Wednesday, September 21, 2011

The Problem of Status Quo Bias

This is the most important and cogent commentary from Jonah Goldberg that I have ever read:

And now let us recall the "Fable of the Shoes."

In his 1973 "Libertarian Manifesto," the late Murray Rothbard argued that the biggest obstacle in the road out of serfdom was "status quo bias." In society, we're accustomed to rapid change. "New products, new life styles, new ideas are often embraced eagerly." Not so with government. When it comes to police or firefighting or sanitation, government must do those things because that's what government has (allegedly) always done.

"So identified has the State become in the public mind with the provision of these services," Rothbard laments, "that an attack on State financing appears to many people as an attack on the service itself." The libertarian who wants to get the government out of a certain business is "treated in the same way as he would be if the government had, for various reasons, been supplying shoes as a tax financed monopoly from time immemorial."

If everyone had always gotten their shoes from the government, writes Rothbard, the proponent of shoe privatization would be greeted as a kind of lunatic. "How could you?" defenders of the status quo would squeal. "You are opposed to the public, and to poor people, wearing shoes! And who would supply shoes … if the government got out of the business? Tell us that! Be constructive! It's easy to be negative and smart-alecky about government; but tell us who would supply shoes? Which people? How many shoe stores would be available in each city and town? … What material would they use? … Suppose a poor person didn't have the money to buy a pair?"

It's worth keeping this fable in mind as the reaction to last week's CNN-Tea Party Express debate hardens into popular myth. Moderator Wolf Blitzer had asked Rep. Ron Paul (R-Texas) what should happen if a man refuses to get health insurance and then has a medical crisis. Paul — a disciple of Rothbard — explained that freedom is about taking risks. "But, congressman, are you saying that society should just let him die?"

At this point, a few boneheads in the audience shouted "yeah!" and clapped, though liberal pundits and activists imagine they saw an outpouring of support.

Paul calmly replied that he's not in favor of letting the man die. A physician who practiced before Medicare and Medicaid were enacted, Paul noted that hospitals were never in the practice of turning away patients in need. "We've given up on this whole concept that we might take care of ourselves and assume responsibility for ourselves," he observed. "Our neighbors, our friends, our churches would do it."

Both Mitt Romney and Rick Perry have condemned the response from the Paulistas in the audience and endorsed a more active role in government in healthcare.

Still, it's amazing how quickly status quo bias kicks in. Since the 1960s, it has become a given not only that the government should be more involved in areas like healthcare and poverty but that these problems remain intractable because the government has not gotten more involved. That's the premise behind so many of the anti-libertarian questions at the GOP debates. Any rejection of the assumption is derided as a right-wing effort to "turn back the clock."

Charles Murray, my colleague at the American Enterprise Institute, notes that the most remarkable drop in the poverty rate didn't come after President Lyndon B. Johnson declared war on poverty but when President Eisenhower ignored it. Over a mere 12 years, from 1949 to 1961, the poverty rate was cut in half. Similarly the biggest gains in health coverage came when government was less involved in healthcare, i.e. before the passage of Medicare and Medicaid in 1966. Duke University Professor Christopher Conover notes that in 1940, 90% of Americans were uninsured, but by 1960, that number was down to 25%.

Blitzer's specific error was to use "society" and "government" as interchangeable terms. People need shoes. But that doesn't require the government to provide shoes for everyone. Similarly, poverty rates should go down. But does that mean it's the government's responsibility?

Maybe the answer is yes. But if it is, the burden of proof should fall on those who, in effect, want the government to win the future by "investing" in shoes — rather than on those of us who are open to the idea of turning back the clock.
Just yesterday I was having a discussion over healthcare and poverty with a lawyer, who suffered from a typical case of status quo bias. I said to him that I thought that Americans were a charitable lot and that without government in the charity business, private charity would boom (I mean really boom) and that the sector would attract very bright and very creative people. This doesn't occur today because, wrongly, most people now think that charity must be provided by the government, and they can't see how it could otherwise be. So now instead of creativity entering the field of charity, food stamps and small checks are tossed at the poor. I have no idea how a private sector in charity would evolve, just like I don't know how cell phones or the internet will evolve, but I just know that it would become an exciting field with great innovations. Yes, great innovations. They don't occur now because charity is one big government/bureaucratic mess designed to do nothing but buy blocks of votes and funnel money to the crony suppliers of government designated charity products and services.

It's time to move beyond the status quo in charity. Charity should be returned to the private sector, where it can truly bloom and help those that need help. It is a total scam for government leaders to claim that charity must be forced out of the hands of Americans via the government. Government charity does nothing, as should be obvious, but cement the down trodden in a wretched life.


  1. Status quo bias, aka, a lack of imagination.

    And I would disagree with the notion that there should be a "turning back of the clock" if anything we should explain it as going back to the principles that work and *improving* on them!

  2. I agree 100%. Unfortunately, the few morons in that audience tarnished Dr. Pauls' calm comments about charity.

  3. Were they morons in the audience or plants? Plants seems more likely to me. Honestly, who cheers people (ie Americans) dying?

  4. Was in downtown DC yesterday at lunch time and walked by Roti Mediterranean Grill on K Street.

    They were offering a free lunch to all. Hostess was out on the street announcing it to passersby. Contributions were being asked on behalf of DC Central Kitchen.

    The line extended out the door.

    Hurray for Rot(hbard)i! The American people are amazingly generous upon given the opportunity to be.

    The line was out the door. Hurray for Roti.

  5. If the government didn't take most of my money in the form of taxes I would have more of it to spend how I saw fit, thus I would have more money to donate to people in need. It's hard for people to donate to needy people when they themselves are the needy people, so you can't say that people wouldn't support charity because they don't today, no one knows what people would do with their money if they had more of it.
    Certainly if we had no government funded anything people would give money to what they think IS the most important, and there would be a lot fewer people upset about their money going to fund this or that. And if something/someone was truly in need of money people would make sure they knew about it. That's what people do.

  6. @ Anon 12:40 pm,

    The same bloodthirsty people who support war. On a related note, when will the military stop blindly following unlawful orders regarding unconstitutional wars?

  7. @ anon 1:15 pm,

    How can lunch be free if a contribution is requested? Sounds like a fundraiser.

  8. Whoa, this is disorienting. Jonah Goldberg quoting Rothbard approvingly? Did the earth just shift on its axis?

  9. I've always loved Rothbard's "shoe analogy", and I often use it myself. It's so simple and to the point.

    When I first read the article shown above, I was flabbergasted. I simply could not believe that I was reading a mainstream columnist and who was writing for a mainstream media outlet, actually mentioned Rothbard and did so in a positive light. People may not make much of it, but for me that is huge!

    I also found the comments interesting below the article. Some idiot kept spamming the boards saying "let him die", as if to say that Ron Paul's position was to let the individual die in the question posed to Paul- the man clearly said "No". But, what was really cool is that most of the commenters were entirely aware of what was going on and filled the boards with some truly outstanding commentary.

    Man, I love when the people on your side of a debate actually know what they are talking about and make superior examples of themselves. It lets me know that these people aren't just following a faddish trend, rather they are really getting into it and putting effort into becoming knowledgeable about political philosophy and economics. What is more is that I have seen these numbers increasing dramatically as of late. I love it!

  10. Jaffi, I've noticed the same. Some of them are RP guys, but quite a few (and you can tell by their flawed but earnest attempts to explain Austro-lib theory through a Keynesian lens) are actual mainstream Reps & Dems who have had enough of the Federal Reserve and the broken promises of Bush/Obama and Co. Reading the comments on sites like CounterPunch or HuffPo, or NatRev or Frontpage, is enough to bring a smile. Some of these guys are finally waking up and seeing The Matrix.

  11. to anon at 1:59. Guess you've never made a voluntary contribution. Which is what makes it voluntary. Anyone could have chose to have had lunch and not made a contribution. Get it?

  12. Around a decade ago Goldberg was completely smacked down in his cyber feud with Maybe the lessons finally sunk in somewhat? Or maybe he just sees the ron paul freight train of intellectual momentum can't be stopped, so he is hopping on board.

  13. I could (almost) reinstate my long-lapsed LAT subscription for Goldberg's commentary.

    Or maybe the LAT is trying to fracture the GOP vote.