Ticket Prices Pay For The Whole Seat, But You'll Just Need The EDGE

The chamber is sparsely, yet tastefully appointed. The lone orchid is in bloom, shrouded from the glassy-eyed gaze of the man in the chair, partly obscured by the shadow cast by the naked bulb incongruously dangling from a plain black wire and partly obscured by the thick rawhide strap fastening his head to the sturdy oaken top rail.

The silence is broken by the sharp, staccato click of steel-shrouded heels on blood-red tile. The woman is carrying a cage that John Hurt or George Orwell fans will immediately recognize. At one end is a military-grade OBA facemask with the window removed. Secured to that is a wire mesh tunnel, perhaps eighteen inches long with deadfall gates at each end. At the other end is a tiny tin shack, roof rusted, housing a hillbilly rat famished from a sparse diet of millet crumbs.

The woman quickly, professionally, and wordlessly attaches the contraption first to the dedicated bracket emerging from the top of the chair, then with a fluid motion that suggests a journeyman's familiarity with shipboard firefighting gear, strapped the repurposed breathing mask to the man's sweat-soaked face. The involuntary whine that escaped his lips did precisely nothing to deter either her resolve or her efficiency of motion.

The comically large gold-plated key in his right hand was leaving an impression in his flesh, even as he strained vainly against his restraints. He didn't notice as she glided out of view behind him and began releasing the first safety catch on the deadfall nearest the snaggletoothed rodent snuffling at the far end of the cage. He did notice as the deadfall fell and the rat cautiously advanced down the tunnel, its claws raking against the wire mesh in the most awful symphony he could imagine.

As her elegantly manicured fingernail stretches toward the next catch, his whine escalates rapidly through a keen, then a wail, finally landing on an eardrum-shattering shriek. His hand flies open and before the prop key can even clatter to the floor, the device is whisked from his trembling head and is being spirited away by a dedicated assistant. The leather bonds on his head, arms, and legs are released, and he slumps to the floor, weeping in the sort of ecstatic bliss that only a brush with the deepest of fears can evoke.

I invite you to draw your attention to the woman. If she were in possession of a psychiatry degree and the room were part of her professional offices, this would be called "aversion therapy" and would be perfectly legal. If, contrarily, her job were unlicensed and she used the professional title of "dominatrix," the session described above would be called "edgeplay" and would be illegal, at least if money changed hands.

Consider the possibility that emotional therapy is a vocation, and that the wisdom embedded in the heuristics employed by seasoned professional doms is as good (if not better in some cases) than the classroom education obtained in graduate school. If paid licensed therapy is euvoluntary, why isn't paid BDSM?

End prohibition now. Therapy is not a crime.

The Moonshiners' Lament

In early July of 2019, I was subpoenaed for a Senate subcommittee hearing on S.2025, the Home Distillery Reform Act. Here is a partial transcript of the proceedings.

Sen. Jabroney (D-WI): Mr. Wilson, thank you for joining us today. I understand you are a, uh, expert on the, uh, economics of home alcohol production. Is that correct, sir?

SLW: Yes, your honor.

Jabroney: It's "Senator," thanks. Now, isn't it true that you're here today to argue that... let me see here... that moonshine, that is to say, distilling operations performed in the home... that this should be legal in the 50 states? Is that correct, Mr. Wilson?

SLW: Yes, that's correct. Um, Mr. Senator. Correct.

Sen. Rumplebottom (R-MS): Mr. Wilson, you are aware, aren't you, that illegal moonshine can be a poisonous substance and that in 2018 alone, over 250 Americans died from ingesting so-called "home-distilled spirits?" You did know this, Mr. Wilson, did you not? Or how about the fact that this unregulated black market alcohol often ends up in the hands of children, and that they don't know just how potent this stuff can be? You are aware of the negative effects of alcohol consumption on children, Mr. Wilson?

SLW: Yes, Senator. Those are all excellent reasons to legalize home distilling.

Rumplebottom: Excuse me? Did I hear you correctly? Did you just say that those are reasons IN FAVOR [emphasis in original] of passing this bill?

Sen Terdenhare (R-TX): Mr. Chairman, if I might, we did see that legalizing homebrewing of beer did not produce general lawlessness in America or that it led to the moral decay of the youth. If anything, the statistics have shown a decrease in underage drinking since the ban was lifted [2011 CDC findings], and that drunk driving fatalities have dropped from over 15,000 in 1991 to just over 10,000 in 2012, and that's with more young drivers on the road. Isn't that true, Mr. Wilson?

SLW: It is true, but it could be spurious to link the two. Other factors could have contributed to the decline in underage drinking and drunken driving. The best reason to legalize home distilling is to improve product quality.

Rumplebottom: Hold on a minute. Did you just say "product quality?" Mr. Wilson, this governing body has no interest in this product being available at all. Professional distilleries have the tools and expertise needed to produce safe spirits at reasonable prices. Can you sit there and guarantee me that the... the... the hooch coming out of a still in someone's garage won't be poisonous? Can you sit there and tell me that a home distiller wouldn't put bleach, or... or arsenic or some other adulterant into the mash to give it some extra kick? These aren't new practices, Mr. Wilson.

SLW: That's correct, Senator. When the homebrewing of beer was illegal, vendors were prohibited from selling the airlocks, carboys, and brewers' yeast needed to safely prepare beer in the home. As a result, the quality of homebrewed beer suffered. Now that homebrewing supply is a fairly large industry, hobbyists can easily and cheaply obtain high-quality equipment and ingredients to produce beer safely. The same logic applies to distilling.

Rumplebottom: Correct me if I'm wrong here, Mr. Wilson, but the brewing of beer is far less complicated than the distilling of alcohol, is that not so? If the temperature inside the still is just a little too high, impurities from the mash will carry over into distillate. Furthermore, if there's pesticides in the corn, those can be... [leans over to whisper to neighbor] ...volatile and end up in the final product. Is that not correct, Mr. Wilson? I can't tell you how many of my constituents have ended up in the hospital from drinking moonshine that either hasn't been distilled properly or has been made on the fly by some... some yokel trying to evade taxes. Is that not what you're trying to encourage with your support, Mr. Wilson?

SLW: It's true that distilling spirits is more technically demanding than brewing beer. Just as it's more technically demanding to build a dining room set than it is to build a bird feeder. The science and technology behind distilling is not all that complicated. Electric heating systems can maintain constant mash temperature in the required range much more reliably than the campfire methods commonly used by today's moonshiners. If this bill is passed, never again will anyone have to pull an old radiator out of a junked car in an ad hoc still. Kits, complete with instructions, as well as mash base, will be sold freely by vendors with tax id numbers who can be tracked down in the event that they sell defective or dangerous products. In an above-board, legal market, consumers have legal recourse.

Terdenhare: Thank you for your testimony, Mr. Wilson. This committee appreciates your cooperation.

Chair: This hearing is now in recess.

Three weeks after this hearing, the AP ran a story about how Senator Rumplebottom had received a sizable campaign donation from DISCUS, aka the Distilled Spirits Council of the United States, a lobby organization representing the commercial interests of the distillery industry. No charges were filed.

[This post and all the events depicted herein are fictitious. Any resemblance to any persons, living or dead, is purely coincidental] Euvoluntary Exchange, 2014.

It Snowed in Ferguson: the Logic of Prohibition

Earlier this month, I argued the logic of prohibition. The gist of the economics is this: if a market exists, outlawing it rearranges the institutions supporting exchange, but does not necessarily eliminate trade.

Consider hydromorphone hydrocloride, aka dilaudid. Dilaudid is a powerful analgesic, stronger than morphine, and classified on schedule II in the US (Substances in this schedule have a high potential for abuse which may lead to severe psychological or physical dependence. [source]). Despite its potency and potential for abuse (just ask any med-surg RN), dilaudid seldom joins the pantheon of street drugs the way MDMA, peyote, LSD, and marijuana do. Or more importantly, the way its close cousins morphine and heroin do. And why is this the case? Price elasticity. Dilaudid is a semi-synthetic opioid—its manufacture is a delicate process requiring specialized equipment and knowledge. Morphine and heroin require no hydrogenation process, and are therefore (relatively) less capital-intensive. These differences are reflected in the relative prices and the attending quality control and legal institutions in each market. Consumers can still obtain the pleasant effects of their opioid of choice, the costs simply move margins between strike price and risk premium. The market itself is not destroyed by prohibition.

I've come to wonder lately if there isn't a similar market for racial animus. What would a world look like if the legal market for bigotry were thwarted? As with opioids, I expect there might still be some underlying demand and a creative entrepreneurial class to serve that demand. I expect that by forcibly denying bigots, no matter how loathsome their intentions, the freedom to refuse association that they may turn to less accountable institutions that serve similar purposes.

You may read this and say something like, "hey, this guy is claiming that the 1964 Civil Rights Act caused blue-on-black brutality in Missouri. What a jackass." Let me disagree with the first half of that statement. I am not claiming that an end to the oppression of minorities created hate in anyone's heart. I am claiming that given the existence of hate, the institutions meant to govern it matter a great deal. What we seem to have done is apply a liberal dose of wishful thinking to the dilemma of hate in America. You can legislate a market in bigotry away no more effectively than you can a market in opium. Product bans in alcohol put power in the hands of crooked mobsters. Product bans in narcotics put power in the hands of crooked cartels. Product bans in bigotry put power in the hands of crooked police. Bigotry is scandalous and obscene. If the constituency has an interest in reducing or eliminating its trade, an orderly wind-down in an open setting of voluntary exchange is far better than employing para-military state thugs to harass and murder with impunity and unaccountability.

As I mentioned to Sarah, good cops are good; good institutions are better.

Interlude: Ice-T vs. Adam Smith

An exercise in analytical moral intuition. Please reconcile the following:

1) "As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market. When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for."

2) "Pimpin' ain't easy"

references
1) Adam Smith, Wealth of Nations Book I ch. 3 (1776)
2) Ice-T album "Rhyme Pays" track titled "Somebody Gotta Do It (Pimpin' Ain't Easy!!!)" (1987)

Abortion is not Euvoluntary

Few topics generate as much heat and as little light as abortion. I've found it interesting that it seems to come up relatively infrequently among those libertarians whose company I frequent. Something tells me that there's not a salience problem. Indeed, I imagine that almost every liberty-minded person out there has spent time mulling this thorny issue, wrestling with its complexity, weighing implicit, stochasic agency against predictable regret, noting likely BATNA scenarios. Giving the topic its due, as it were.

So it's particularly interesting for me to see a libertarian heavyweight tangle with arguably one of the most deservedly important living economists in the world. Bryan Caplan engages Richard Thaler.

Apart from Mario Rizzo's ongoing campaign against the camel's nose in the tent, the idea of soft or "libertarian" paternalism flared up again right here on EE with a post I wrote about the British Parliament's efforts to make salacious materials on the Web available to homes on an opt-in basis. Way off down under in the Land of the Kiwi, crazy Canuck Eric Crampton had similar thoughts at Offsetting Behavio[u]r. Professor Thaler emphatically denied the Nudge link on Twitter, even though "choice architecture" and his work was directly referenced by the politicians designing the scheme.

That's the funny thing about ideas. They're a common pool resource. It'd be nice if there were a lifeguard on duty, making sure nobody's running and that the splashing and horseplay is kept to a minimum, but sure as the day is long, that old burrito is bound to catch up with Smalls and he'll crap right in that pool. That's the nature of politics: it encourages, nay, demands that someone take a dump in the ol' swimmin' hole sooner or later. Virginia Political Economy details this mechanism with sufficient clarity and detail that James Buchanan won a Nobel Memorial Prize for it. I don't think he ever used any pool-pooping metaphors though. That undignified nonsense is 100% Sam. Point is, the originator loses control of an idea once ceded to a legislative authority. Perhaps this is obvious to me only because I'm a public choice student, and expecting others to share my esoteric knowledge is excessive. I should temper my expectations.

The conversation continues with Caplan posing a pointed question to Nudge Paternalists: why not nudge expectant parents away from the decision to abort a fetus? Included in the terms is what seems like a reasonable proposal, regardless of your stance on choice architecture: end government subsidies. After all, to get more of something, subsidize it, and I don't think that even the most staunchly pro-choice left liberal actively seeks more abortions, unless perhaps they subscribe to eugenic or NPG philosophies. Which they might. I know such people. Here's how Thaler responds: "what do you think the ban on government money does? Medicaid=poor. yikes!" Bryan follows up here.

I think Thaler's making a claim underpinned by EE conditions! One of the strongest arguments for keeping abortion legal is founded in BATNA considerations: one alternative to safe, legal abortion is dangerous, black market ("back-alley") abortion, which is riskier for the mother. Of course, that's an assumption. Elsewhere, JR has proposed a new logical fallacy: "I proclaim a new rhetological fallacy: the error of assumed opportunity, e.g. pursuit of leisure costs productivity, instead of leisure." It works well here, since the Right assumes that the alternative is childbirth and the Left assumes that the alternative is the medical equivalent of Jesse Pinkman in season 1 with a surgical mask... okay, let's leave the rest of that alone. More sophisticated arguments on both sides acknowledge multiple margins or a continuum, but most of what we hear are simplified platitudes. Hence the "much heat", "little light" above.

As the novelty account based on Dr. Phil lower in the Tweet thread notes, the median price for an abortion is around $470, and I checked about the Medicaid thing. Only 15 states allow Medicaid to help with the out-of-pocket cost of abortions. I can imagine how I would set up the econometric strategy to find out where the substitution margins actually are (it's not an easy specification, in case you were wondering), but something tells me that even carefully conducted empirical studies are unlikely to cause a whole lot of people to change their minds on this particular subject. It's pretty likely that this is based on strong moral considerations, not on dispassionate utilitarian evidence.

Maybe the reason libertarians don't like talking too much about this subject is because of the problem I'm having right now. I can't write a snappy concluding paragraph. I can't even beg you to consider the issue in a new light. You've heard the arguments, you know the positions. I have nothing new to add to the conversation. All I can say from an EE point of view is that in the exchange of services between a pregnant woman and a physician, the potential future human whose life is at stake gets no say in the transaction. That's it. I can make no further positive claims than that. This observation does not imply in any way any sort of policy position one way or the other and principled people can have legitimate disagreement over what to do next. This is a clash of values, not of beliefs. Our deontology here includes consequences, but the actual moral calculus is not ours to solve on your behalf.

Best wishes everyone, and sorry about the poop jokes. I get nervous when I tackle difficult subjects and it sometimes manifests poorly.

Update: another take here from Joe Colucci. I think he makes an excellent point when he notices that the nudge camp wants to quietly alter knife-edge behavior. Abortion is anything but. The decision to abort is fraught with distress, moral panic, and deep consideration. This is another reason why disinterested third parties have a very difficult case to make for interfering.

Shall We Crucify Mankind on a Cross of Austerity?

My post on the 17th Amendment got me thinking about William Jennings Bryan. What a character that guy was. He enjoys lingering fame for his efforts to force a newly-strengthened Washington DC to acknowledge and reflect the Will of the People. But most interestingly, he's also possessed of his fair share of infamy thanks to his participation in The State of Tennessee v. John Thomas Scopes and the embarrassing drubbing he got on the stand at the hands of Clarence Darrow: "We have the purpose of preventing bigots and ignoramuses from controlling the education of the United States." Ouch.

It's not my purpose here to dredge up the ugliness of the early Progressives. Instead, consider Bryan's approach to free exchange between consenting adults: those exchanges against which he bore enmity were to be the subject of control by the state. He did not champion for the virtue of temperance, he championed for the vice of wrath, channeled through the iron truncheon of the 19th Amendment.

In retrospect, we look back at the moral shortcomings of Bryan and men like him and chortle at their bucolic, benighted values, smirking and patting ourselves on the back at our obviously superior morality.

Yet still we turn to the unremitting power of the state to ossify our evaluations of euvoluntarity, expecting the eschaton ere long. Scott Sumner tries to sell monetary policy as a free lunch. Paul Krugman says that anyone who disagrees with him is a liar, a fool, or worse.

W.J. Bryan's arrogance did a lot of damage. Apart from being a prohibitionist, he was a war hawk. Sumner and Krugman probably won't be responsible for the rise of a large criminal underclass or the deaths of hundreds of thousands of young men in the cold Continental mud, but is it at least possible that history will judge each of us poorly? Is it possible that our grave certitude is inexact? Is it possible that we're wrong?

Therein lies the comparison: what are the relative consequences between a) being right and failing to act and b) being wrong and acting. This is a hardheaded question that deserves clear, hardheaded thinking. The euvoluntarity of future generations depends on it.

What are your null hypotheses?

Dubbers Asks (Season 1, ep.2): Isn't It High Time We Legalized Marijuana?

Art Carden has yet another Forbes article questioning the wisdom of drug prohibition. One of my fondest memories of my Principles of Microeconomics class was hearing the economic arguments against prohibition for the very first time. In truth, the arguments are really not fundamentally different than anything else basic economics teaches: accounting of benefits while ignoring costs is aggressively dishonest. Skillfully including unseen costs* is the hallmark of an accomplished economist. In the case of the drug war, those hidden costs were never that well hidden and are increasingly wearing neon madras and waving glow-in-the-dark pennants. The violence, the disintegration of low-income families, the rise of civil asset forfeiture, the meth lab fires, these are all pretty hard to ignore.

It's encouraging that regular voters are starting to wise up to the damage that the drug war is causing**, but if a baseline for intervention into trade is that euvoluntary exchange is acceptable, it's worth asking whether or not drug use is euvoluntary. Also interesting might be production and distribution, both as-is and in a likely alternative regime. We can then follow up with an exploration of what changes might be directionally euvoluntary.

Drug use now: not especially euvoluntary, most notably because of potential regret. Some of that regret comes from the risk of adverse addiction, but some of it is from bad product quality. The basic economics of don't kill your customers still has some logic even the illicit drug trade, but if someone way up the production chain cuts the product with something poisonous, the end consumer has no legal recourse. It seems to me that conditional on use, prohibition might increase the risk of ex post regret.

What about uncompensated external costs? I seem to recall hearing an argument that widespread drug use will reduce productivity, thus harming GDP. Ignoring for a moment the uncomfortable anthropomorphism of a statistical artifact, note that if it weren't for state-sponsored social safety nets the costs of drug use wouldn't be borne by the taxpayers, but rather by users and their families. The uncompensated externality is created by institutional choices. A similar argument applies for more severe cases and the medical services they consume, again, occasionally at taxpayer expense. It occurs to me that since drug abuse and public service provision have joint production characteristics, it's misleading to judge one without considering the other. At any rate, conditional on the status quo provision of health care and basic income (recall that there may be better ways to provide basic income than through managed payments, see Munger (2011) and Wilson (working paper) for more details), legalization might increase taxpayer burden, though this isn't a slam-dunk case. It really depends on how many more people would end up on the dole or in overdose treatment and what other mitigation institutions might arise. This isn't the place for that sort of detailed analysis and this question is far from settled, even in the best academic literature. Suffice it to say that it's possible but not certain that relaxed or repealed drug laws might breed more problem addicts.

Now to the meat of the question: BATNA disparity. Incarceration for simple possession is linked very strongly to poverty. At my most charitable, I think you could make the following argument: drugs are bad for you and wealthy drug peddlers are exploiting poor people by getting them hooked on drugs. For their own good, we will prohibit drug consumption on penalty of imprisonment. If I were less charitable, I might allege that throwing users in prison is a reinvention of Jim Crow, but that's probably a more incendiary claim and one that I can't rigorously support, despite its intuitive plausibility. We can see that like with calls to shut down sweatshops, though once again, the cure is worse than the disease. I wonder what it would look like if we went around imprisoning people for their own good for other supposed offenses, like watching too much TV or forgetting to floss regularly. Prohibition itself makes BATNA less attractive and moves away from euvoluntary trade. I can't see how this is meant to be good for society.

So I then reiterate Carden's question: isn't it high time we legalized marijuana? If not for the obvious reason of refraining from punishing otherwise peaceful people for their choice of recreation, then for making the world a more euvoluntary place?



*good economic analysis should correctly identify transfers as well as costs and benefits, and good analysts must be able to clearly explain the difference between the two.

**recent Gallup polls have support for marijuana legalization around 50% and rising