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Hurricanes & Pharmaceutical Prices

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While the Democrats and President Trump have expressed support for reducing the cost of pharmaceuticals, Senate Majority Leader Mitch McConnell has made it clear that he will oppose efforts to impose price controls, saying that “Socialist price controls will do a lot of left-wing damage to the healthcare system.” This does not, of course, entail that McConnel would oppose all efforts to reduce the cost of drugs, but it does seem to express a general opposition to the state engaging in efforts to control prices. This view is typically defended on free market grounds: the market should set the prices for products rather than the state. The stock moral argument, going back to the beginning of capitalism, is that everyone will be better off this way.

One obvious problem with defending drug pricing on free market grounds is that the pharmaceutical industry is largely based on the state enforcing drug patents—that is, the state uses its coercive power to ensure that the market is restricted rather than free. While it is reasonable to debate what regulations, if any, should exist the fact that this sort of regulation is accepted does open the door to additional regulation. To use an analogy, if someone says that they will oppose all efforts for their family to have a pet on the grounds of the principle of the pet-free house and yet they already have a dog, then the door would thus seem to be open to more pets. After all, the principle has already been violated. This does not preclude debating about whether to get another pet but justifying not getting another pet by appealing to the no-pet policy would be absurd. As such, the free-market argument is rather problematic—unless companies are willing to fully embrace the free market. This does not provide a positive argument for price control, at best it takes away an argument against it. I now turn to an argument for price control of certain drugs.

My adopted state of Florida is routinely ravaged by hurricanes and other disasters. In the past, free-marketeers used these disasters as opportunities to use the law of supply and demand to the fullest: they charged people exorbitant prices for goods and services that were in demand because of the disaster. Detractors of this free-market approach labeled this entrepreneurship “price-gouging” and Florida responded by protecting consumers. The gist is that it is unlawful during a state of emergency to charge prices that are unconscionable. From a moral standpoint, the justification for this protection is that is morally wrong to use an emergency to coerce people into paying excessive prices. This is clearly a limit on how the free market sets prices and would seem to set a moral and legal precedent for taking an analogous approach to drug pricing.

As noted, what makes price gouging in an emergency unethical is using basic needs in a disaster as a means of coercing people into paying higher prices. The same principle would apply by analogy to drug pricing for medically necessary drugs. To use medical necessity to coerce people into paying higher prices would thus be at least as wrong as using an emergency to coerce people into playing more for important goods and services.

It could be objected that charging high prices for drugs is not gouging when the high price is the normal price. To use an analogy, charging a high price for generators during a disaster would not be gouging if that was the normal price for the generators. The counter to this is to point out that the price can be compared to the prices paid in other countries (adjusting for relevant factors) for the same drug. So, if Americans are paying exorbitant sums for the same medication that is available in Canada for far less, then Americans are being gouged. Gouging an also occur when the price is increased-such as is the case with insulin.  Intuitively, price gouging can also take place even when the “normal” price is high—this is because gouging is a matter of coercion and not just a matter of comparing prices.

Given the above, it is morally and legally acceptable for the state to limit price gouging during emergencies, then it is also legally and morally acceptable for the state to do the same for medically necessary drugs. This is based on the principle that using legitimate needs to coerce people into paying excessive prices is morally unacceptable.

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Libra: Facebucks

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As was presumably inevitable, Facebook has begun its entry into the realm of cryptocurrency. Rather than going with the obvious “Facebucks”, the company calls the new currency and payment system “Libra.” Given Facebook’s fundamental lack of ethics in favor of profit-pragmatism, this development is raising some concerns. To be fair to Facebook, some good does come out of the company and Libra does have some positive aspects.

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On the positive side, Libra can provide people who do not otherwise have access to traditional banking access to a currency system that can serve some important financial needs. That Facebook will profit from this does not diminish this value; while it is nice for people to do good for free, eventually one must do something that can pay the bills. Libra might also provide users with greater security and safety when it comes to financial transactions, which would also be a plus.

It should be noted that while Libra is classified as a cryptocurrency, it does differ from the more traditional versions, such as Bitcoin. One difference is that Libra is supposed to be an asset based crypto currency (what could be called an ABC or even an ABCC)—there are real-world assets behind it, rather than being a speculative investment it is intended to be money. Unlike Bitcoin, it will be closely controlled—thus causing some to see it more like Venmo than a traditional cryptocurrency. This has positive and negative aspects, depending on what one intends to do with the currency. While all these are worth considering, my main concern is with the main business model of Facebook: monetizing private user data.

Facebook claims that it is but one of many companies involved in Libra and that it has walled off the information that will be spewing from the cryptocurrency operation. It could be argued that Facebook would be content with the revenue generated by Libra and the executives believe that they need to maintain the wall in order to gain the trust of customers. But the data collected from the operation of this cryptocurrency would be incredibly valuable—so valuable that it is hard to imagine that Facebook would forgo drinking deep of this data stream. Facebook has repeatedly shown that it cannot be trusted and any protests to the contrary are analogous to those of a serial cheater telling their partner that they have changed and will be faithful this time. If Facebook persists in the tale that it will respect the wall, it will be just a matter of time before it is revealed that they did not. As noted above, the ethics of the company (if they can be called that) are such that the company cannot be trusted to respect privacy or abide by its public promises.

That said, it can be worth supping with the devil, if you have a long spoon and are aware of what the deals you make entail. The devil must do as the devil does, the same is true of Facebook: to expect otherwise is to fail to understand the nature of the company and capitalism in general. The question is not whether Facebook will use your Libra data, but whether the service is worth providing Facebook with data—just as with Facebook’s other services. So, yes, I will probably use Libra if it is advantageous for me to do so.

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School Vouchers Part Two

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In the previous essay, I considered some of the arguments in favor of school vouchers. I now continue the discussion. Another set of arguments focus on the choice aspect, that vouchers allow parents to select education that best fits their children and education that will cultivate values. For example, choice proponents claim that vouchers (and similar programs) will enable parents of children with special needs to pick a tailored program not available in public schools. An obvious reply to these arguments is that the main reason public schools lack tailored programs is that they are woefully underfunded. Schools could offer tailored programs if they had the funding—so diverting public money to vouchers makes less sense than funding such programs. To use an analogy, this would be like arguing that public money should be diverted from community rec centers to private gyms because the rec centers lack the variety of equipment possessed by private gyms. If the equipment is critical for the community, then the funding should be used to get that equipment for the rec centers.

A third set of arguments focus on economic efficiency and accountability—the gist of the arguments is that private schools will be more economically efficient and more accountable than public schools and hence they are better. While I will not deny that public schools can be inefficient and lack accountability, I will also not deny that the same is true of private schools. Look at the nightmare of for-profit colleges to see what can go wrong in the private education sector. There is obviously no public sector curse and private sector magic—one can have bad or good in either domain. If a school district is inefficient and not accountable, going private is not an automatic fix—it also leaves all the problems in place in what remains of the public sector. Rather, the solution is to increase efficiency and accountability in the public sector—as has been done with many very good public schools. In the case of for-profit schools, there is always the obvious question about how they can do all that a public school would do for less, yet still make a profit. At the college level, the answer was that they did not.

A final set of arguments focus on how voucher and similar programs improve schools by offering competition. While, as a runner and gamer, I do recognize that the right sorts of competition can result in improvements, this does not seem to apply in education. First, consider the disastrous for-profit colleges. If the competition hypothesis held true, they should have been better than public schools and helped improve them. However, they ended up being vacuums for public money and disasters for their students. Public schools mainly responded by doing what they could to help their victims—I attended various meetings about what to do with classes for students who attended for-profit schools that were not accredited. Second, public schools operate at an incredible disadvantage in the alleged competition. They are more accountable than private schools, they must meet far more requirements than private schools, they are subject to state assessment and grading, they must accept everyone, and their funding is limited. To use an analogy, this would be analogous to arguing that giving places like Disney and Six Flags public money from the state park system would improve the state parks because of the competition. This would obviously not improve the state parks—they are far more limited than the private operations and already have far less funding. If we want better state parks, taking away money would hardly be the way to make that happen. Likewise, taking money from public education is not going to make it better.

In sum, while vouchers are good for some people, they do not benefit public education. The arguments in their favor are problematic, while those against them are strong. As such, vouchers (and similar programs) are a bad idea.

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School Vouchers Part One

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My adopted state of Florida recently passed a school voucher program that would pay $130 million to private schools to pay the tuition for 18,000 students. If the voucher plan is not ruled unconstitutional (as it was in 2006), the state plans to expand it to include families with ever higher incomes. This plan has been praised by conservatives who support it by appealing to the benefits of school choice.


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While strong support for public education has been bi-partisan at times, it is currently split along ideological grounds. As such most opposition to vouchers comes from the left and they advance a variety of stock arguments. First, it is argued that the voucher system is intended to transfer public money to private businesses, thus making it a form of “wealthfare” in which public money benefits businesses that are already well-off. Second, it is argued that vouchers take money from underfunded public schools that desperately need funding. Florida, while not the worst, is near the bottom for spending per student and teacher pay. There are many unfilled teaching positions, schools with broken air-conditioning, and teachers routinely must buy their own classroom supplies. Third, it is argued that vouchers are often a tool to channel public money into religious institutions through their schools. Fourth, it is argued that the voucher system is intended to undermine public education to maintain the existing class system and to undermine the bedrock of democracy. While I do agree with these arguments, it is worth considering the proposed merits of vouchers. After all, to simply embrace or shun something solely on ideological grounds would be to reject critical thought. As such, I will consider some of the reasons advanced in favor of voucher programs.

One set of reasons can be grouped under what I will call the “better student argument.” The gist of this argument is that vouchers are good, because it results in better students. To be specific, choice advocates point out that private schools have better safety, better academic performance and better graduation rates than public schools. From this, they contend, it follows that vouchers are beneficial.

It certainly makes sense that the private schools have better students than public schools—this is because they can select their students and public schools must take everyone (with some limits). There is also the fact that parents who would use the voucher program would tend to be more engaged.  To use an analogy, comparing the two is like comparing intramural teams which must take everyone and varsity teams that have strict tryouts and cuts. The varsity teams will almost always be better teams. But it is not being varsity that makes the varsity team better—it is the selection process. The fast runner is not fast because she is on the varsity team, she is on the varsity team because she is fast.  The same holds for the private schools—they get better students because they are free to reject the ones they do not want.

One could also use an analogy to public health: the private schools are like hospitals that can select their patients and exclude those they do not want. Public schools are like hospitals that must take everyone. Such exclusionary hospitals would have far better outcomes than the public hospitals—because they would select the better patients and would be getting more money. However, this would hardly be a good solution to public health.  

On the one hand, if your child is a good student and can get accepted by a private school, then the voucher program would be appealing. You can get your child into a school with a better class of students. On the other hand, if your child is the problem child or bad student that other children are trying to escape, then the voucher program will not help you—your child will be stuck in an ever-declining public-school system. While this might be seen as just a problem for the children who cannot escape and their parents, these children are part of society and are thus everyone’s concern even if the concerns are purely pragmatically about crime and employability. Using a public health analogy, abandoning people into a declining public health care system puts everyone at greater risk.

If it is replied that the problem students will also get vouchers, then the obvious problem is that private schools will no longer be better or safer. Going back to the sports analogy, this would be like varsity teams trying to still claim to be better while responding to criticism about leaving people out by opening the teams up to everyone. They would soon cease to be better. Likewise for the voucher program: if it is open to all children, then the public schools would simply be replicated in private form. If the schools are exclusionary, then people will be left behind in what are acknowledged to be more dangerous and inferior schools. As such, the better student argument is problematic. Excluding the “problem” students so that the private schools are better means abandoning these citizens to declining public education—which will hurt everyone. Opening the schools up to everyone would mean they would be the same as public schools, so they would not be better. The discussion continues in the next essay.

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Opportunity Hoarding I: Mobility

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In the wake of the college admissions scandal of 2019 the media briefly focused on how the wealthy use their advantages to secure admission to the best schools. As part of the coverage, there was some discussion of opportunity hoarding, a concept developed by Richard Reeves in his Dream Hoarders. The gist of the concept is that opportunity hoarding occurs when parents try to seek advantages for their children in ways that are harmful to others. One extreme example would be parents disparaging children competing with their own for school admission. The practice of opportunity hoarding raises many important moral issues that I will address over the course of a short series of essays. I will begin by discussing the concept of economic mobility in the context of opportunity hoarding.

Americans want to believe in economic mobility—that by hard work, people will be better off than their parents. While people tend to just talk about economic mobility, it is important to distinguish between two types: relative mobility and absolute mobility. In both types, mobility is a matter of moving up or down relative to one’s parents. Relative mobility is measured by comparing the economic ranking of current adults relative to the rankings of their parents. This can be illustrated by an analogy to running road races. When comparing two road races, my relative performance is a measure of my place in the second race relative to how I placed in the first race. If I placed better in the second race than in the first one, then my relative performance was upward. If I placed worse, then my relative performance would be downward. In this analogy, the race is a generation: the first race would correspond to the economic ranking of the parents and the second would be analogous to the current adult’s ranking.

Absolute mobility is a measure of whether the current adults have a higher adjusted (for inflation and such) income at the same age as their parents. Going back to the running analogy, my absolute performance would be a measure of whether I was faster in the second race relative to the first race. As before, the first race is analogous to the parents’ income and the second is analogous to the current adults’ income. While both measure improvement (or decline) there are some important differences.

A critical difference between the two is that relative mobility is a zero-sum game: if someone moves up, someone else must move down. To illustrate, the top 1% can only be 1% of the population: if Sally moves into the 1%, then she pushes someone else down. The analogy to the race illustrates this as well: if I move into first place, then I push someone else into second place. In contrast, absolute mobility need not be zero-sum: my getting more income does not entail that other people get less. Going back to the running analogy, my getting faster between races does not make anyone else slower—in fact, everyone could get faster. Because of this, a country could have little or no relative mobility, but exceptional absolute mobility.  Using the running analogy, the same people could place in the top 10 in race after race while everyone is also getting faster. Because of this, distinguishing between the two types of mobility is critical—especially when it comes to opportunity hoarding.

If relative mobility is low, then children almost always stay in the same economic class as their parents. For example, if Sally is born to parents in the top 20%, then she will probably stay there. If it is high, then people are likely to move up (or down) relative to their parents. While it is tempting to think that low relative mobility would always be bad, this is where absolute mobility becomes rather important. If relative mobility is low but absolute mobility is high and widely distributed, then most people will be better off than their parents—though they will still be in the same relative place as their parents. Going back to the running analogy, everybody is running faster—but people keep getting the same places in the races. One could imagine a very desirable society that has very low relative mobility but exceptional absolute mobility. Imagine, if you will, a nation in which Bartholomew Billionaire’s family has always been in the top 1% and owns dozens of houses, several yachts, three private jets and 100 luxury cars. Living in the same country is Paula Poor whose family has always been in the lowest 1% of income earners. But her family now owns a modest residence, her children are attending state college, and she and her husband can easily afford good insurance, good food and the occasional vacation.

 This would seem to be far better than a society with high relative mobility but with a history of awful absolute mobility. People readily moving up (and down) from generation to generation might seem good, but if income does not improve (or worsens) from generation to generation, then moving around more freely would be worse than being “stuck” in a good situation. Going back to the running analogy, this would be like be races in which people did not get better (or got worse), but different people made it into the top 10 each race.

A society in which both types of mobility are low would also be a bad scenario: those stuck in the lower income classes would not move up relatively or absolutely. While those in the upper classes would be secure, their lot would also not improve much relative to their parents. This would be a rather stagnant society. But what about real countries, such as the United States?

Currently, the United States has low relative mobility: people tend to stick within the class of their birth. Absolute mobility used to be good, but income has stagnated and currently the United States has lower absolute mobility. As such, many Americans are worse off than their parents and are stuck in their economic class. In this situation, downward relative mobility would be rather bad: one would be moving towards or into an economic class inferior to that of one’s parents—downward mobility.

Those in the upper classes (the top 20%) are aware of what downward mobility entails and, if sensible, they endeavor to prevent this by giving their children all the advantages they can. While doing the best one can for their children is generally the right thing to do, it can become morally problematic when these efforts actively harm the opportunities of others—perhaps by locking them out of moving upward. Richard Reeves and Kimberly Howard have discussed the phenomena of the glass floor—a metaphor for the various factors that keep the children of the well off from sinking into the lower classes. This floor is obviously a ceiling for others—even if there is no malicious intent, to the degree that it keeps the children of the upper classes from descending it also keeps the children of the lower classes from ascending. This is for the obvious reason that relative mobility, like the places in a race, is zero-sum. My victory is your loss. But it should not be simply assumed that this is immoral, hence the need for additional essays on this subject.

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The Mobile Homeless

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While the overall economy is strong, there has been an increase in the number of homeless Americans. One of the growing segments consists of people who live in their cars and many of them work. They are generally homeless not by choice, but because they cannot afford housing near enough to where they work.

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Since people in such straits generally lack political power and are often regarded as presenting a threat or creating an eyesore, it is not surprising that many municipalities tried to “solve” this problem by passing laws aimed at cracking down on people living in their cars. As would be expected, these laws were not effective in solving the problem. Churches, charity groups and some communities have attempted to address the problem in a more positive way by establishing safe parking areas for the homeless. In some cases, there is access to showers and bathrooms. This situation raises various moral concerns about what, if anything, should be done to help the homeless. This is, obviously enough, yet another specific version of the broader moral question of what we owe other people.

One approach, as noted above, is to try to solve the problem by passing laws banning people from sleeping in their vehicles in public areas. This gives people the choice between running afoul of law enforcement or leaving the area. If these laws are widespread, then leaving becomes problematic—there would be few places to go. Also, the working homeless are often tied to their jobs and moving would thus problematic. If they stay, they can end up losing their car to fines and impounding—which will leave them without shelter or transportation. This solution is also morally problematic since it punishes people for being poor and unable to find affordable housing.

It could be objected that these people could easily drive somewhere, find a new job and get affordable housing. However, if it were so easy for them to do this, then surely most of them would have done so already.

Another approach, as mentioned above, is for charity, churches and communities to create safe parking lots for the homeless. While this is certainly preferable to turning the coercive power of the state against the poor and powerless, it does have some problems. One concern is the cost of the lots—they are typically located in pricey areas and hence the resources used to pay for lots there could pay for actual housing elsewhere. Another concern is that the lots used by the homeless are thus not usable by other people, thus reducing available parking. Perhaps the greatest concern is that while the homeless need not fear the police and have some safety, they are still living in their cars in a parking lot—a situation that is certainly stressful, unpleasant and difficult. The fact that they do not have a permanent residence also creates other problems, such as the matter of where the children can attend school. As such, while such safe lots are a step up from parking illegally or “in the wild”, they are hardly ideal and do not address the underlying problems.

Obviously enough, the main reason that the working homeless live in their cars is that they cannot afford housing. This can be seen as their pay being too low to pay for housing or the housing being too expensive for them to afford. As such, the underlying problem is financial in nature. This does allow for two obvious solutions.

The first is to increase wages so that the working homeless can afford at least basic, safe housing. The obvious problem is determining how this should be done. While some employers do provide sufficient wages, it would be a bit foolish to think that they will (or even can) step up to provide a living wage. Another option is to use the coercive power of the state—this time not against the homeless, but to compel employers to pay more. This raises the usual objections about the state interfering with the “free” market.

The second solution is to provide more affordable housing. As with better pay, this could be done by the private sector (landlords voluntarily making less money) or by the state (compelling more affordable housing). As always, this raises the usual objections about the state interfering with the market.

As noted above, one could argue that the working homeless should find better jobs or move someplace with lower housing costs. While this has some appeal, the working homeless driving away would create a problem for the well-off: if the people who clean their houses, make them lattes, teach their kids, put out their fires, police their streets, and so on are forced to move too far away, then the rich will be left without these services. Perhaps this is why Silicon Valley is working so hard on robots. As such, even the rich have a reason to support better pay or affordable housing—or better public transportation to bring in workers from the less-affluent neighborhoods. At least until the robots arrive. However, expecting rational self-interest or moral concerns about the well-being of others to solve the problem from within the private sector is most likely unreasonable. Also, solving social problems is not really the job of the private sector—dealing with social issues is one reason we form governments. So, if the problem is to be addressed effectively, then the power of the state would be needed.

As noted above, using the coercive power of the state against the homeless is not an effective solution and is certainly not ethical. As such, the state should use our resources to address pay or housing costs. As noted above, many would object to the state interfering in the market (except, obviously, when the state’s interference is to their advantage) by compelling change in wages or the cost of housing. However, the Lockean view of the state is that it exists for the good of the people—so using its power to slightly reduce the wealth of the wealthy so that the less well off do not have to live out of their cars would seem morally justified. At least for those who subscribe to the Lockean view. But, not everyone subscribes to this view of the purpose of the state and even Lockeans might see this as unjustified.

Another option that does not involve wages or compelling affordable housing is for the state (and perhaps some in the private sector) to invest in affordable, reliable and fast public transportation that would allow workers to live where housing is affordable and commute (as many now do) into the upper-class zones to work. This approach would have the effect of enhancing the already established and growing division between the classes in America: the rich will dwell within their enclaves, while those who teach their children, make their lattes, clean their houses, fight their fires, and police their streets will be transported in to do their work, then shipped out when they are done. But at least they won’t be living in their cars.

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