redistribution here). When Jefferson wrote that "...all men are created equal," he wasn't an idiot. He knew that there were some who had more or less intelligence, looks, money, etc. The best we can hope for is to ensure that children have equal access to the basics of food, water, shelter, clothing, and learning so as to provide some level of fairness when the time comes for them to accept the responsibility for their lives as adult individuals. A capitalistic society can provide equality of opportunities without guaranteeing equality of outcomes. But big government actually ensures worse outcomes for the have-nots by stacking the deck in favor of the wealthy. I have one more example.
The income tax. A code of over 17,000 pages, so complex that you'd need to be a rich person to hire the accountants required to tease it apart. Additionally, lobbyists often suggest amendments and loopholes to insert into the code so that they have legal work-arounds. And the real kicker: The income tax only applies to income and many of the wealthiest live off of dividends from investments (INTEREST!!!). So while we can talk about raising the income tax level against the wealthiest 1%, it doesn't have the impact because the taxes paid on dividends are meager in comparison. For this and many other reasons, I support a tax based on consumption rather than income (because apparently wealthy people purchase things too).
Trusting wealthy politicians to help close the gap between the haves and the have-nots will not solve our problems. Additionally, it is a mistake to base one's opinions of capitalism on the corporatism we have today (where the government actively helps keep big businesses free from competition). Changing the tax structure, ending the Fed and its ability to conjure money out of thin air (inflation), and reducing the influence of big corporations over the market (by reducing their influence over politicians and reducing government's influence over the market) will be key to setting the economy on a path toward closing the gap between the poor and the wealthy.
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