federalism

Obamacare and Zones of Liberty

Uwe Reinhardt, a professor of economics at Princeton, offers this tantalizing idea:

Let us set up two distinct systems for health care within our nation. Call one the Social Solidarity system and the other the Libertarian system. Ask young people — at age 25 or so — to choose one or the other.

People joining the Social Solidarity system would know that they will be asked to subsidize their less fortunate fellow citizens in health care through taxes or premiums or both. They would also know, however, that the community will take care of them, and they will not go broke, should serious illness befall them.

People choosing the Libertarian system would not have to pay taxes to subsidize other people’s health care, and they would pay actuarially fair health insurance premiums — low for healthy people and high for sicker people.

Libertarians, however, would not be allowed to come into the Social Solidarity system, unless they were so pauperized as to qualify for Medicaid. Hospitals would have every right to use tough measures to make them pay their medical bills in full, to prevent freeloading at the expense of others.

Furthermore, care would have to be taken to prohibit the kind of estate planning that now often permits well-to-do individuals to take advantage of Medicaid benefits. ["Health Care: Solidarity vs. Rugged Individualism," in Economix, The New York Times, June 29, 2012]

Reinhardt’s suggestion has much merit — his loaded labels aside. The “social solidarity” model really amounts to freeloading, or the futile attempt to freeload. The “rugged individualism” model really amounts to a preference for making one’s own decisions instead of having decisions rammed down one’s throat by government — in other words, a preference for liberty.

But, as I say, the suggestion has merit. And the merit extends far beyond the matter of health care. As John Goodman puts it, “why restrict the choice to health care?”

Which leads to my immodest proposal for zones of liberty:

The 50 States (and their constituent municipalities) are incompatible with the kind of federalism envisioned by the Framers. Today’s State and municipal governments are too bureaucratic and too beholden to special interests; they have become smaller versions of the federal government. For, in today’s populous States and municipalities, coalitions of minority interests are able to tyrannize the populace. (The average State today controls the destinies of 25 times as many persons as did the average State of 1790.) Those Americans who “vote with their feet” through internal migration do not escape to regimes of liberty so much as they escape to regimes that are less tyrannical than the ones in which they had been living.

The kind of federalism envisioned by the Framers — and the kind of federalism necessary to liberty — would require the devolution to small communities and neighborhoods of all but a few powers: war-making, the conduct of foreign affairs, and the regulation of inter-community commerce for the sole purpose of ensuring against the erection of barriers to trade. With that kind of federalism, the free markets of ideas and commerce would enable individuals to live in those communities and neighborhoods that best serve their particular conceptions of liberty.

What do I have in mind? A zone of liberty would be something like a “new city” — with a big difference. Uninhabited land would be acquired by a wealthy lover (or lovers) of liberty, who would establish a development authority for the sole purpose of selling the land in the zone. The zone would be populated initially by immigrants from other parts of the United States. The immigrants would buy parcels of land from the development authority, and on those parcels they could build homes or businesses of their choosing. Buyers of parcels would be allowed to attach perpetual covenants to the parcels they acquire, and to subdivide their parcels with (or without) the covenants attached. All homes and businesses would have to be owned by residents of the zone, in order to ensure a close connection between property interests and governance of the zone.

Infrastructure would be provided by competing vendors of energy, telecommunications, and transportation services (including roads and their appurtenances). Rights-of-way would be created through negotiations between vendors and property owners. All other goods and services — including education and medical care — would be provided by competing vendors. No vendor, whether or not a resident of the zone, would be subject to any regulation, save the threat of civil suits and prosecution for criminal acts (e.g., fraud). Any homeowner or business owner could import or export any article or service from or to any place, including another country; there would be no import controls, duties, or tariffs on imported or exported goods and services.

The zone’s government would comprise an elected council, a police force, and a court (all paid for by assessments based on the last sale price of each parcel in the zone). The police force would be empowered to keep the peace among the residents of the zone, and to protect the residents from outsiders, who would be allowed to enter the zone only with the specific consent of resident homeowners or business owners. Breaches of the peace (including criminal acts) would be defined by the development of a common law through the court. The elected council (whose members would serve single, four-year terms) would oversee the police force and court, and would impose the assessments necessary to defray the costs of government. The council would have no other powers, and it would be able to exercise its limited powers only by agreement among three-fourths of the members of the council. The members, who would not be salaried, would annually submit a proposed budget to the electorate, which would have to approve the budget by a three-fourths majority. The electorate would consist of every resident who is an owner or joint owner of a residence or business (not undeveloped land), and who has attained the age of 30.

A zone of liberty would not be bound by the laws (statutory and otherwise) of the United States, the individual States, or any of political subdivision of a State. (The federal government could impose a per-capita tax on residents of the zone, in order to defray the zone’s per-capita share of the national budget for defense and foreign affairs.) The actions of the zone’s government would be reviewable only by the U.S. Supreme Court, and then only following the passage of a bill of particulars by two-thirds of each house of Congress, and with  the concurrence the president. (A zone could be abolished only with the approval of four-fifths of each house of Congress, and with the concurrence of the president.)

Absent such an experiment, I see only one hope for liberty — albeit a slim one — a Supreme Court that revives the Constitution. Politics as usual will only take us further down the road to serfdom.

I wrote that two years ago, and it is based on a post that is now more than six years old. Much has happened since, almost all of it to the detriment of liberty. Would our rulers dare allow at least a few of us to undertake an experiment in liberty? It is doubtful, because they fear the possibility that the experiment would succeed. And if it did, they would face the prospect of demands for more of the same. And where would that leave them? Without vast power. Scratch the idea of asking the federal government or any State government for a zone of liberty.

But maybe it isn’t necessary to ask. Suppose that a new (unincorporated) city were to spring up in, say, an isolated county with a friendly government. Suppose, further, that the new city’s citizens were to do nothing to organize themselves but (a) set up a police department and (b) hire legal counsel to ensure that the residents obey those State and federal laws that they must obey. And suppose that the city were to be an economic and social success, despite the absence of all of the codes and ordinances that ensnare the residents and businesses of today’s typical city.

Isn’t it worth a try? And doesn’t it beat trying to entice libertarians to move to New Hampshire (brrr!) or to live in international waters (pirates off the bow)?

Points of Agreement and Reinforcement

Scott Lincicome, Don Boudreaux, and Mark Perry continue their stalwart defense of free trade (latest entries here, here, and here). The controversy revolves around the notion prevalent in “liberal” circles that exports are “good” and imports are “bad.” This is an old view, which Henry Hazlitt addressed in Economics in One Lesson:

(From the 1952 edition. Originally published in 1946).

I couldn’t agree more with Lincicome, Boudreaux, Perry, and Hazlitt — as you will see if you go here, here, and here.

John Goodman keeps tabs on the abomination known as Obamacare. His many post-enactment observations about Obamacare include these:

Docs Declare “No Confidence” in AMA, Exercise as Anger Management, and the Upcoming Nursing Shortage
Doctors are Leaving Medicare
Who is Going to Provide the Extra Care?
Selling Health Reform to the Victims
The Coming Doctor Shortage
Victims of Health Care Reform

None of this comes as a surprise to me. I warned against Obamacare in several pre-enactment posts:

Rationing and Health Care
The Perils of Nannyism: The Case of Obamacare
More about the Perils of Obamacare
Health-Care Reform: The Short of It

Goodman also offers a tantalizing post about the idea of testing public policies before they are fully implemented. The idea of testing public policies is one of the arguments for true federalism, where the central government has a hands-off policy on economic and social matters (but not civil rights). Only true federalism — which this nation enjoyed (more or less) until the subversion of the Commerce Clause by the Interstate Commerce Act — will dispel the “anger” toward the central government that deeply, and justly, animates a large number of Americans.

Big-government advocate Linda Greenhouse now opposes broadly worded delegations of power to subordinate authorities, because the broadly worded power, in the present instance, would

authoriz[e] the secretary of Homeland Security to “waive all legal requirements” that the secretary, in his or her “sole discretion, determines necessary to ensure expeditious construction of the barriers and roads [comprising the border fence project].”

The writer of the quoted article notes the irony in Greenhouse’s present position. It puts her on the side of Judge Douglas Ginsburg, who argued against broad delegations of congressional authority in “Delegation Running Riot” (Regulation, 1995, no. 1), where he coined the term “the Constitution-in-exile”:

So for 60 years the nondelegation doctrine has existed only as part of the Constitution-in-exile, along with the doctrines of enumerated powers, unconstitutional conditions, and substantive due process, and their textual cousins, the Necessary and Proper, Contracts, Takings, and Commerce Clauses. The memory of these ancient exiles, banished for standing in opposition to unlimited government, is kept alive by a few scholars who labor on in the hope of a restoration, a second coming of the Constitution of liberty-even if perhaps not in their own lifetimes.

All of which reminds me of an old post of mine about the Constitution in exile.

A Bargain with the Devils of “Liberalism”

I have said many times that government should (a) stay in the marriage business and decline to honor homosexual “marriage,” and (b) reverse Roe v. Wade to allow the criminalization of abortion. My views are distilled here, where I say that

“rights” like abortion and homosexual “marriage” [are] government-imposed social innovations with potentially harmful consequences for civil society. If social custom, as embodied in legislative acts, rejects such things as abortion and homosexual “marriage,” it does so because those things undermine the fabric of society — the bonds of mutual respect, mutual trust, and mutual restraint that enable a people to live and work together in peace.

I am still against homosexual “marriage” and abortion, but I am willing to trade my support of government involvement in both matters for the cessation of government action in a multitude of other matters. Now, if I could persuade the other several million opponents of homosexual “marriage” and abortion to do the same, here is the deal we would offer:

We, the nation’s right-minarchists and right-statists, are willing to accept the possibility that some states will allow homosexual “marriage” and abortion. We are willing to do so, and end our attempts to regulate homosexual “marriage” and abortion at the federal level, if you, the nation’s left-minarchists and left-statists, will accede to the following conditions:

  • Eliminate all federal departments, and their functions, excepting justice, defense, state, and treasury.
  • Roll back all regulatory enactments and enabling laws to their status as of 1900.
  • Do the same with the federal tax code.
  • Except for the core federal functions of justice (in truly federal matters), defense, and foreign policy (which ought to serve our defense needs), devolve all federal functions to the States. (“Homeland security” is properly a  defense function, as are matters having to do with veterans’ benefits.)
  • The citizens of each State, through their legislatures and other avenues consistent with republicanism, shall determine questions such as access to marriage (if it remains in the purview of a State) and abortion, as well as such other matters as agricultural policy, regulation of commerce, provision of education, energy policy, justice (intra-State), health care regulation and subsidies, housing subsidies, labor policies, the disposition and use of public lands, urban affairs and transportation (including agreements with neighboring States about the construction and maintenance of highways and other means of transportation), and welfare (including State-level equivalents of Social Security, Medicare, and Medicaid).

I wouldn’t expect left-minarchists to want States in the driver’s seat on marriage and abortion. Nor are left-statists likely to give up on the idea of pressing every citizen into the same, Washington-dictated mold. But left-minarchists might be attracted by the opportunity for some States to offer their citizens more liberty. And left-statists might be willing to accept certain victory for dictatorial “liberalism” in many States, especially as they hail from the States most likely to give them all the “liberalism” they can stand.

I, for one, would welcome the opportunity to live in a State that rejects homosexual “marriage” and abortion, along with the imprisoning, impoverishing baggage of modern “liberalism.” Surely, there would be at least a dozen to choose from, right off the bat.

Why would I be willing to allow some States to legalize homosexual “marriage” and abortion if I am so strongly against those two things. One way of looking at it is this: The world is never going to be perfect, so you make the best you can of it. In this case, making the best of it allows some States to swim against the tide homosexual “marriage” and abortion.

It is likely that those same States, freed from the shackles of Washington, would take other actions to restore civil society and thus advance liberty. I suspect that the policies of those States would be so popular that other States would follow suit to avoid massive emigration and its result: a fiscal death spiral, à la Michigan.

Controlling the Beast

Professor Randy Barnett, a libertarian scholar of constitutional law, proposes a “federalism amendment” to the Constitution. As Barnett notes,

Article V [of the Constitution] provides that, “on the application of the legislatures of two thirds of the several states,” Congress “shall call a convention for proposing amendments.” Before becoming law, any amendments produced by such a convention would then need to be ratified by three-quarters of the states.

An amendments convention is feared because its scope cannot be limited in advance. The convention convened by Congress to propose amendments to the Articles of Confederation produced instead the entirely different Constitution under which we now live. Yet it is precisely the fear of a runaway convention that states can exploit to bring Congress to heel.

Here’s how: State legislatures can petition Congress for a convention to propose a specific amendment. Congress can then avert a convention by proposing this amendment to the states, before the number of petitions reaches two-thirds. It was the looming threat of state petitions calling for a convention to provide for the direct election of U.S. senators that induced a reluctant Congress to propose the 17th Amendment, which did just that.

There’s always the chance (albeit a slim one) that Congress would allow a convention to go forward. Were that to happen, I would try to drum up support for my version of a new Constitution, which does all that Barnett wants to do with his proposed amendment — and a lot more.