Dispensing More “Free Stuff”

I  have just finished reading an opinion entitled “A Birth-Control Morality Play Comes to Supreme Court” by Megan McArdle, the lonely voice of libertarianism over at Bloomberg View.

The thrust of the article is to use philosophical hypotheticals to explain the violent reaction of some religious groups to the seemingly minor certifications required to escape the contraception mandate in the Affordable Care Act.  But the article makes another point, albeit in an oblique manner, which is more important.   In the “culture wars,” an overreaching government often fires the first shot.


dogslifeCradle-to-grave nannying by the State has certain small drawbacks, but you’ll get used to them, serf.


As McArdle says “My own intuition is that the Obama administration chose this fight….For one thing, contraception is an inexpensive routine purchase that is exactly the sort of thing that insurance shouldn’t cover (for the same reason your car insurance doesn’t cover routine service: you’d just end up pre-paying the service in the form of higher insurance premiums.)”  Here, McArdle is making the same point and in fact using the same example – great minds thinking alike, and all that – I used in my 2012 blog entitled “Contraceptive ‘Coverage.’

As I pointed out earlier, contraception fails any reasonable definition of an insurable risk, being a “random undesirable event, usually of significant consequences.”  Since having sex is neither random nor (typically) undesirable, nor are the costs of contraception that significant, it cannot be “insured.”

Frankly, using the language of insurance in this context is a transparent attempt to hide the political belief that the government should be dispensing, or forcing others to dispense, more “free stuff” behind a smokescreen of science and health care.  But as the old saying goes, in war, cultural or otherwise, truth is the first casualty.


Obama ClausBut there is! Gimme!


The Road to Serfdom

In addition to being economic and linguistic nonsense, contraceptive “coverage” also perfectly illustrates why libertarians like McArdle and me do not want the government engaging in these kinds of activities.  It is a reason advanced at length by Friedrich von Hayek, the Nobel Prize winning economist and social thinker, in his book The Road to Serfdom.  This was written a long time ago, but in today’s environment of heated partisanship, the argument is well worth repeating.


hayek1In the early 1940s, Hayek became disenchanted with the direction economics had taken after Keynes. As a result, he never penned the definitive book on capital theory he had planned as a follow-up to his initial effort, the “Pure Theory of Capital”. This is a pity, but on the other hand, Hayek then focused on political theory and questions of knowledge, bequeathing us a great many influential and interesting works, inter alia “The Road to Serfdom”, an eloquent attack on the tyranny of the socialist welfare state, social engineering and central planning.


Hayek argues that it is relatively easy to reach societal consensus on the basic functions of government.  A legal system and the police to enforce it.  A national defense.  Roads and other services that can be provided most efficiently by a monopoly.  Even, more controversially (at least among libertarians), support for basic education and some form of social “safety net” for the small portion of society that is truly unable to help itself.  And a relatively modest level of taxation to support all of this.

However, there is no reason to believe that this consensus can be maintained when government pushes well beyond these bounds.  And this is precisely what we are observing with the contraception mandate, the funding of Planned Parenthood, and many other facets of the “culture wars.”

Now I personally have no problem with contraception and abortion, but I have to recognize that there are other people who do.  In a libertarian world, people with these differing opinions and values can live side by side in reasonable harmony, each side following the famous Voltairian advice to disapprove of what someone says (or does), but defend to the death his right to say (or do) it.

But this harmony breaks down when one group or the other seeks to put the heavy finger of government on their side of the scales.  In addition to all the utilitarian arguments for why the government should avoid this type of micro-managed social engineering, we libertarians believe that this is an independent reason for setting a high bar for these practices.

Those who advocate for policies such as contraception mandates and the funding of Planned Parenthood, which almost certainly don’t belong in the government sphere on purely economic grounds, should also be required to justify the “culture wars” they will inevitably unleash.


saddam_4_apr_culturewarHome from the war …


This is particularly true when, as in all wars, “tit for tat” quickly becomes the standard.  The left shoves Planned Parenthood and a contraception mandate down the throat of the right.  Then the right feels doubly justified in trying to impose their views on abortion and “intelligent design.”  The end result is a reduced sphere of freedom for everyone, including us innocent bystanders caught in the crossfires of their battles.

For Hayek, the attempt to expand the sphere of government action, with the inevitable discord it produced, was a major factor behind the rise of anti-democratic politics in Weimar Germany.  It was a major factor in The Road to Serfdom that led, in the case of Germany, to fascism.  However, we don’t have to go this far.  We only have to look at the gridlock in Washington and the rise of anti-Washington political candidates to realize that the same dynamic is at work in modern-day America.  Although thankfully for now in a less virulent form.


July 1931: Thousands are queuing at the branch offices of the Post Office Bank in Berlin to withdraw their savings. The Weimar Republic had long ceased to be fun, and both communist and nationalist groups were actively working to bring about its downfall and replace it with a dictatorship. Hitler’s party won this particular contest two years after this photograph was made.

Photo credit: DPA


Image captions by PT


This article was originally posted at Economic Man.


Roger Barris is an American who has lived in Europe for over 20 years, now based in the UK. Although basically retired now, he previously had senior positions at Goldman Sachs, Deutsche Bank, Merrill Lynch and his own firm, initially in structured finance and latterly in principal and fiduciary investing, focussing on real estate. He has a BA in Economics from Bowdoin College (summa cum laude) and an MBA in Finance from the University of Michigan (highest honors).




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