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Rationally Speaking is a blog maintained by Prof. Massimo Pigliucci, a philosopher at the City University of New York. The blog reflects the Enlightenment figure Marquis de Condorcet's idea of what a public intellectual (yes, we know, that's such a bad word) ought to be: someone who devotes himself to "the tracking down of prejudices in the hiding places where priests, the schools, the government, and all long-established institutions had gathered and protected them." You're welcome. Please notice that the contents of this blog can be reprinted under the standard Creative Commons license.

Tuesday, April 20, 2010

On So-Called “Sin Laws”

In 1859, British philosopher John Stuart Mill wrote one of his seminal works, "On Liberty" (imagine having more than one!). In this essay, Mill weighs "the nature and limits of the power which can be legitimately exercised by society over the individual." He sums up his stance with this now-famous passage:

"The sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number is self-protection. The only purpose for which power can be rightfully exercised over any member of a civilized community against his will is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He cannot rightfully be compelled to do or to forbear because it will be better for him to do so, because it will make him happier, because in the opinions of others to do so would be wise or even right. These are good reasons for remonstrating with him, or reasoning with him, or persuading him, or entreating him, but not for compelling him, or visiting him with any evil in case he do otherwise. To justify that, the conduct from which it is desired to deter him must be calculated to produce evil to someone else. In the part which merely concerns himself, his independence is, of right, absolutely. Over himself, over his own body and mind, the individual is sovereign."

In short, your decisions over your life are yours alone. Unless you are causing harm to others, the government has no right to interfere in your business. It is acceptable, Mill said, to write a book condemning beliefs or behavior, laying out reasons for your position; but it is not, however, for the government to step in with its heavy arm. Written more than 150 years ago, how does this so-called "harm principle" hold up? To be sure, it has widespread implications, and I could probably write an entire book on the matter. However, in this essay I would like to contain our discussion to what are commonly called "sin laws."

One form of sin laws is smoking bans in certain public spaces. The reasoning is that cigarettes directly and negatively influence the health of other citizens via second-hand smoke, and so these citizens should be protected. Smoking bans have also extended to bars and restaurants -- a move many charge is an example of the government exceeding its bounds, telling private companies how to run their business. However, bars and restaurants are public spaces -- they depend on public usage for their business. Therefore, they fall under the domain of government, and the government has an interest in protecting its citizens from damaging cigarette smoke.

A more controversial form of sin law, however -- which I will focus on for the rest of this essay -- is "sin taxes," or fees levied on products deemed harmful to society. Examples include taxes on cigarettes, soda, and bottled water. Another example, one that recently sparked an argument between my friends and me, and which led to writing this piece, is the news that tanning salon customers will face a 10 percent tax under the new federal health insurance reform package.

But aren't these people merely harming themselves? Wouldn't Mill object to such laws?

Interestingly, the moves are not necessarily designed to change behavior (indeed, data on this seems inconclusive; I would love to see more). Rather, since empirical evidence shows these products -- cigarettes, soda, bottled water, tanning salons, and more -- are harmful to general human and environmental health, the idea being that their usage strains the societal system. And since this would impact everyone in the system, the users should help cover the costs.

A seemingly clear-cut case for us might be the tanning salon taxes. The U.S. currently spends about $1.8 billion on treating skin cancers each year. To help fund the $940 billion health insurance overhaul -- which will extend coverage but also have to handle costs on such cancers -- lawmakers tacked on a 10 percent tax on individuals receiving indoor tanning services. The initiative is expected to generate $2.7 billion over ten years; and doctors predict the tax will reduce future costs of treating skin cancers.

But this issue admittedly gets more entangled. Consider the recent situation in Washington State. To help close a $2.8 billion budget shortfall, lawmakers there boosted taxes on bottled water, soda, beer, and candy. The measure makes for about half of an $800 million tax package Democrats argued was needed to prevent drastic cuts in state services. As one assembly member said:

"We cut health care, we cut K-12, we cut higher education. It's going to be harder for your students to get into college. Your students are going to have crowded classrooms they didn't have before because of our cuts. But at some point, you cut so much you start to close down basic government services."

One might argue, after reading that quote, that these taxes are not directly going to cover the health care costs they are creating. This should be obvious from the start, for such taxes cannot be divvied up in such a way. The argument remains, however, that these taxes are not going to cover health care costs at all, and instead are going to fund different services; that is, cigarette taxes are not going to fund lung cancer work. But this is all needless. The costs of certain behaviors make it tougher for the state to fund basic services because state costs are being diverted to pay for the consequences of those behaviors when they could be spent in other areas. So, if a state is facing such drastic budget shortfalls, it seems reasonable to raise taxes on those products or behaviors that increase costs to help pay for essential services.

The crux of this line of thought is that because we are all being hit by health insurance and social costs, it seems a minor move to implement a small fee on the goods reasonably deemed to be the cause of those costs -- especially on the specific goods and products in mind, and therefore the specific users, too. What about other products such as bottled water? Americans can quite easily stop using plastic water bottles, which is terribly damaging to and costly for the environment, and substitute reusable water bottles. Hence, if you want to continue to hurt the environment, you help pay for it.

The most registered reaction to the arguments above is known as the "slippery slope argument." It usually sounds something like this: "Next thing you know they'll tax (blank)!" or “Next thing you know they'll ban (blank)!”

But the slippery slope argument gets us nowhere. In fact, I cannot think of another avoid-the-argument argument that works as well as the slippery slope. It sounds more like: "Oh, I don't like that. But I can't think of anything against it. So .. hey .. I've got it: now that they did that, there's a very slight chance they'll do this! So that is bad!"

Consider, for instance, that a friend seriously pondered whether the government might be a step closer to imposing a tax on -- or worse yet, outlawing -- high-heeled shoes because of the danger they pose to a woman's ankles. This person also wondered whether the government might next step in and do something about paper, which is apparently causing an epidemic of paper cuts. But again, the taxes on cigarettes, tanning salons, and soda, are based on empirical data showing they are very bad for human health (at least in their current mode of consumption). There is no empirical data to support the same claim for high heels. Is anyone really frightened the government might levy taxes on high heels for the every-so-often twisted ankle or for that matter, paper cuts?

This brings us to another commonly heard counter-argument: "the government shouldn't tell us what to do." Perhaps the aforementioned backlash is coming from somewhere else -- say, a rejection of everything the government does (except that which helps, of course). This again avoids the issue. But, to the point, one cannot reject government action out of hand, for the government takes many actions that influence our lives everyday, some good, some bad. Instead, we need to discuss the merits of each particular case.

Still others will worry we are moralizing. Even Mill wrote that:

"The likings and dislikings of society, or of some powerful portion of it, are thus the main thing which has practically determined the rules laid down for general observance, under the penalties of law or opinion."

There is a problem if our laws are based on preferences, on likes and dislikes. However, I do not think we should be worried about morality influencing our laws, for our laws and morality cannot be separated. Our moral beliefs and values -- whether religious or secular -- are about how to deal with the suffering, happiness and welfare of sentient, conscious creatures on Earth, which means they will surely influence social and public policy. President Barack Obama admitted as much in "Audacity of Hope," noting that our laws are but a codification of our morality. The point becomes that it is fine to moralize so long as the moral views are supported by reason and evidence.

Still, we must realize the difference between certain actions taken to cure a societal ill. Mill states that men should live "without impediment from our fellow-creatures, so long as what we do does not harm them even though they should think our conduct foolish, perverse, or wrong." For the cases above, the government has taken certain steps to protect, at a baseline, other citizens from the harms of others. The government has also taken certain steps to recoup costs put on the system by citizens acting questionably. What the government has not done generally is ban products, unless they are absolutely dangerous to human health. Instead, if we collectively believe certain actions are "foolish, perverse, or wrong", we can continue to grant such actions allowance -- with perhaps a higher price tag or controlled usage -- but also write blog posts and books, and start campaigns detailing their downsides in an attempt to slow their use. This is liberty guided by real world considerations.

That last idea -- liberty guided by reason and evidence -- is important to note because uncritical adherence to principle can leave us blind to nuance. Consider marijuana. Marijuana has been under the thumb of the law for decades -- but why? Mostly because orthodoxy and tradition hold that it is a dangerous drug akin to cocaine and others. Yet marijuana is absolutely less harmful than cocaine -- and even cigarettes and alcohol. So why outlaw it? Here we come back to the point: our laws should be guided by reason and evidence by way of case-by-case evaluations -- not by broad stroked, handed-down moral traditions. Apply critical inquiry to each case before us and we just might get somewhere.

55 comments:

  1. I do not understand why sales tax for certain 'sin' items thought to increase everyone's health care premiums cannot be allocated to direct state support for health care costs. We should be able to divide estimated total sales for a given consumer product by total sales of all products that generate state sales tax.

    Why is this problematic?

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  2. I agree with what you say on this post, Michael De Dora. This one seemed well thought out and progressed in steps.

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  3. Taxes smokers pay well exceed medical costs they impose.

    There is no need for the government to "protect" the public from smoking in private establishments since those that find cigarette smoke distasteful can easily avoid such establishments.

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  4. @Dave S.,

    My understanding is that the tax system just doesn't work like that. While we can figure out how much the state will recoup, I don't think all that money goes into a specific government cash account.

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  5. No specific comment, but wanted to say thanks for writing and as usual, for improving my thinking and arguments on a topic!

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  6. Fine post, but I think clarification on a couple economic concepts would help. Sin taxes usually have one of two goals that actually compete with each other.

    The first, such as in the case of smoking bans, is to correct the negative externalities imposed on non-smokers. The basic idea is that is smokers had to pay for the harm they caused non-smokers, fewer would smoke or they would smoke less. Taxation is one way to impose this cost that is otherwise missed by the market. Note that in this case, it doesn't matter how the money is spent (it could just be given back as a rebate) since the goal of getting rid of the externality is accomplished simply by reducing smoking. All the better if those funds are used constructively. Note that the same logic could be used to entice people to create positive externalities (e.g. tax breaks for cleaning your yard so that house prices in the neighborhood stay high). Would Mill have a problem with this type of intervention as well?

    The second goal of sin taxes is revenue generation. Many sin products have high inelasticities of demand, meaning that a large change in price has a small effect on quantity demanded. Thus, they are good at generating revenue precisely because they don't cause people to quit smoking, tanning, etc! If increase cigarette taxes caused enough people to quit smoking, it wouldn't generate more revenue. Hence, the goals of correcting externalities and generating revenue are rivals. I suspect that cynical politicians know this, and use the excuse of correcting behavior because its expedient when the real goal is revenue (this obviously doesn't apply to restaurant smoking bans since there is no revenue there). Another rationale for taxing anything with high inelasticity of demand is that it is economically efficient, since it basically involves a direct transfer of funds without dead weight loss (in econojargon).

    Even if one accepts these economic premises, one still might find it immoral to use sin taxes because they impinge of personal liberty. But I think these economic models at least lay bare what moral decision your making - protecting a person's freedom to smoke at the expense of harming some nonsmokers. I find both utilitarian and civil libertarian ideas compelling, making it hard to deal with these issues at times. It seems that the evidence (e.g. how harmful is secondhand smoke) informs which principle I adopt, which is kind of the opposite of how it should go I think? I don't know, it's a difficult issue.

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  7. Two things: One, to call a private business a public space is a stretch if we take property rights seriously. A private bar or restaurant doesn't rely on "public usage" to stay in business. It depends on private citizens making the decision to frequent the establishment. Which they can do or not do, to the extent that the place's smoking policy is palatable to them.

    Two, if the govt is justified in taxing these so called harmful behaviors, why not an outright ban? Surely if cigarette smoking is so harmful to the general populace that cigarettes should be subject to heavier taxation than other consumer goods, then a ban would be more beneficial and would save more money, right?

    And while I agree with you regarding slippery slope arguments in general, the concern is not always inappropriate. Couldn't the govt, if permitted to tax behaviors deemed harmful under certain measures for no other reason than the ones you've outlined here, extend the argument further? One concern is that laws are often subject to judicial review, which maintains a level of deference to precedent (albeit not absolute) and this deference might allow additional restrictions on freedoms that go beyond the obvious intent of earlier laws on the basis that the argument for the new law is the same as the argument for the law on which the precedent decision was rendered.

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  8. Decent post, Michael.

    One thing I would criticize is the way you say 'the government'. It perpetuates this notion that our government operates as this completely unaccountable regime. The government represents peoples' interests and acts as an arm of the people (at least this is the way its supposed to work; not at all times, admittedly) - especially on the policies you mentioned.

    Smoking is banned because most people don't like it. Not because 'the government' decided it was a good idea one day.

    Its a point worth mentioning as I feel if more people recognized this, there'd be less distrust of it.

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  9. Marijuana. Not so harmless after all...

    http://www.schizophrenia.com/prevention/streetdrugs.html

    A documentary for those too stoned to read: http://www.cbc.ca/documentaries/natureofthings/2010/downsideofhigh/

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  10. Interesting and related story came out today, reporting on the April issue of Archives of Dermatology, a journal of the American Medical Association:

    "Indoor Tanning Addictive as Alcohol and Cigarettes"

    http://www.foxnews.com/story/0,2933,591288,00.html

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  11. Another good and related piece, this on soda taxes and the corporations fighting them.

    http://www.huffingtonpost.com/peter-dreier/the-soda-tax-wars_b_544898.html

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  12. Regarding the potential for "soda taxes" we should also be aware that the govt. also subsidizes consumption through farm policy supporting corn and high fructose corn syrup, a common ingredient.

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  13. I agree with C Van Carter. People who find second-hand smoke repellent can simply avoid places of commerce that allow smoking to occur. I have no problem however with government enterprises like courts or police stations prohibiting in-door smoking.

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  14. So the 85% of people who do not like smoking should go elsewhere to avoid it?

    How gracious of you!

    How about the smokers go hide in caves, instead?

    Unbelievable.

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  15. NewEnglandBob,

    If I own a restaurant, by what right may the government use force to determine how I run my restaurant as long as I respect the rights of others and don't aggress against them? I disagree that there is such a thing as a "right" to smoke-free dining that involves government coercion.

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  16. The Monkey: "One, to call a private business a public space is a stretch if we take property rights seriously. A private bar or restaurant doesn't rely on "public usage" to stay in business. It depends on private citizens making the decision to frequent the establishment. Which they can do or not do, to the extent that the place's smoking policy is palatable to them."

    I feel like we're split on definitions; I don't see public and private like you do. I consider people, citizens, part the public. They need to frequent eateries, so the health conditions at those eateries are, to some degree, of public concern. This doesn't mean overbearing laws. There can still be liberty while protecting citizens.

    The Monkey: "Two, if the govt is justified in taxing these so called harmful behaviors, why not an outright ban? Surely if cigarette smoking is so harmful to the general populace that cigarettes should be subject to heavier taxation than other consumer goods, then a ban would be more beneficial and would save more money, right?"

    This is from my essay. It seems like balanced liberalism to me. Your thoughts?

    What the government has not done generally is ban products, unless they are absolutely dangerous to human health. Instead, if we collectively believe certain actions are "foolish, perverse, or wrong", we can continue to grant such actions allowance -- with perhaps a higher price tag or controlled usage -- but also write blog posts and books, and start campaigns detailing their downsides in an attempt to slow their use. This is liberty guided by real world considerations.

    C Van Carter: "There is no need for the government to "protect" the public from smoking in private establishments since those that find cigarette smoke distasteful can easily avoid such establishments."

    Not all public areas are closed off to smoking. For instance, in the streets of NYC, fine. Parks, fine. But in bars and restaurants, no. You can smoke in the front, or on the back patio.

    People frequent bars and restaurants differently than they do the vast public. It is not as easy as some make it seem to avoid smoke in closed spaces. The government has an interest in protecting its citizens from something that is proven harmful for them.

    Darek: "Smoking is banned because most people don't like it. Not because 'the government' decided it was a good idea one day.

    This is a salient point. Public opinion does steer the government. The public opinion has moved, I think, because of the evidence that smoking is horrible. In turn, the government acts.

    Elvis: "Marijuana. Not so harmless after all."

    There actually is some nuance to marijuana. Teen use seems to correlate with mental problems later. Also, I think that certain smoking methods are worse than others. And marijuana can be overused, surely. Public education on this would go a long way.

    Still, alcohol and cigarettes are worse.

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  17. This comment has been removed by the author.

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  18. Now this will make sense ...

    I should couch that: I consider people, citizens, part of the public in their engagement with the public, which to me is the space outside the confines of our preferences and homes. But there is clearly a difference. It's fine for you to drink alcohol as you will in your home; it's not fine to then get in a car.

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  19. Michael Labeit,

    "by what right may the government use force to determine how I run my restaurant as long as I respect the rights of others and don't aggress against them?"

    Because the 85% of the public does not like it and 100% of the public can be harmed from it. That is intrusive. I smoked for 35 years, so I know what it feels like to smoke and be addicted. I became less stupid 8 years ago.

    "I disagree that there is such a thing as a "right" to smoke-free dining that involves government coercion."

    Too bad you disagree. You are still wrong. That is the major problem with the right wing in the US. Only concern for self and screw everyone else. It is truly offensive.

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  20. There's a practical consideration here beyond abstract notions of civil liberty.

    Having the government ban smoking in restaurants benefits restaurant owners who want to prohibit smoking while avoiding the abrasive unpleasantness of enforcing a self-imposed smoking ban. This way, the restaurant owner who is obliged to enforce the ban can simply shift the blame to the government.

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  21. Where I live it is illegal to have a private club for smokers only, staffed entirely by people who themselves smoke. Obviously there is no rational justification for this.

    Indoor smoking bans (as New England Bob reminds us) are a moral crusade. Cigarette taxes are greed.

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  22. NewEnglandBob,

    Individual rights do not depend upon public opinion. A social system that operates as if rights do depend upon public opinion is a form of pure democracy, majoritarianism. That 85% of the public oppose smoking in private restaurants is irrelevant. If an individual rightfully owns a restaurant, he should be able to control it as he wishes as long as he respects the rights of others, i.e., as long as he refrains from aggressing against others.

    "100% of the public can be harmed from it." The key word is "can." I suppose one can be harmed from habitually patronizing a restaurant that allows in-door smoking. Thats why, in a free society, one is able to refarin from patronizing such establishments.

    This issue here is property rights. If a person employs his physical and mental labour to start a restaurant by purchasing or renting the property, acquiring the labour necessary to produce the food and serve the customers, and acquiring the financial capital, debt or equity or both, to finance his undertaking, then I believe he has a right to control his restaurant as he pleases. Of course, he would be bound by any contractual agreements.

    A person requires freedom in order to think, in order to employ his mind in a rational and productive endeavor. Government aggression eliminates this necessary condition to rationality. You might say "Well, the restaurant owner is not acting rationally." But if this is the case, how is force an antidote to irrationality? One cannot force another to be rational. Rational conduct is something that must be chosen; it cannot be imposed.

    "You're wrong" + a smear about "right-wingers" doesn't count as a rebuttal.

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  23. ...those that find cigarette smoke distasteful can easily avoid such establishments.

    Where I live it is illegal to have a private club for smokers only, staffed entirely by people who themselves smoke. Obviously there is no rational justification for this.

    Well, by the same logic, you can easily avoid such a thing by opening up such a business elsewhere.

    "You don't like it here, than leave" is a two way street when the legislative brass behind such a principal is decided by a majority.

    I take it democracy is not for you?

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  24. "This issue here is property rights. If a person employs his physical and mental labour to start a restaurant by purchasing or renting the property, acquiring the labour necessary to produce the food and serve the customers, and acquiring the financial capital, debt or equity or both, to finance his undertaking, then I believe he has a right to control his restaurant as he pleases. Of course, he would be bound by any contractual agreements."

    Property rights is only a part of the situation. Governments require all kinds of permits and licenses. The board of health can attach all kinds of caveats and can close down a restaurant for any number of reasons. The government can and does require food that a restaurant buys to be inspected and produced to standards. The municipality can require handicap access. They can control the traffic situation outside and can rule on whether the parking is sufficient and egress and access conform to certain levels. Taxes can be levied on all the food and even more onerous taxes can be levied on things like alcohol. The government can and does ensure that all citizens who attend this 'private' restaurant are dealt with equally and fairly (Can not refuse seating based on race, etc. but CAN exclude all people who are shoeless). The public can and does expect to be protected by the taxes THEY pay to the government and their rights can supersede individual property rights.

    It is also settled law that any establishment open to the public at large is a pubic location.

    By your flawed logic, anyone could open a restaurant to serve food and prostitution and drugs and have a table in the corner to arrange murders.

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  25. Darek W: It's simpler, less burdensome, and requires no state coercion for customers to avoid bars, nightclubs, and restaurants they don't like than it is for smokers to move to one of the few cities where smoking is still allowed.

    I avoid - and so does everyone else - all sorts of bars, nightclubs, and restaurants for all sorts of reasons - serving quality or types of food I don't like, having staff I dislike, playing music I dislike, having a general atmosphere I find dull or distasteful. Yet I don't demand government intervention to make all places amenable to my tastes, even though according to you people my "right" to enjoy all establishments is being infringed.

    It's true I'm not a fan of democracy.

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  26. Michael De Dora writes,

    "The most registered reaction to the arguments above is known as the 'slippery slope argument.' It usually sounds something like this: 'Next thing you know they'll tax (blank)!' or 'Next thing you know they'll ban (blank)!'

    But the slippery slope argument gets us nowhere. In fact, I cannot think of another avoid-the-argument argument that works as well as the slippery slope. It sounds more like: 'Oh, I don't like that. But I can't think of anything against it. So .. hey .. I've got it: now that they did that, there's a very slight chance they'll do this! So that is bad!'"

    I think this is a misrepresentation of the slippery slope argument. As an argument it is not fallacious per se, as is implied above. I would argue that the slippery slope argument is sound within respect to "sin taxes" because, economic history demonstrates admirably that government intervention often beings with nominal, allegedly negligible new controls upon narrow industries or firms and ends up involving sweeping, industry wide regulations.

    As economist Robert P. Murphy argues,

    "I note with dismay that I am old enough to remember when libertarians and conservatives would object to government interference with tobacco and alcohol by asking, 'What next? Will the government start taxing fatty foods and put warning labels on fettuccine alfredo?' I can honestly remember that the proponents of the 'serious' regulations dismissed this particularly slippery slope argument as absolutely absurd, that nobody would ever advocate a tax on fatty foods. And yet now, Barry Popkin at the University of North Carolina in Chapel Hill defends the taxes on soda by pointing out, 'We've done it with cigarettes.'"

    According to the slippery slope argument applied to this situation, the premises that permit the taxing of tobacco and alcohol do not permit the government to refrain from further taxing soda. Logical, deductive consistency with the premises that permit tobacco and alcohol taxes demands that one conclude that soda should be taxed as well. I say that one is abiding by an invalid deductive argument if one taxes tobacco and alcohol but not soda. To do so, I say, is logically inconsistent.

    Furthermore, the danger lies in the fact that we may not currently know what deductive conclusions flow from the initial premises that act co-operatively to "justify" tobacco and alcohol taxes. If the premises that act co-operatively to "justify" tobacco and alcohol taxes are sufficiently broad, then the sky may be the limit when it comes to the imposition of further taxes down the road.

    So, I argue that the slippery slope argument is sound if it identifies the dangerous potential of logical consistency from false premises.

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  27. This issue here is property rights. If a person employs his physical and mental labour to start a restaurant by purchasing or renting the property, acquiring the labour necessary to produce the food and serve the customers, and acquiring the financial capital, debt or equity or both, to finance his undertaking, then I believe he has a right to control his restaurant as he pleases. Of course, he would be bound by any contractual agreements.

    What I feel this argument fails to consider is what that property is inherently bound by. Is it in a city? Will most of its patrons be using roads to get there? Buses or subways? Will that restaurant rely on the cities' sewage and waste disposal systems?

    I would suggest you read the link provided by Michael in this post from The Onion and extrapolate the underlying message a bit further.

    If something like a restaurant is going to benefit by what the state provides, it can put up with what the state decides - especially when legislated by popular support - the same popular support that you are trying to get in your restaurant.

    As much as one would love to believe that they are solely responsible for the their venture because of their brilliance and good looks, they rely more on others than they like would like to admit.

    Also, theres a strange notion of freedom being floated around here... You seem on the one hand to acknowledge the harmfulness of smoking and on the other complaining that you don't have the freedom to setup an establishment that allows people to smoke...

    'Freedom for me and not for you' is not freedom at all.

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  28. C. Van Carter,

    So its a matter of whats less burdensome for the minority of people? Thats what should serve as arbiter in these kind of situations? I obviously think thats not a good argument to settling the 'if you don't like it, than leave' conundrum. Certainly, majorities can be in the wrong, but that shouldn't mean they should be subjected to the few.

    Avoiding a bar because of bad music is different from avoiding a bar because of smoking. Are you being harmed by bad music? Its effecting your health in the same way as a cigarette?

    I'm not against your 'right' to enjoy or avoid these establishments. But I am against this notion of the 'freedom' to harm others - which is what smoking does and is the issue here. Its not about telling you where you can eat or where you can go. Its about preventing harm.

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  29. NewEnglandBob,

    Arrange murders? Nice insult.

    Yes, I would legalize prostitution as well as the production and exchange of drugs including the hard, nasty stuff. Let the drug war be someone else's legacy.

    Sure, the government does all those things you mentioned. That's not the question. The questions are "should the government do all those things?" and "can private enterprises do those things more efficiently" (not counting taxation however - stealing is an art perfected by the government). You tacitly imply that only the government can ensure food safety and control traffic (the government actually causes traffic by artificially reducing the price of road access, causing a road access shortage).

    Don't talk about arranging murders, especially when your own character is this () close from commiting suicide.

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  30. I have to agree that slippery slopes do exist. "If we build a 4-lane highway here, what's next, a 6-lane highway?" 20 years later, there it is.

    and not to nitpick, but high-heeled shoes are bad for you. look on pubmed for plenty of studies.

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  31. Several people have argued that smoking bans in restaurants and bars are unreasonable because people who "don't like" cigarette smoke can just go somewhere else.

    The problem is not that people don't like cigarette smoke. The problem is that second-hand cigarette smoke is a genuine health hazard. So what's the difference between smoking and other kinds of hazardous activities that the government regulates? For example, OSHA has strict regulations regarding construction work in places open to the public. Should OSHA abandon those rules just because people can avoid areas under construction?

    Note also the key phrase "open to the public." A place can be privately owned and still be open to the public, and opening a private property to the public carries certain kinds of legal baggage -- as it should.

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  32. "can private enterprises do those things more efficiently"

    No. They generally can't. Whats more profitable is always considered above anything else and generating the most profit is always the same as being efficient (like making millions while polluting). Not to mention, private businesses cannot be held accountable in the same way government agencies and programs can.

    The past couple years should serve as a sharp reminder of this.

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  33. "should the government do all those things?"

    Yes, it is what people elected the government to do.

    "can private enterprises do those things more efficiently"

    Some things - yes; many things - an emphatic NO.

    "the government actually causes traffic by artificially reducing the price of road access, causing a road access shortage"

    That is a statement of pure nonsense - where is there anywhere in the world private roads that everyone can use that work better than those SUPPLIED BY THE PEOPLE via their governments.

    "Don't talk about arranging murders, especially when your own character is this () close from commiting suicide"

    This shows that you are a troll and an asshole - I will no longer respond to such stupidity from you. Go ahead and rant your stupidity that I will not see. You have deadened this thread with your nonsense and I am out of here.

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  34. NewEnglandBob,

    It should be obvious (even to you) that a government should not perform certain acts merely because its officials are elected by a majority to perform those acts. Anyone is capable of conceiving a scenario where the government should not do what the people want it to do.

    I gather from your reaction to my proposition regarding government and traffic that you are not too familiar with economics. Allow me.

    According to the laws of demand and supply, when the price of a good falls, the quantity of that good demanded by consumers rises and the quantity of that good supplied by producers falls. The reasoning is simple. As the price falls, it falls within the price ranges of more consumers and departs the price ranges of more producers. Now, the market always establishes prices that equate the quantity of a good demanded with the quantity of a good supplied, since incentives exits within the market to correct imbalances between the quantity demanded and the quantity supplied.

    However, the government can seize goods and impose its own non-market prices upon them. This is the case with roads, an industry monopolized by the government. Our government sets the price of road access artificially low, i.e., below the market price (if there was one). As a result, the quantity of road access demanded rises (while the government generally maintains the quantity of road access supplied). Thus, the quantity of road access demanded exceeds the quantity of road access supplied, causing a shortage - traffic.

    "where is there anywhere in the world private roads that everyone can use that work better than those SUPPLIED BY THE PEOPLE via their governments."

    There's a tremendous lack of private roads *because* governments prohibit the production of private roads. Dude, the non-existence of private roads due to government intervention is not a mal-effect of private roads - its a mal-effect of government. How can you simultaneously criticize private roads for not operating well and champion the government monopolization of roads which eliminates the necessary condition for the very existence of private roads?

    Good riddance. If you can't take it, don't dish it out. Might I remind you that the nastiness began with your post.

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  35. Darek W: No one is involuntarilly "subjected" to second hand smoke. The government does not prevent people from engaging in activites far more risky than being around smokers, including smoking itself.

    The 'second hand' consequences of drinking (drink driving deaths, assaults, rapes) are far worse than than the second hand effects of cigarette smoke, and those harmed by them are harmed involuntarily. It would be more rational public policy to tolerate smoking in private establishments, while only allowing drinking in private homes.

    Scott: OSHA sets permissible exposure limits (PEL's) to a variety of hazardous substances. If you believe the government there is "no safe level" of exposure to second hand smoke. Which is absurd, but then government claims about SHS are not based on science. The Anti-smoking movement is motivated by extortion and moralism.

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  36. Darek W writes,

    "What I feel this argument fails to consider is what that property is inherently bound by. Is it in a city? Will most of its patrons be using roads to get there? Buses or subways? Will that restaurant rely on the cities' sewage and waste disposal systems?...

    If something like a restaurant is going to benefit by what the state provides, it can put up with what the state decides - especially when legislated by popular support - the same popular support that you are trying to get in your restaurant."

    Darek,

    If the state takes it upon itself to provide everything and forcibly prevents private enterprises from competing to provide those same goods, would it be sensible then to acquiesce to the demands of the state?

    Sure, restaurant patrons most likely use city roads. However, the city largely prohibits the ownership and construction of roads by private enterprises. If I'm a milkman and I'm the sole provider of milk to you but only because I forcibly exclude milkman competition in my neighborhood by harrassing and coercing the other milkman, are you going to show me deference because I deliver milk to you? This is what government does with regard to roads.

    The same applies to government roads, government transportation, and government sewer systems. There is no reason why private roads or sewer systems or buses and trains could not operate effectively.

    "Also, theres a strange notion of freedom being floated around here... You seem on the one hand to acknowledge the harmfulness of smoking and on the other complaining that you don't have the freedom to setup an establishment that allows people to smoke...

    'Freedom for me and not for you' is not freedom at all."

    I haven't been shy when it comes my conception of rights and freedom. I argue, a la Ayn Rand, that a right is a moral sanction to the performance of a specific action within society. We have the right to guide our lives in accordance with our own independent judgment and to control the material product of our mental or physical laboour - meaning, we have the right to do these things in the absence of forcible interference as long as we do not initiate the use of force against others.

    Is there a contradiction between recognizing the harmfulness of smoking (I've never smoked, ever) and simultaneously recognizing one's right to establish a restaurant that permits in-door smoking? I don't think so. I think you'll see that I do not endorse asymmetric freedom.

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  37. Darek W writes,

    "...Whats more profitable is always considered above anything else and generating the most profit is always the same as being efficient (like making millions while polluting). Not to mention, private businesses cannot be held accountable in the same way government agencies and programs can.

    The past couple years should serve as a sharp reminder of this."

    If a private enterprise pollutes upon another's body or private property, so much so as to constitute a right's violation, then the government should punish the private enterprise in question by levying compensatory damages upon it and require the private enterprise to conduct a clean up. That the government very often does *not* do this is its fault, not the fault of the private enterprise or of capitalism. In this case, the government commits what Walter Block calls the "sin of omission." It fails to do what it should do, i.e., protect individual rights (as I conceive of them, of course) including private property rights.

    Now, I argue that the past couple of years demonstrates the "sin of commission" on the part of the government. In particular, it shows why the government should neither artificially reduce interet rates nor forcibly reduce credit exchange standards.

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  38. C. Van Carter,

    If I go to a place for a burger, I don't want second-hand smoke on the side - especially if most people there are not smoking. If I get it, I'm involuntarily subjected to it, no? "Well, go someplace else for a burger." is your response, but most people don't smoke (anymore). If we didn't know about the health risks associated with smoking and we were back in the 1930s, you'd have something here. But we do, and I'm being to subjected to cigarette smoke because someone else wants the freedom to do so.

    If there were no laws or restrictions against drunk driving or being intoxicated in public, perhaps you'd have a good analogy - but those are charges that have restrictions as well. The government in fact limits the amount you can drink, should you drive. I don't see the government doing the same with cigarettes.

    The drinking to smoking argument also fails in that if I am consuming a beer, I'm not at the same time effecting the persons' health next to me as I'm drinking it. The actions you're talking about that may be aided by the fact that someone is drunk are triggered by other varying factors - not just the alcohol.

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  39. Michael Labeit

    If the state takes it upon itself to provide everything and forcibly prevents private enterprises from competing to provide those same goods, would it be sensible then to acquiesce to the demands of the state?

    This is what I was talking about when I made my first comment on this thread to Michael. The state is not the Randian bogeyman you'd like to think it is. If I support - to the level of the nation, state, county, city, whatever, a measure to ban smoking - its complicit. The 'demand' of the state is a demand by a majority of people (assuming my support fell into the majority) - a demand which is executed by an organized body we call government. Its not some independent, unnacountable mafia unit.

    The problem is - in the restaurant/smoking scenario - that you're arguing on the waning side (not that you are necessarily a smoker). Smoking was once very popular, but now, because of what we know, it is not. Things change; hence the nature of reform. The 'freedom' to smoke is reformed given new information of what smoking does.

    The acquiescence here is for those who fall in the latter category - namely those who are free to harm themselves, but not others.

    If I'm a milkman and I'm the sole provider of milk to you but only because I forcibly exclude milkman competition in my neighborhood by harrassing and coercing the other milkman, are you going to show me deference because I deliver milk to you? This is what government does with regard to roads.

    No. Thats a very poor analogy. If you're a milkman, you rely on a hell of a lot of government subsidy in order for you to do business - from where that milk comes from to how that milk gets processed, to how it gets distributed. This narrow-mindedness (frankly, its what it is) is precisely what is wrong with Randian views (though I will concede I've only ever read 'Atlas Shrugged' and 'The Fountainhead').

    The same applies to government roads, government transportation, and government sewer systems. There is no reason why private roads or sewer systems or buses and trains could not operate effectively.

    This is a bit of a 'cry me a river' argument, if I can say so. We could live in a world where our economy worked differently, but it doesn't. We have these things because we needed them and the best way to get them done was through government programs - not through private enterprise. Who ever stepped up to offer us a national highway system? railway system? Why did they fail? The resources and dynamical capabilities of a centralized state is second-to none next to private enterprise - I challenge you to show me wrong historically.

    Not that private enterprise can never help - see the history of ATT.

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  40. to Michael Labeit (continued)

    What you are ignoring is the fact that all of those government programs provided things that were recipricated by public support. If you're insinuating that the private sector was there at all times, from the railroads to the moon, to provide a hand, the first to the idea, willing to do those things instead, but it was that damn government which forced us out like the mafia... well, frankly, the burden is on you to make this make sense.

    We have the right to guide our lives in accordance with our own independent judgment and to control the material product of our mental or physical laboour - meaning, we have the right to do these things in the absence of forcible interference as long as we do not initiate the use of force against others.

    Not only is the problem that your control over your material product disregards the possibilty of unintended consquences unto others, its exactly why private interests - when used as motivation as a model for public policy, is inefficient and negligent in comparison to government - which is publicly accountable

    Is there a contradiction between recognizing the harmfulness of smoking (I've never smoked, ever) and simultaneously recognizing one's right to establish a restaurant that permits in-door smoking? I don't think so. I think you'll see that I do not endorse asymmetric freedom.

    Yet in your next post to me, you agree that those who pollute another's body or private property should be punished... Frankly, I don't think you know what you're talking about here - or rather, your position is clearly not well thought out with this contradiction present.

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  41. If a private enterprise pollutes upon another's body or private property, so much so as to constitute a right's violation, then the government should punish the private enterprise in question by levying compensatory damages upon it and require the private enterprise to conduct a clean up. That the government very often does *not* do this is its fault, not the fault of the private enterprise or of capitalism.

    The government does attempt to place restrictions and regulations, but when you have an industry powerful enough - like coal or oil, among others - to lobby government officials, which circumvents public interests, than you have polluters paying to pollute - but they're making profit. That you seem to ignore this (I say this because I don't think you've never found a case in which I have described) is very telling.


    In this case, the government commits what Walter Block calls the "sin of omission." It fails to do what it should do, i.e., protect individual rights (as I conceive of them, of course) including private property rights.

    Nope. It tries to do just that. But when private enterprise develops resources that out-maneuver public support, democracy is a catch phrase and fascism is fashionable.

    Now, I argue that the past couple of years demonstrates the "sin of commission" on the part of the government. In particular, it shows why the government should neither artificially reduce interest rates nor forcibly reduce credit exchange standards.

    What? Sorry. Please expound on this further. This is not even wrong, as it stands.

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  42. Darek W writes,

    "If I go to a place for a burger, I don't want second-hand smoke on the side - especially if most people there are not smoking. If I get it, I'm involuntarily subjected to it, no?"

    No. You are not involuntarily subjected to second hand smoke in this scenario *because* no one forced you to patronize the above burger establishment. Its as simple as that. As long as you choose to eat within a restaurant that tolerates second-hand smoke, it is *you* who exposes yourself to second-hand smoke. You subject yourself to second-hand smoke, or better yet, you allow the owner of the restaurant to subject you to second-hand smoke. Either way, you act voluntarily and you are not subject to coercion in any way.

    The restaurant is private property, and when you agree to enter the premises you agree to abide by the rules of those who control the private property.

    Ironically, it is *your* proposal which would introduce the coercion. I gather you would have the government use force to abolish smoking within restaurants.

    As a side note, I also think that the government should criminalize drunk driving, as long as it controls the roads.

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  43. The restaurant is private property, and when you agree to enter the premises you agree to abide by the rules of those who control the private property.

    Damn private property if it causing harm unto others. And no - I don't have the same zeal you do towards property rights.

    You rely on others whether you acknowledge it or not. The restaurant owner relies on patronage and public support (as mentioned above). He or she is not exempt to the law or granted any rights, simply because they own property, to harm others.

    Calling it coercion is a stretch, but it is in the same vein as 'coercing' the state to establish certain laws. You do not live on an island because you own a restaurant.

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  44. Darek W writes,

    "No. Thats a very poor analogy. If you're a milkman, you rely on a hell of a lot of government subsidy in order for you to do business - from where that milk comes from to how that milk gets processed, to how it gets distributed. This narrow-mindedness (frankly, its what it is) is precisely what is wrong with Randian views (though I will concede I've only ever read 'Atlas Shrugged' and 'The Fountainhead')."

    You've chosen to argue besides the point. The point is that you cannot give special credit to the government for offering a service like road access when the government *forcibly prevents* all others from offering road access as well. Instead of arguing to the point, you have chosen to emphasize aspects of the *current* nature of milk production and distribution, i.e., a diversionary tactic. It doesn't matter if the analogical good in question is milk or widgets or pornography, the hypothetical proposition I offered stands: If the government is the sole provider of good X and excludes everyone else from competing with it to provide good X, then no special credit may be lent to the government for providing good X (the one exception is the administration of justice, which is a necessary condition for the existence of a market to begin with).

    Regarding the alleged narrow-mindedness of the "Randian' method - again, demonstration is distinct from assertion.

    "This is a bit of a 'cry me a river' argument, if I can say so. We could live in a world where our economy worked differently, but it doesn't. We have these things because we needed them and the best way to get them done was through government programs - not through private enterprise. Who ever stepped up to offer us a national highway system? railway system? Why did they fail? The resources and dynamical capabilities of a centralized state is second-to none next to private enterprise - I challenge you to show me wrong historically."

    It certainly is not true that we have government controlled roads, transportation, and sewer systems because, as you say, "we needed them and the best way to get them done was through government programs - not through private enterprise.' The whole corpus of free-market economics is based upon, among other things, a demonstration that the private firms can provide goods more efficiently and of better quality than the government. We have government controlled roads, transportation, and sewer systems precisely because the government would not have it any other way. And who can legally challenge the authority of the state in this respect, since the government holds a monopoly of the use of retaliatory force? What would happen if a group of investors tried to finance the construction of a new road to satisfy consumer demand? Or finance the construction of a new sewer system? Or transportation goods. A thousand multi-letter commissions and bureaucracies would descend upon them and obstruct any such undertaking. This is common knowledge.

    As far as private attempts at providing goods now monopolized by the state - there is a library of examples from money production, to roads, to mail delivery. Check the Ludwig von Mises Institute which has thousands of free books and papers on this and related subjects.

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  45. Darek W writes,

    "The state is not the Randian bogeyman you'd like to think it is. If I support - to the level of the nation, state, county, city, whatever, a measure to ban smoking - its complicit. The 'demand' of the state is a demand by a majority of people (assuming my support fell into the majority) - a demand which is executed by an organized body we call government. Its not some independent, unnacountable mafia unit."

    I couldn't care less if the state had the support of everyone or of no one. The truth of a proposition is not contingent upon its popularity. It does *not* follow that an act by the state is permissible as long as it receives majority support. As far as the state being a "bogeyman" is concerned, that's the proposition under consideration here. Its one thing to say that the state is a false threat with respect to smoking - its another to demonstrate that the state is a false threat with regard to smoking.

    Darek W writes,

    "The problem is - in the restaurant/smoking scenario - that you're arguing on the waning side (not that you are necessarily a smoker). Smoking was once very popular, but now, because of what we know, it is not. Things change; hence the nature of reform. The 'freedom' to smoke is reformed given new information of what smoking does."

    I often pride myself on being the underdog. But nevertheless, I don't particularly care that the number of smokers has decreased. Again, the issue is "does a restaurant owner have a right to control his restaurant as he sees fit?" I say that he has the right to do so, regardless of how many people disagree, because his restaurant is, first and foremost, the product of his mental and physical labour. To prevent a man or woman from reaping the full benefits of his or her labour is, among other things, morally reprehensible, in my opinion. Again, the mere popularity of a practice should have no bearing upon whether the government should prohibit it or not. That is majoritarianism of the kind that had Socrates murdered. The harmfulness of smoking is not a relevant issue, since the mere harmfulness of a practice is not a sufficient condition for its prohibition. If I force you to inhale cigarette smoke by dragging you into my establishment by the collar, then I have initiated the use of force. But if you decide, on your own, as an adult, to walk into my smoking establishment, no coercion exists.

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  46. Darek W writes,

    "Not only is the problem that your control over your material product disregards the possibilty of unintended consquences unto others, its exactly why private interests - when used as motivation as a model for public policy, is inefficient and negligent in comparison to government - which is publicly accountable"

    Disregard unintended consequences? Did I not say that, for example, if a private factory pollutes upon another's body or property so much to constitute a rights violation, that the government should step in and levy compensatory damages upon the factory in question and require the factory to clean up the plaintiff's property?

    How ironic. It is private firms who have been historically accountable to those whom they serve, while the history of government is a history of chronic unaccountability. What happens if a private firm fails to satisfy consumer demand? Consumers stop patronizing that firm, then the firm either loses money, goes bankrupt, or goes "under." What happens if a government fails to satisfy consumer demand? It *does not* go out of business, because it obtains its revenue through taxation, through the coercive expropriation of monetary assets. Private firms have an incentive to properly and to continually satisfy consumer demand because their survival is contingent upon properly and continually satisfying consumer demand. This does not apply to government as it is whatsoever. The survival of government is not contingent upon its performance, since its ability to tax assures its continued existence. Thus, the market incentivizes performance by linking it inextricably with survival. By contrast, there is little connection between the survival and the performance of a government since the government can use other means, taxation, to easily maintain its existence.

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  47. Darek W writes,

    "What you are ignoring is the fact that all of those government programs provided things that were recipricated by public support. If you're insinuating that the private sector was there at all times, from the railroads to the moon, to provide a hand, the first to the idea, willing to do those things instead, but it was that damn government which forced us out like the mafia... well, frankly, the burden is on you to make this make sense."

    Yes, the private sector is always ready to satisfy consumer demand. You cannot indict market participants for being too greedy in earning profits and simultaneously criticize them for allegedly lacking the initiative possessed by government to serve consumer wants. Where there is a demand, there will be entrepreneurs waiting to satisfy that demand.

    The market coordinates the satisfaction of consumer demand through the price system. If the demand for good X is high and the supply of good X is low (a situation where consumer demand probably is not being properly satisfied), the price will be correspondingly high. As the price of good X increases, the quantity of good X supplied will increase. How? As the price of good X rises, more money can be made from producing and distributing it. Investors and entrepreneurs (greedy as they are) are in it to make money. Ergo, as the price of good X rises, investors will lend financial capital to entrepreneurs who will use it to acquire factors of production (land, labour, and capital goods) to produce and distribute good X. If the demand for a good increases, the price of that good will increase, attracting financier and entrepreneurial attention. Thats how the market works to satisfy consumer demand. If the demand for railways is high (as you imply it was) then the price would have risen. As the price rose, investors and entrepreneurs would have noticed (again, they are among our most selfish citizens) and would have organized the production of railways (and would have made a windfall in the process if they were among the first to respond to the unsatisfied consumer demand - those who respond first, make the most).

    So not only can the market coordinate to satisfy consumer demand - the market provides incentives for the rapid satisfaction of consumer demand by rewarding those who satisfy consumer demand the fastest and in the most efficient and innovative way. This is, as they say, economics 101.

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  48. Darek W writes,

    "Yet in your next post to me, you agree that those who pollute another's body or private property should be punished... Frankly, I don't think you know what you're talking about here - or rather, your position is clearly not well thought out with this contradiction present."

    *Sigh*

    This is what I have been arguing thus far: One has the right to pollute upon one's private property and one does not have the right to pollute upon another's private property unless the polluter has the person's permission.

    If factory X pollutes upon your private property without your permission, the factory is in the wrong and you should be able to sue for damages. If factory X pollutes upon its own property without polluting upon your private property, you have no justification for suing him. Furthermore, if a restaurant owner allows cigarette smoking within his private property, you have no right to sue him. Ok. This is a lucid, dummyproof position.

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  49. Darek W writes,

    "The government does attempt to place restrictions and regulations, but when you have an industry powerful enough - like coal or oil, among others - to lobby government officials, which circumvents public interests, than you have polluters paying to pollute - but they're making profit. That you seem to ignore this (I say this because I don't think you've never found a case in which I have described) is very telling."

    Well, that's *corporatism,* not capitalism. Corporatism is a social system where the government fails to protect private property rights, usually in the interest of large corporations and private enterprises. On the other hand, capitalism is a social system where the government recognizes and protects private property rights. Under genuine capitalism, there would be no lobbying since the government would be legally unable to extend corporate welfare in the form of special privileges, grants, or subsidies.

    Darek W writes,

    "Nope. It tries to do just that. But when private enterprise develops resources that out-maneuver public support, democracy is a catch phrase and fascism is fashionable."

    ??? I think that this is more of a cliched response then an argument. I don't know what it means.

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  50. ...(continued) As entrepreneurs acquire more credit and demand more factors, more entrepreneurs enter the market to produce factors for sale and, thus, both the length and width of production increases.

    Unfortunately, the ultimate cause of the boom in the factor market - the initial increase in the supply of credit - is fraudulent. The problem with increasing the supply of credit by merely printing money electronically is because the only sound way to increase the supply of credit is by increasing the supply of *savings.* When people save, they demonstrate that they are more future-oriented. When an increase in the supply of credit comes from an increase in savings, the credit supply increase comes from an increase in future-orientedness from savers.

    However, fraudulence is built into an economic structure of production if its fueled by an increase in the credit supply by counterfeiting money (as is the case with the Fed). The kind of production that's fueled by an increase in the supply of credit is the kind tailored towards the production of goods that satisfy the demands of more *future-oriented consumers.* When such production is fueled by a savings-caused increase in the supply of credit, i.e., fueled by consumer future-orientedness, then the production ends up producing goods that satisfy consumer demand. However, when such production is fueled by counterfeiting, where consumers have *not* exhibited greater future-orientedness, then the production ends up producing goods that do not satisfy consumer demand, i.e., producing more future-oriented goods for less future-oriented people.

    Needless to say, less future-oriented consumers do not want more future-oriented goods, so they decrease their demand for more future-oriented goods and continue spending their wages on less-future-oriented goods. Those entrepreneurs producing more-future-oriented goods find that demand for their goods becomes insufficient, precipitating into a recession where businesses have to be liquidated, labour relinquished, and real estate and capital goods sold at a discount. The recession is the necessary liquidation process by which the mal-investments caused by artificially credit expansion are eliminated.

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  51. I would gladly elaborate on the issue of the government and the current recession.

    The current economic contraction was made necessary by the artificial credit expansion engaged in by the Federal Reserve system, the central banking system created by an act of Congress in 1913.

    Under the tutelage of Alan Greenspan, the Fed artificially reduced interest rates (it does so through a complicated process but it essentially does it by lowering the Fed funds rate) all throughout the 2000s. The interest rate is the price of credit. According to the law of demand, as the price of credit, or the interest rate, falls, the quantity of credit demanded rises. This is the case because as the price of credit falls, it enters the price ranges of more credit demanders or borrowers. This is precisely what happened in the mid 2000s (and continues today as the Fed funds rate is next to 0%).

    The problem comes with how the Fed goes about reducing interest rates. It does so literally by manufacturing money. In the olden days it had to order the Bureau of Printing and Engraving to print new bills and it wrote paper checks. Now the Fed reduces interest rates by calling upon the New York branch to write electronic checks which it uses to buy debt instruments (bonds, bills, and notes) issued by the Treasury Department. The Fed buys these Treasury instruments (claims to future payment) with money that it literally makes electronically, from nothing, ex nihilo.

    By producing more credit, the Fed increases the supply of credit. As the supply of credit increases, the price of credit falls. As the price of credit falls, the quantity of credit demanded rises. Entrepreneurs make up the bulk of those who increase the quantity of credit demanded at the lower interest rates. Entrepreneurs need financial capital with which to acquire factors of production (land, labour, and capital goods). These factors allow them to produce goods that consumers wants, be they citizens on the street or other businesses. So, if financial capital becomes cheap, entrepreneurs will acquire more of it. As entrepreneurs who acquire cheap credit use it to purchase factors of production, they simultaneously increase the demand for factors of production, particularly capital goods. As the demand for factors increases, the price of factors increases. This explains why commercial real estate and capital goods become so unusually expensive during bouts of artificially economic growth...(to be continued)

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  52. Darek W: Why would you go someplace for a burger that allowed smoking if you don't like smoke? As you note, the majority dislikes smoking, meaning without regulations there would be (and were, prior to smoking bans) ample freely chosen non-smoking restaurants.

    Because the secondary harms to third parties from drinking aren't immediate does not change the fact the harmful effects are real. Restricting alchohol comsumption to within the home would prevent harms far greater than the harms of second hand smoke.

    Obviously smoking is being held to a different and irrational standard.

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  53. That is why government should not meddle with interest rates. Now, on to credit exchange standards. As a note, its the Fed's interest rate meddling that does the real damage. The following government scheming is foul, but its not as economically detrimental as the Fed's conduct.

    The government, ever since the Carter administration, has made it an objective to increase the supply of mortgage loans, passed the market supply of mortgage loans, particularly for ethnic minorities. According to many within the Clinton, Bush, and Obama administrations, people have a "right" to housing.

    Through a number of legislative instruments, including the Community Reinvestment Act of 1977, the federal goverment tried to increase the supply of mortage loans by forcibly reducing the conditions upon which mortgage loans are exchanged. The forcible reduction of conditions took several forms, but I'll focus on one. For example, the government prohibited racial discrimination in the distribution of mortgage loans by institutional lenders. Now, institutional lenders extend credit in accordance with a potential borrower's creditworthiness. Creditworthiness is measured by assessing a potential borrower's income, both in its size and its consistency, past performance in fulfilling debt obligations, quantity of savings, criminal background, etc. These variables co-operate to form a potential borrower's credit rating.

    Unfortunately, the credit ratings of whites have always exceeded the credit ratings of minorities, for a variety of reasons (none of them being racial in a physiological sense). Thus, historically more mortgage loans have been distributed to whites than to minorities. As stated, institutional lenders exchange credit only with those who are creditworthy. They must, otherwise they will incur unnecessary credit risk if they extend credit to those who are not creditworthy. Credit risk puts the business solvency of an institutional lender in question.

    However, the historic asymmetric distribution of mortgage loans between whites and non-whites gave opponents of institutional lenders a fortuitous opportunity to publically miscontrue the asymmetry as racism and, furthermore, to give a spurious justification for greater government intervention into the mortgage loan market. Now, lending in accordance with mathematically analyzed assessments that yielded a racially unbalanced distribution of mortgage loans became discrimination and therefore illegal. Thus, mortgage loans found themselves in the hands of those who were not creditworthy.

    Its no surprise that, subsequently, an awful amount of black and Hispanic people have defaulted on their mortgage loans and have been removed from their homes (again, igniting claims of racism and racial discrimination).

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  54. I couldn't care less if the state had the support of everyone or of no one. The truth of a proposition is not contingent upon its popularity.

    But majority support matters here. How hard is that to understand? You can sit there and fill the room with all the hot air you want, but at the end of the day, how laws get passed or things like smoking bans get placed matters on its popularity. I agree that it does not follow that x is true because so many people think its correct, but there is also reality - like taking so many votes for a measure to pass. Welcome to reality.

    Again, the issue is "does a restaurant owner have a right to control his restaurant as he sees fit?" I say that he has the right to do so, regardless of how many people disagree, because his restaurant is, first and foremost, the product of his mental and physical labour.

    A restaurant owner has no 'rights'. No more 'rights', that is, than anyone else just because he or she decides to open up a business. A product of his mental and physical labour? Puh-leez. A restaurant (a successful one, anyway) is a product of many people working together - from the staff to the location to the continued patronage, not to mention the things we've discussed that aids it in its success (like benefiting from being in a city). Because someone sits down one day and decides they want to do this, they all the sudden are not special and do not gain 'rights' that may exclude him or her from having to comply with that citys' or states' referendums.

    I have no interest in reading and responding to the rest of what you wrote, I stopped when you try to accuse me of diversion when you then spooge all over the place with your libertarian nonsense.

    What you're doing is working backward - today private enterprise may have the resources to do things better than government - that may indeed be the case in some areas, others not so, but I'm not interested in being told that the private sector was ready - resources in hand - to take on projects like the railway or highway systems in the past. Revising history will not help you.

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  55. Obviously smoking is being held to a different and irrational standard.

    You concede that smoking directly impacts anyone near it so its more rational to say that indirect impacts are the same?

    You're just copping out but don't want to admit it.

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