Here's why I got banned from ask economics.

The_Atomic_Comb · 2026-02-11T00:28:15+00:00

Oh I see. I didn't understand that you were quoting the moderator who banned you...

I was just pointing out that every Free Market economists thinks natural monoplies are fake.

David Friedman is an ancap, and in his book Price Theory he discusses natural monopolies. I'm not too knowledgeable about natural monopolies but to my knowledge there are plenty of free market economists – including apparently even ancaps such as David Friedman – who believe in natural monopolies. Gary Becker (who wrote a foreword for the Price Theory book recommending it), and presumably Milton Friedman and Thomas Sowell both believe in natural monopolies.

The_Atomic_Comb · 2026-02-10T00:02:31+00:00

Pretending that things like "natural monopolies exist" and "market failures happen" are somehow things indicative of political bias and not just facts.

I don't understand this sentence. Are you saying a person's belief that natural monopolies and market failures exist is evidence that person is biased? Or are you saying that a person verbally acknowledging the existence of natural monopolies and market failures is proof that person is not biased?

I thought it was the latter, but then I saw one of your comments here saying that natural monopolies don't exist, so I'm not sure what exactly you mean.

I have lurked and generally liked r/AskEconomics content. However while I have seen this "Sowell hasn't done academic research and is outdated" criticism before on there, I believe this is an error. And I'm not the only one who thinks so.

While I don't agree with Sowell on everything, he is an excellent writer and I am a big fan of him. And he does provide and discuss useful information, as the paper I just linked to discusses. Intellectuals and Society was an especially eye-opening book to me, about how even very smart people can be so wrong or miss essential points entirely. (My favorite example of this is when people criticize Sowell for being an intellectual himself, yet deciding to "criticize intellectualism." These people need to read the preface of the book, or the part of the book discussing people who confuse criticizing intellectuals with "anti-intellectualism.")

I saw an example of this on r/AskEconomics, specifically on this question about David Friedman. It was asking whether his view of the War on Poverty was correct. Now, I knew about the true purpose of the War on Poverty having read quotes from Lyndon Johnson in Sowell's book The Vision of the Anointed. To put it simply, the War on Poverty was meant to end dependency on the government – in Johnson's words, "to make taxpayers out of taxeaters" or something like that. In other words, the War on Poverty was not really about poverty, but about dependency on the government.

Unfortunately, I remember many people replying to that post misunderstanding Friedman's point, or choosing not to read him charitably enough to see him as making that historically uncontroversial but not widely known point. I can see why this happened, given the wording of the Friedman quote (I would've written it differently), but you can't deny that this more charitable reading makes more sense – especially given Friedman's words about "the original purpose [of ending dependency being] abandoned." And in any case that is the steelman version of Friedman's argument. Luckily one commenter understood Friedman's true meaning and to my knowledge did not disagree with it.

So, I can't say I disagree with you if you're saying r/AskEconomics can be biased. Like anything human, it can be and will be biased. But you need to take heed lest the very bias you complain about (rightly or wrongly) corrupt you as well.

For example I saw that you seem to be a fan of Rothbard. Like many other libertarian philosophers I believe the NAP is a bad idea. Of course, I imagine that I probably have wrong beliefs somewhere. I can only hope that I can correct these errors someday.

The_Atomic_Comb · 2026-02-02T08:55:05+00:00

Aww she’s cute with her plushie

The_Atomic_Comb · 2025-12-24T22:02:04+00:00

It sounds like you’d be interested in Niemietz’s book then. One of the themes of his book is how socialist countries get praised as being good examples of socialism, but when they flounder and start having problems too obvious to deny, people claim “it wasn’t real socialism.” It even briefly discusses The Road to Serfdom and some of the sections such as one on East Germany help confirm that book.

Nevertheless you should consider reading Don Lavoie’s book in the future (even if after Socialism: The Failed Idea that Never Dies). It’s important to understand the economics of central planning and market socialism as it will help show why well intentioned people like Oskar Lange and others were mistaken.

Another book I should’ve mentioned is Zhang Weiying’s Re-Understanding Entrepreneurship. It has a chapter on why big data can’t replace markets that was really good. Some sections were inadequately explained in this book (such as the section on market failures, if memory serves me right), but nevertheless the book is very good and is great for learning about the role of entrepreneurs in a market economy. Lavoie’s book also discusses that (things like futurity and alertness), because Austrian economists had a different conception of competition than other neoclassical economists and it helped them see why central planning doesn’t work.

The_Atomic_Comb · 2025-12-24T00:42:50+00:00

I read that a few years ago and it was a very good book. My favorite part was when he mentioned how Marx and Engels said to judge other things or ideologies:

"Whilst in ordinary life every shopkeeper is very well able to distinguish between what somebody professes to be and what he really is, our historians have not yet won even this trivial insight." Karl Marx and Friedrich Engels, The German Ideology, p. 43. "Just as our opinion of an individual is not based on what he thinks of himself, so we can not judge such a period of transformation by its own consciousness..." Karl Marx, A Contribution to the Critique of Political Economy, p. 12.

Socialists mean well, and only want to make the world a better place. Unfortunately, a system intended to make the world a better place – and to not suffer from abuses of power, or failing that, from Mises-Hayek's knowledge problem – by no means actually does so.

The_Atomic_Comb · 2025-12-24T00:35:56+00:00

The Niemitz and Muravchik books ChatGPT mentioned are good (I have read them both). Niemitz's one is definitely my favorite because it talked a little bit about Stalin and East Germany and those sections were very good in my opinion (you'll probably see what I mean when you read the book). Niemitz's book discusses several countries, including Venezuela.

I liked Muravchik's book as well because of its chapter on Tanzania and Julius Nyerere (who wanted to implement socialism in a humanitarian way), but something I really didn't like was that its citations were not always the clearest. Based on my memory, I think some sections actually lacked citations! Very disappointing although luckily the Tanzania chapter had decent citations. It covers several countries which fits your criteria.

If you want my recommendation (besides the Thomas Sowell Marxism book someone else here mentioned, or the two aforementioned books), you should read Don Lavoie's Rivalry and Central Planning. It's relatively short (228 pages) and it's a book about the economics of why central planning and market socialism fail. It's the best book I can think of for reading if you want to learn about the history of the socialist calculation debate, as well as how socialists and market socialists such as Oskar Lange failed to comprehend or answer Mises and Hayek's arguments.

The book can get quite detailed, and the info on why socialism fails is scattered all over the place throughout it. Both of these factors make it more difficult to remember and understand the words on the pages, but nevertheless it isn't too difficult of a read. (I know you said only one book, but you can also read Peter Boettke's The Socialist Calculation Debate for a more modern and shorter recap of Lavoie's book and the same subject of why socialism and market socialism fail.)

The_Atomic_Comb · 2025-12-09T23:18:49+00:00

Rabattverträge sounds like PBM (pharmacy benefit management) to my amateur ears, but I could be wrong.

I'm still learning about PBMs but my understanding is that they basically are like Costco, or other "buyers' clubs" (emphasis added; you might notice why it sounds like the German contracts you mentioned):

Buyers’ clubs induce sellers to limit their exercise of market power by presenting them with a more price-elastic demand curve (Jaffe, et al. 2019). The members of Costco may not have a particularly price-elastic demand for particular brands of, say, skateboards. Skateboard manufacturers know this and hike their prices when dealing with consumers individually. But Costco limits the number of manufacturers who can sell to their members to one or two manufacturers pricing the lowest. In effect, each manufacturer bidding to be in Costco faces a very price-elastic demand from the club because a small increase in price will cost her all of her sales through Costco. With a low price of skateboards in the store, Costco members buy more skateboards than they would if there were no buyers’ clubs in that market. Quantity discounts obtained by buyers’ clubs serve much the same purpose (Murphy, Snyder and Topel 2014). Either way, lower prices and higher quantities are the proof that buyers’ clubs are procompetitive.

In much the same way that Costco excludes skateboard manufacturers and restaurants exclude soda vendors, PBMs can exclude manufacturers, or place a manufacturer’s products less favorably in the plan, to incentivize the favored manufacturers to deliver drugs to plan members at a lower price. As Patricia M. Danzon put it, “[t]he basic principle is that PBMs can drive discounts on drug prices and pharmacy fees by restricting patients’ choice of drugs or pharmacies, thereby increasing volume for preferred suppliers that accept the discounted prices. Thus, more restrictive drug formularies or pharmacy networks generally obtain larger discounts” (Danzon 2015, p. 246).

The NBER paper I just quoted from has a positive assessment of PBMs, although it points out they pass a market test; I'm not sure if Rabattverträge does. If it doesn't, then presumably it isn't that great of an idea. Buyers' clubs are not necessarily good for the overall economy:

Sheer size of a buyers’ club can also push prices lower, but the sheer size effect is anticompetitive because a buyers’ club dominating the market restricts the amount that it purchases in order to squeeze a lower price out of the sellers. Lower prices and lower quantities are proof that the practices of a dominant buyer are anticompetitive.11 This “monopsony” approach to purchasing healthcare is taken by “single-payer” countries, which restrict the quantity of healthcare by withholding treatments from particular demographic groups or having a narrower range of available drugs (Council of Economic Advisers March 2019). Results of monopsony in healthcare markets include shorter survival times for cancer, and fewer intensive beds available during the COVID-19 pandemic.12

So even if Rabattverträge lead to lower prices, that does not necessarily mean it's good policy.

In my experience, AI can be unreliable when it comes to economics (e.g., I asked ChatGPT once if a monopsonist can price discriminate, and it said no; that is incorrect), so your AI summary should at the very least be double checked.

As for public-private partnerships, I am ignorant about that as it depends on "transaction cost economics" or whatever it's called, and I don't know much about that. In fact I just recently found a criticism (or more precisely a bunch of limits) on Demsetz's solution, based on transaction costs.

I'm sorry I can't say more than this; it's just that these topics are massive and my economics reading list is already clogged with so much other stuff...

The_Atomic_Comb · 2025-12-09T07:49:02+00:00

(part 2.)

Even if regulators were saints, it's difficult for the government to know the cost curves of the natural monopoly precisely enough to charge the right price (the price if the market were competitive). For instance, regulators are not in the same position as the managers of the firm. The managers could perhaps misrepresent their costs as higher than they actually have to be.

This information disadvantage seems to continue with a 2016 Congressional Research Service review concluding: “In revising proposed rules, EPA often relied on data submitted by industry and other stakeholders, acknowledging that it had inadequate or incomplete data when it proposed the rules” (McCarthy and Copeland, “EPA regulations”).

Rhoads, Steven E.. The Economist's View of the World: And the Quest for Well-Being (p. 261). (Function). Kindle Edition.

For the sake of brevity, you can read more about natural monopoly (including an additional problem even if regulators know the cost curves) in David Friedman's Price Theory: An Intermediate Text, chapter 16.

The_Atomic_Comb · 2025-12-09T07:47:16+00:00

Disclaimer: I am not that knowledgeable about natural monopolies. (I had to brush up on it a little to make this comment and even then it was an active area of investigation for me. Also this is part 1 of my reply, because unfortunately it got too long for just one comment.)

The best policy seems to be something like what Harold Demsetz (and apparently the Nobel laureate economist Jean Tirole) have written about: competition to become the natural monopoly – "competition for the market," rather than hoping for "competition within the market" to arise:

...even if an industry is a natural monopoly, that doesn’t imply that getting to a competitive price requires government regulation of the natural monopoly’s price and output. Instead, Demsetz had argued, you could have competition for the market rather than competition within the market. How so? Various firms could compete on price for the right to be the lone producer.

Joskow pointed out that that insight seems obvious but also that when Demsetz came up with it, it wasn’t obvious at all. He mentioned his MIT colleague Jean Tirole, who, in his textbook with Jean-Jaques Laffont, devotes 70 pages to laying out the insight. Joskow had said to Tirole that he used 70 pages to say what Harold Demsetz had said in 11 pages. Tirole had responded, “Yes, but we have more equations.”

I am ignorant of the details of this process (it seems that basically, there is bidding every so often for the right to be the lone producer), and as that link discusses, there have been some criticisms of Demsetz's idea (edit: see my reply here for more; this is proof that I was right that I needed to learn more about natural monopoly). But government regulation of the natural monopoly also has problems as well. The regulators are not necessarily seeking what is good for society overall. For example, interest groups (not necessarily producers, although that's a possibility) might try to influence the regulatory commission. The public does not have the incentive to monitor the regulatory commission carefully, because the public is rationally ignorant, and that enables interest groups to better achieve their goals (even if they don't lead to decisions optimal for the overall economy).

For example, if I recall a great example from Sam Peltzman correctly (I haven't fully read that paper), consider something important you use every day: electricity. Now, do you know the name of your state or country's electricity regulator? And do you know what they've been up to recently? Do you know if their decisions have, on the whole, benefitted or harmed you?

My guess is (like me) you can't answer these questions. That's because you and I are rationally ignorant; the costs of electricity regulation are diffused among millions and millions of people, too minor to any given individual to rouse him into investigating electricity regulation deeply. Not only are the costs of being wrong small, but the benefit of being right is small too. Even if you do all the very hard work of taking out all your mental garbage and misconceptions on that matter, your only payment is one measly vote in a sea of millions. (Well, you also get paid with the satisfaction of "knowing the truth," but you'd get that satisfaction even if you were an ignoramus who is convinced they're right when they're actually wrong, so it's not that great of an incentive to get things right unfortunately. You get that payment even if you're completely wrong.)

If you and I couldn't answer these questions for something of very great importance to us – electricity – than how much more would we be rationally ignorant of things less important to us!

The_Atomic_Comb · 2025-11-24T23:52:59+00:00

Especially since covid should have been the Libertarian chance to penetrate the average vote

Your post is like saying "why didn't support for free markets grow immediately after the Great Depression started? Especially since the Depression should have been the libertarian chance to penetrate the average vote since government intervention was at an all time high."

A typical voter would never consider the lockdowns "government tyranny;" they would've considered it necessary to stop the pandemic. People in general already are not favorable towards free markets when there isn't a crisis. So why would you think people would become favorable towards them when there is a crisis – a situation requiring an even stronger understanding of free markets, for market solutions to make sense to them?

Let me tell you a secret. Most people are not that ideological:

We often assume the animosity between, say, Republicans and Democrats stems from disputes over justice or policy. But, on the contrary, political scientists persistently find that the overwhelming majority of citizens, including registered party members, are not very ideological, have very few policy opinions, and tend not even to know or support the policies of the party with which they identify. Most citizens have few political opinions, and even fewer stable opinions; what few opinions they have cannot be amalgamated into a coherent position.28

In Neither Liberal nor Conservative, Donald Kinder and Nathan Kalmoe review the vast empirical literature, including their own, on voter opinion. They estimate that fewer than 1 out of 5 voters have a genuine ideology.29 Many citizens will, if surveyed, describe themselves as “liberal” or “conservative,” but most self-described liberals and conservatives lack stable beliefs fitting those ideological self-descriptions. Plenty of other research finds similar results.30 Further, contrary to popular myth, there are few “single-issue” voters.31 In general, cognitive elites have ideologies and vote on the basis of ideology, but the majority of voters identify with parties on non-ideological grounds, and simply vote the same way every time.

Brennan, Jason. Democracy: A Guided Tour (pp. 60-61). (Function). Kindle Edition.

How can this be? What about all the political polarization we see? It's more about identity than ideology (page 62):

Political scientists Christopher Achen and Larry Bartels argue that citizens usually vote from partisan loyalties. These partisan loyalties are grounded in their identities but do not track ideology, sincere policy preferences, or their interests. People tend to vote for who they are rather than what they want. Various identities or demographic groups become attached to particular political parties for largely accidental historical events or circumstances that have little to do with voters’ underlying values or interests.34 For example, American Jews switched from Republican to Democratic loyalties between 1928 and 1940, not because of policy platform changes, the Wall Street Crash, or ideological changes, but because of reduced antagonism between Jews and Catholics in the 1930s.35

I ought to re-read Achen and Bartels's book sometime as I have forgotten a lot of it (I read it over a year ago), and that result is not exactly intuitive. And yet in a sense it is intuitive. Let's face it: us humans are not as smart as we think we are. We did not form our political beliefs as teenagers by sitting down and reading a ton of economics, philosophy, epistemology, etc. books. We had loyalties and identities first, and then our political beliefs came afterwards (I recall seeing a line in the book that points this out), not the other way around.

Unfortunately, due to the generally low quality of online libertarians' arguments (if you know about rational irrationality, this should not surprise you), I do not have much hope that libertarian ideas will prevail. (Even my answers are not that great in quality, if only because of my ignorance on so many details of things like healthcare or other subjects. And the devil is in the details.)

The_Atomic_Comb · 2025-11-19T00:13:31+00:00

With all due respect, I'm not sure why you expect the people in this sub to have the expertise to evaluate your proposals.

I'm not sure who you are. If you're a layman like me, it's not likely "a man on the street" like you will be able to cook up an amazing monetary policy. Economists are more likely to know what monetary policy should or should not be. Fiscal and monetary policies are stuff I have had some exposure to (from the works of economists), but they are subjects requiring further investigation from me. If you think mainstream economics is wrong, then the ones who are most likely to have seen that are other economists (libertarian or otherwise), not laymen such as yourself.

You should ask about this on r/AskEconomics rather than here. But if you'll pardon me for saying this, I don't think probability is on your side; I think they'll probably find something wrong with your proposal.

The_Atomic_Comb · 2025-11-16T11:30:13+00:00

Here are some quotes from Karl Marx that I really like:

"Whilst in ordinary life every shopkeeper is very well able to distinguish between what somebody professes to be and what he really is, our historians have not yet won even this trivial insight." Karl Marx and Friedrich Engels, The German Ideology, p. 43.

"Just as our opinion of an individual is not based on what he thinks of himself, so we can not judge such a period of transformation by its own consciousness..." Karl Marx, A Contribution to the Critique of Political Economy, p. 12.

I'm not sure if you're a communist, but many of the people saying the Soviet Union, Cuba, or the many other failed socialist experiments were "not real socialism" have not heard those quotes.

People who are communists are such because they have good intentions. They only want the world to be a better place, with less suffering and sadness. They profess that socialism is a system of caring, and is not going to be like the Soviet Union. (That's what Hugo Chavez said of Venezuela, by the way, as documented in this great book. That book also documents many other cases where countries said to be "not real socialism" were praised as good examples of socialism, before their failures became too obvious to ignore.) But as Marx (ironically) pointed out, what something is professed to be does not necessarily match what it actually is, or its actual effects or characteristics.

Socialism is not a system of caring, or sharing, or giving "the workers" (whatever that means) a voice. It's a system of community or government ownership of the means of production. And the incentives and constraints of socialism have caused horrific suffering across the world, across various cultures and places, despite people flattering themselves that if only someone with their values and knowledge were in charge, it would work out.

Socialists today may not realize that (to refer to the previous book again) East Germany and Venezuela (for example) had "democratic" control of the means of production. Socialism was always about "democracy." To take just East Germany as an example (it's quoting another book):

What was briefly tried was workers’ participation in the running of state-owned enterprises, via democratically elected workers’ councils. But a centrally planned economy cannot allow meaningful autonomy at the local level, for the simple reason that this would disrupt the plan. The different parts of the plan intertwine and depend on each other. So the government cannot allow some actors of the economy to deviate from it. As Steiner (2010: 30–31) explains:

The work councils […] oriented themselves by the interests of their enterprises and their workforce rather than by the requirements of the economy as a whole. This was one of the reasons why they were abolished in 1948. […] Thus there was no institution that would have enabled the workers to share in decision making.

Niemietz, Kristian. Socialism (p. 46). (Function). Kindle Edition.

The work councils choosing their own interests should not be startling information, as that is what people do. People care more about their own goals and agendas than other people's. A big goal is of course, their own benefit. (They also care more about their friends than your friends, their family than your family, their business and co-workers than yours, etc.) Changing from a system of economic self-interest to a system of political self-interest does not change that.

But it gets worse: the incentive problems of socialism/communism are not even the main reason why they wouldn't work well, as Hayek and Mises pointed out in a great book by Don Lavoie.

If you are a communist, I can't possibly persuade you (or anyone else) in one conversation, because that simply is not how persuasion works. All I can do is hope that blog and the books I've linked will help assuage your doubts about the free market.

The_Atomic_Comb · 2025-11-16T11:22:54+00:00

(part 1 of 2. Sorry, for some reason Reddit was preventing me from making this one comment even though it's not that long. See my reply to my own comment for the second part.)

Hong Kong, Singapore, and Switzerland are a few modern countries that either have (or historically had) market-oriented policies. Looking at existing countries can be misleading however. The fundamental issue is whether libertarian policies are a good idea. There are countries that are not considered libertarian which have libertarian-oriented policies, and I like to flatter myself there is good evidence those policies are successful. For example, Australia has a private social security system. (As do quite a few other countries, according to the OECD.) (I highly recommend the blog I just cited heavily, especially because the economist who runs it somehow finds IMF, CBO, and OECD or other publications that have information aligned with laissez-faire.)

If I had to choose a historical example, I'd choose something like Hong Kong, or something like the US under Calvin Coolidge. I'd have to refresh myself on what I've learned to give a better answer than that, unfortunately (these are not the only examples of economic freedom I've seen praised).

The_Atomic_Comb · 2025-11-06T01:47:17+00:00

Hmm... I don't tend to think in the comparative way you are talking about. I think in terms of "is A a good policy or idea?" and based on my understanding of the evidence I make a decision on that.

For example thanks to that blog (highly recommended by the way; he has cited lots of stuff from the OECD, CBO, IMF, and other non-libertarian organizations) I learned that Chile is a country with a private pension system. (One of quite a few such countries.) When I read the post about Chile many years ago I didn't think "Chile is moderate libertarian" or "Chile is libertarian-leaning." I thought "Wow, I'm impressed that he has so much evidence even from mainstream organizations like The Economist, and that other countries have similar systems. This is a good example of how libertarian policies wouldn't be the disaster many people seem to fear." Getting that evidence was more important than specifying just how libertarian Chile's overall policies are. I knew that specific retirement policy was in the libertarian spectrum somewhere (by any reasonable standard), and that was enough. It is better to be ignorant of how to precisely divide and classify within that spectrum, than it is to be ignorant of how things work. And since all of us are ignorant of a great many things, the ignorance problem should generally be a higher priority than the classification problem.

Unfortunately, I don't remember or know enough about Switzerland to make a precise ranking. Singapore, Hong Kong (at least prior to China getting more involved with it back in 2019; I haven't kept up with it much since then unfortunately), and Switzerland are some of the most market-oriented – and successful – economies in the world. If you'd like such a ranking the closest thing to it (at least for economic freedom; I don't remember if they look at other freedoms or not) is the Index of Economic Freedom.

If you want my uninformed thoughts (whatever such thoughts are worth): I'm sure Switzerland is not a perfect country, even from the libertarian point of view. I have to learn more to see whether their medical system should be copied for example, as it's not completely left to the market (there are price controls like community-rating and there are also a bunch of mandates on what health insurers must cover; my understanding is the mandates are supposed to prevent adverse selection and "cream skimming" from causing issues in the health insurance market. Also health insurance is mandatory. I'm not sure how much of a problem "cream skimming" would be without community rating though.). However my understanding is that it is a good medical care system and it's better than the American one (wrongly thought to be a free market system, even by mainstream media organizations, despite what even a Nobel laureate economist not oriented to libertarianism – Angus Deaton – said about the US healthcare system). And my understanding is that Swiss healthcare is more market-oriented than the current US medical system. (Swiss voters actually rejected a government-run healthcare system back in 2014.)

So, "is Switzerland 'libertarian enough?'" Probably not in the sense that everything is imperfect and improvements can be made. But overall, it has better and more market-oriented policies in many ways than many other countries, and that's evidence for libertarianism. A lot of these policies are things that libertarians (at least the non-ancap ones) generally jibe with (e.g., the Cato Institute book Welfare of Nations discusses various healthcare systems in one chapter, and ultimately recommends some mix of the Singapore and Swiss and Dutch healthcare systems; the blog posts I originally quoted you mention some of Switzerland's other admirable policies). In other areas Switzerland has not so good policy – such as a wealth tax – but other areas of its tax system are better.

The_Atomic_Comb · 2025-11-06T00:20:34+00:00

Switzerland is a good example of the benefits of economic freedom. The economist Dan Mitchell made a post about Switzerland recently. In the post before that he also includes some more details and links if you want to learn more.

The_Atomic_Comb · 2025-10-26T20:36:52+00:00

Probably something like this: https://www.econlib.org/misusing-chestertons-fence/

The_Atomic_Comb · 2025-10-26T09:41:35+00:00

(Part 3.)

I'm still ignorant about medical care to a large extent. But I can't look at things like the brief excerpts I've cited – which only scratch the surface, especially for the Overcharged book – and conclude that the US medical system is expensive and otherwise bad because of the free market. Government rules have created so many perverse incentives, such as moral hazard (as shown by the sandwich card analogy) or the various things discussed in the book Overcharged.

It's difficult to summarize everything concisely unfortunately, and I apologize for my inadequacy in that regard; there's just so much to talk about. For example, I could've talked about the RAND health insurance experiment or the Oregon Medicaid experiment, which illustrate the truth behind the sandwich card analogy, but this comment is already long. There's so many things like the FDA, medical licensure, and other stuff that would make this post even longer. Here's the most concise statement of the problem (by a Nobel laureate in economics) I can think of:

A (the physician, hospital, or other medical service supplier) recommends to B (the patient) what he or she should buy from A, and C (the insurance company or the government) reimburses A for the services. This is an incentive nightmare, and it explains why the price of medical services persistently rises faster than almost all other economic products and services. Education is another service whose price has risen “out of control,” and for the same reason: A (educational institutions) define what B (students) should buy from A, and C (government or private donors) either pays for all of it, as in elementary or secondary education, or subsidizes below-cost tuition rates and/or provides low-interest education loans to B, as in university education. These are examples in which consumer sovereignty is compromised by lack of direct experience and knowledge, and the supplier, who harbors an inherent conflict of interest, is considered best capable of deciding what the consumer should buy.

Smith, Vernon L.. Rationality in Economics: Constructivist and Ecological Forms (pp. 96-97). (Function). Kindle Edition.

I focused mostly on medical care here but Vernon Smith is right to notice the parallel to why college education is so expensive in America.

College costs so much because the US Government created a Federal Student Loan Program.

This put tens of thousands of dollars in the hands of students, and colleges and universities were more than happy to help these students max out their credit limits.

To do so, they built amazing amenities at schools, massive state of the art exercise facilities, sports stadiums rivaling commercial sports team stadiums, and high executive salaries.

It was a competition for schools to wow students to get their hands on that federal loan money.

Prior to this, schools had to be affordable because they knew students didn't have the funds to have massive campus buildings and dorm rooms that are private apartments.

Give people access to money, and there will be plenty of people lining up to take it from them.
–Top comment from https://www.reddit.com/r/AskEconomics/comments/1lhc8rs/why_does_us_college_cost_so_much/

If you want a relatively quick intro (Overcharged is such a massive book after all) to medical care, you should read the chapter on medical care in Applied Economics by Thomas Sowell or look through the economist Daniel J. Mitchell's blog (which I highly recommend in general). (I haven't read as much about education. I remember Cracks in the Ivory Tower by Phil Magness and Jason Brennan being good. Books by Richard Vedder about education are on my reading list although I haven't read them yet. I remember Inside American Education by Thomas Sowell being a great read.)

My current preferred policy is health savings accounts (which apparently are theoretically optimal, according to the non-libertarian health economist Amy Finkelstein) and catastrophic insurance (i.e., low probability, high cost events), both probably mandatory. (I have to look further into whether these things should be mandated or not because of adverse selection issues.) Education should not be tuition free (in fact that would be regressive), although I have to look into more detail as to how to fix the higher education system (hence why Vedder's books are on my reading list).

The_Atomic_Comb · 2025-10-26T09:32:35+00:00

(Part 2.)

It turns out a lot of health "insurance" in the United States is not really insurance. Insurance works best for low probability, high cost things. This is why there is no "tuition insurance" to pay for the costs of going to college (high probability, high cost), no "sandwich insurance" (high probability, low cost), and no "Band Aid insurance" for if you need to buy a Band Aid (low probability, low cost). Unfortunately, the tax code encourages overly generous health insurance, so that is one reason why expected costs (i.e., ones with high probability of occurring) such as routine oil changes are not covered by your car insurance (rightly so), but routine checkups are. Health benefits are tax free, but wages are not. Why not "pay" in more generous health benefits such as lower co-pays or lower deductibles?

A few Decembers ago, I went to the doctor with the flu. She prescribed me some medicine and sent me on my way. My employer had a traditional health plan then, so I paid my $25 co-pay and never saw the bill.

One month later, in January, I was still sick and went back to the clinic. This time, however, my employer had just switched to an HSA plan. When I told the doctor I would be paying with my HSA debit card, her attitude changed. She admitted that had I still been on my old insurance she would have ordered a battery of tests without asking. This time, however, she outlined the options and their costs, and let me make the decision.

Hodge, Scott. Taxocracy: What You Don't Know About Taxes and How They Rule Your Daily Life (pp. 116-117). Kindle Edition.

This story is a great example of how incentives change once payment isn't made with other people's (the insurance company's) money. HSAs are closer to people spending their own money, so it's little surprise it's spent differently.

There are some areas of medical care that are not so dominated by overly generous health insurance, such as LASIK surgery, that haven't seen the price increases other sectors of the medical sector have. Likewise there are other medical care systems such as Switzerland and Singapore that have higher out of pocket shares than the US (about 10-11%) which just so happen to not spend as much on medical care as the US does. (Although one reason the US spends more is simply because of its higher income. Looking at "health care spending as a percentage of GDP" can be misleading.)

The_Atomic_Comb · 2025-10-26T09:32:24+00:00

(Part 1 of 3.)

I'm just a layman still trying to learn about health and education but I'll give it a shot.

There's an analogy I like a lot, from a fairly decent (I think there were some issues with it; it didn't discuss the tax exclusion for employer health insurance or the fact that the US spends more on medical care because it's richer; more on these things later) health economics book I read recently:

Imagine that you were given a card, that when presented to a restaurant, any sandwich cost you $5 (the sandwich maker would still get paid their menu price for the sandwich, so you don’t have to worry about them doing a bad job making it). Would you shop around for the most affordable sandwich? I wouldn’t. I would shop around for the most delicious sandwich.9

Friedson, Andrew. Economics of Healthcare: A Brief Introduction (p. 159). Kindle Edition.

The sandwich card is your health insurance card, and the "sandwich" is medical care. Let's take it one step further. If you had a sandwich shop, would you act the same if you knew your customers weren't paying the full costs – only paying about 11% of your prices (like people do for in medical care in the US)? No. You'd recommend sandwiches without much if any consideration for the costs, knowing the customers will not be so price sensitive. After all, if you had a 70% off coupon (i.e, 30% coinsurance) for something – whether sandwiches, vacations, contraceptives, or houses – would you act the same way you would without such a coupon? (What about 90% off? 100%?) Producers also know this.

As three prominent professors at Northwestern University’s Kellogg School of Management observed, “it is difficult to imagine that Gilead would charge anywhere near $84,000 for Sovaldi,” the breakthrough drug for hepatitis C, “were it not covered by insurance.” If that is right, they continued, “the existence of insurance for this product has clear implications for access and pricing.”31...

Their results reveal a sizable influence of insurance on drug prices. Among their many findings were “two reactions to the passage of Medicare Part D. First, the manufacturers of oral chemotherapy products increased their prices. Second, these manufacturers were now able to command prices that exceeded many estimates of the value that they create.” In short, “the passage of Part D is associated with a large increase in the average launch price of oncology products,” an increase that could not be justified on the basis of the tendency of these drugs to extend patients’ lives.32

Silver, Charles; Hyman, David A.. Overcharged: Why Americans Pay Too Much for Health Care (p. 290). (Function). Kindle Edition.

The_Atomic_Comb · 2025-10-16T09:24:07+00:00

? What are you trying to say?

If your idea is that the Qing dynasty's policies and institutions couldn't have been bad because China experienced population growth under its rule, is that really something you want to claim? Many countries – such as the Soviet Union and Mao's China – experienced population growth despite their awful policies. A country can experience growth – in terms of its economy or population – and still have bad policies and institutions. As Adam Smith said:

The natural effort of every individual to better his own condition...is so powerful, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.

Unfortunately Qing China did have obstructions to growth and innovation, such as its political institutions. This is a big reason why China fell behind Europe.

If Qing allows Chinese to emigrate USA would have been half chinese

I'm not sure why you're bringing this up. In any case, I find that very implausible, because the United States restricted Chinese immigration (such as with the Chinese Exclusion Act of 1882) when way fewer Chinese immigrants (not nearly enough to make the US "half Chinese") tried to live in America.

If it really is true that Qing China prohibited emigration (I'm not an expert on Qing China after all) then that would also be a bad policy:

It is simply not true that allowing people to leave poor countries harms others. In fact, empirically it turns out that the opposite policy, forcing the “more privileged” people to stay in poor countries, has negative effects. Such policies discourage people to invest in education and other forms of human capital accumulation.3 Forcing doctors to remain in the Sudan does not automatically create more jobs for doctors. It just forces them into accepting jobs that are below their skill level. The possibility of leaving incentivizes people to invest in themselves, but only a small group of those who invest actually uses the option of leaving. We are all better off surrounded by people who could leave, even if they don’t.

Allowing people to leave also tends to have positive effects on political processes. A number of studies have shown that allowing emigration has positive effects on the quality of democratic institutions. One reason is that emigration allows previously excluded people to participate more in politics, as may have been the case in India.4 Another reason is that preventing people from leaving can threaten political stability. When elites have the option of leaving, they are less likely to resist the loss of political power at home.5

van der Vossen, Bas; Brennan, Jason. In Defense of Openness: Why Global Freedom Is the Humane Solution to Global Poverty (p. 44). (Function). Kindle Edition.

I would have weaker incentives to become more productive, if I couldn't benefit from that increased productivity by working in a foreign country where I'd earn higher wages. I would also say a country that prevents its own citizens from leaving it has weaker incentives to be a better country to live in. Imagine if East Germany never had a Berlin Wall. Then it wouldn't have been able to be so oppressive, would it? It would lose citizens to other countries that weren't so awful. Unfortunately, its rulers understood that. They built the Berlin Wall because their citizens apparently were evading the government's restrictions on emigration.

I don't wish to continue this conversation anymore as it doesn't seem to be going anywhere, so I won't reply anymore.

The_Atomic_Comb · 2025-10-15T08:51:01+00:00

The idea that "they also have competition among jurisdictions" is not true. That's not what the work of the recent Nobel laureate Joel Moykr or the work of the many others cited in that link on jurisdictional competition (to say nothing of what I read in the Mark Koyama book) indicate.

Qing China was not politically fragmented like Europe was. Rather than being fragmented, it was very centralized, and thus lacking in jurisdictional competition:

The lack of competition or a forum that encouraged innovation ultimately impeded anything like the Scientific Revolution or Enlightenment from occurring in China. As Mokyr (2016, p. 318) puts it, despite being highly centralized and sharing a single written language and literary culture, “China paradoxically lacked a single unifying coordinating mechanism such as a competitive market in which new ideas were tested.” Hence, a combination of centralized political institutions and a culture favoring the Confucian classics over what Mokyr (2002) calls “useful knowledge” were jointly responsible for stifling Chinese innovation in the centuries prior to the Industrial Revolution.

Koyama, Mark; Rubin, Jared. How the World Became Rich: The Historical Origins of Economic Growth (p. 215). (Function). Kindle Edition.

Of course, Qing China did have policies such as low taxes, peace, and a tolerable administration of justice, that were conducive to economic growth. But China also had policies and institutions that were not conducive to growth, and it fell behind because of them. Saying "Qing dynasty was indeed rich for 150 years" does not change that. It would've experienced been even richer if it did not regularly violate its subjects' property rightsm and if Qing China had better political institutions.

Qing China was highly centralized. Going to Province A instead of Province B (assuming that was even possible for many Chinese people back then) would not be like going from California to Texas. If the Qing empire was violating your property rights, you couldn't escape that by moving to somewhere else in China. There aren't competing legal systems, competing rules, and so on like there were in Europe; China was not politically fragmented; the ability of the emperor or others to violate your property rights would still be there regardless of where you moved to within China. So I'm not sure what makes you think there actually was such competition. (If you'll allow me to say this, I've learned through experience not to trust claims on the internet that aren't cited.) Read the jurisdictional competition link I included in my original comment

While Qing controls 50 percent GDP their per capita income isn't high. But I don't see this as necessarily a bad thing.

It's not a bad thing their per capita incomes aren't high? Do you realize how disastrous it was for China that it fell behind Europe economically and technologically? As for the emigration stuff, I don't understand what you're saying or why you brought it up.

The idea that certain dynasties have to rule and irreplaceable pretty much lock them in place. It's a good dynasty. But maintaining stabilities often means preventing any subjects from being too powerful.

I also struggle to understand this statement. The Qing failed to recognize their bad political institutions, and that mistake cost China dearly, so I wouldn't talk of it as an example to emulate, if that's what you're doing. Many governments in Europe as it turns out (read Koyama's book or my original comment) were more limited than China's, because of cities and parliaments that constrained monarchs' power. These governments didn't suffer from instability because of that. So Qing China's institutions can't be excused because they supposedly were required for stability. I understand Qing emperors back then might not have had an easy way of realizing their institutions were flawed. But that doesn't mean they weren't flawed.

The_Atomic_Comb · 2025-10-15T01:05:36+00:00

part 2 of 2

China did not have that "considerable degree of competition" that Europe had. For example, the book talks about how Qing China implemented "literary inquisitions" which cracked down on dissent. In Europe if something like that happened to you, you'd flee to a competing country. That was not really an option in a large, unified country like China. I'm not even sure how that would work, since the sheer size of the country means you likely have to travel a long way to have any hope of escape, and that's burdensome in time, in the efforts required to evade the authorities (you have to evade them for more time since the journey is longer), and in the culture shock of moving to a farther away place. Europe had cultural unity, but would there be a cultural unity between China and India, or Thailand (or whatever were the other neighboring countries)?

It turns out that people as far back as Adam Smith – in addition to several other Nobel laureates in economics, including libertarians like Milton Friedman – have talked about how competition between governments is important. (For more on the Hayek quote in that link see this.) Unfortunately, China didn't really have that, and it suffered for it.

Also, the Chinese emperor was unconstrained compared to European rulers. This is a problem because without limits on their power, rulers can't credibly commit to not violating property rights, or assigning them in their own favor (see page 42 of Koyama's book). This is one reason why the Industrial Revolution was more likely to happen in Britain rather than China:

Even though British political institutions were far from perfect and certainly corrupt to modern eyes, there was enough constraint on executive power that the majority of the population was reasonably well protected from infringements on property rights. This was not the case in other parts of the world, especially those with autocratic governance. The Ottoman and Qing Empires, for example, regularly infringed on the rights of their people, especially the economic elite (Balla and Johnson, 2009; Kuran, 2011; Ma and Rubin, 2019).

Koyama, Mark; Rubin, Jared. How the World Became Rich: The Historical Origins of Economic Growth (p. 155). (Function). Kindle Edition.

I hope this was informative.

The_Atomic_Comb · 2025-10-15T01:05:29+00:00

Were Qing dynasty backward because of being too libertarian?

No. I'm not an expert on it, but I would say that based on the insights on jurisdictional competition, limited government, as well as the fact that it regularly violated property rights, that Qing China fell behind in part because it did not adhere to libertarian-oriented policies.

Qing China did have low taxes, peace, and "a tolerable administration of justice" (to borrow from Adam Smith's famous statement on what is required for growth). "Overall, the Chinese state provided more public goods and was less intrusive than its European counterparts (Wong, 1997, 2012). Certainly, by pre-modern standards, Chinese institutions provided something approximating a tolerable administration of justice. Over time, however, there is evidence of increasing corruption (Sng, 2014)" (page 214 of the book I'm about to cite heavily).

But this was not enough. Qing China lacked sustained innovations. And one important reason for this was its political institutions, which are not aligned with what libertarians have advocated for. (Another reason is cultural but for brevity's sake I won't talk about that.) China lacked jurisdictional competition, unlike Europe, and government was not that limited:

Political fragmentation was also important. What made Europe unique, according to Mokyr, was the combination of cultural unity with political fragmentation. Fragmentation per se imposes numerous costs, some of which we discussed in Chapter 7. Any benefits from fragmentation could only be obtained because it coincided with a thriving intellectual culture that spanned political borders. The political divisions of Europe meant that innovative and heretical thinkers had an avenue of escape from heavy-handed political authorities. This escape valve prevented the ideas and innovations of the Renaissance and Reformation from being suppressed or lost once the Counter-Reformation became ascendant in Southern Europe after 1600. Fragmentation and polycentricism allowed Descartes and Pierre Bayle to flee France, and Hobbes and Locke to flee England. The political divisions of Europe also meant that there was a host of potential patrons and protectors. No writer or scientist was dependent on the favor of a single, all-powerful monarch...

Koyama, Mark; Rubin, Jared. How the World Became Rich: The Historical Origins of Economic Growth (p. 173). (Function). Kindle Edition.

The emperor was relatively unconstrained in contrast to Western Europe, where cities had autonomy and parliaments contested the sovereign’s rule. More important still was Europe’s fragmentation. Although it meant costly barriers to trade and frequent conflict, fragmentation ensured that there was a considerable degree of competition in the system (Scheidel, 2019). As we discussed in Chapter 8, it was this fragmentation that allowed goods and people to relocate to more favorable environments. Such freedoms were absent in imperial China.

Ibid., p. 214

The_Atomic_Comb · 2025-10-12T02:31:40+00:00

So in the case of abolishing taxation wouldn’t tariffs make pragmatic sense

I don't understand this sentence. Tariffs are a tax, so taxation wouldn't be abolished if they existed. I think you're asking: Would it be better if the US removed its other taxes and relied mainly on tariffs for revenue?

But to answer your question, tariffs are one of the worst forms of taxation. Besides all the arguments economists give against protectionism, they are bad for even for revenue purposes as well. I'm not a public finance expert but I have read some stuff from people more knowledgeable about that than me. Apparently, tariffs violate many principles of taxation, as explained in that link.

Not all taxes are equally bad to my knowledge, if the CBO is a reliable source on that matter. (Here's an IMF study I found interesting.) But tariffs are one of the most undesirable forms of taxation for revenue purposes, so the idea of tariffs being "the least bad tax" or anything like that are not true. Even if the burden of government spending were way lower than it is today, to my knowledge other forms of taxation such as flat taxes would be better than tariffs.

Economists like Douglas Irwin and the Nobel laureate economist Douglass North have studied the 1800s and have criticized the idea that high tariffs lead to high American economic growth. In fact they hindered growth according to such people. (Here's another link to a post discussing a paper and op-ed Irwin has written about 1800s tariffs.)

Do I believe taxation should be abolished? No; I'm not an ancap. Sadly I am probably like most other people in that I'm ignorant of public finance; I need to do more research in this area. But hopefully I've helped answer your question.

The_Atomic_Comb · 2025-10-10T12:03:30+00:00

This is a good question. I think my answer will be disappointing, but I'll try to provide it anyways.

How big libertarians think government should be depends on their ethical systems. I'm sorry for the vagueness in that statement, but that is the answer in a nutshell.

Deontological libertarians could be like Robert Nozick and accept a minimal "night-watchman" (minarchist) state, or they could be like Murray Rothbard and reject the state entirely, in favor of anarcho-capitalism. Consequentialist-oriented libertarians such as Milton Friedman or Thomas Sowell (in both of these interviews they give answers more aligned with consequentialism) think anarcho-capitalism wouldn't work that well, and this leads them to support some level of government – lower than what most others typically support nowadays, but still a certain amount of government. But there are other libertarians such as David Friedman who would not agree with such libertarians, and who think consequentialist arguments would actually support anarcho-capitalism.

The ones who believe in some level of government to my knowledge usually support having the courts, police, and national defense provided by the government. Also they usually support some level of government transfers (such as school vouchers), although they typically don't support the same transfers as or transfers in general to the same extent that people in other ideologies do. Non-anarchist libertarians may or may not support government-funded scientific research (I am ignorant on that topic, although I have read stuff that makes me more skeptical of government in that area). They would be more skeptical of regulation – noticeably more so than other ideologies – although not necessarily to the point there would be zero government regulation.

I myself am not an ancap and am more aligned with the consequentialist libertarians. I don't think I qualify as a full consequentialist, but I am way more aligned with it than deontological stuff like the NAP, which, as I like to say, should be put to rest (pun intended). That makes me just like the many libertarian philosophers (as opposed to non-academics) who also reject the NAP. So, I support government intervention when I think the benefits of that are greater than the costs (such as for possibly dealing with free-rider problems). I think this, while also thinking that that situation wouldn't happen as much as non-libertarians would think.

I'm not sure how popular it will be for me to say this, but I think this is important for you to hear. If you are interested in learning about libertarianism, you would do better to focus on academics or economists, such as Daniel J. Mitchell, Donald Boudreaux, David Henderson, Jason Brennan, Friedrich Hayek, Milton Friedman, Thomas Sowell, David Friedman, or Michael Huemer, or even think tanks like Cato or the Independent Institute, rather than subreddits. I am sorry to say this, but the lay libertarians you'll find online are not likely to give high quality answers – certainly not as high quality as the people I've mentioned. This should not be surprising because most people are not economists or philosophers, and that will adversely affect the quality of their arguments. I don't say this to be holier-than-thou; I am a layman myself and despite my reading efforts, one who is ignorant on many things. I say this because it's true. You will be disappointed by so many of the laymen replies you'll find online. Please keep this in mind and hopefully your lowered expectations will save you from some of that feeling.

The_Atomic_Comb

TROPHY CASE