In The Darwin Economy, Robert Frank encourages activist public policy for better-functioning market is his proposed solution. Paralysis and ignorance, argues Frank, are what enable “libertarians and other antigovernment activists” to obstruct their cause. Whenever the familiar call to “do-something” is evoked, as Frank implied in the first chapter, I remember an insight Milton Friedman gave in an interview. As Friedman's teacher of statistics first told him, “Pedagogical ability is a vice, rather than a virtue, if it is devoted to teaching error.” The wisdom applies to government policy as well. Effectiveness at implementing a particular agenda has historically been a vice when it is done by the wrong people. Likewise, gridlock is a virtue when it prevents destructive public policies. One such policy is high speed rail. Frank regards more trains as “desperately needed” despite the reality that they face little demand that cannot be shouldered by our existing, extensive system of interstate charter buses. Cost overruns are another serious problem that accompanies high-speed rail. These are serious issues that can't be overcome by a can-do attitude alone.
Excise taxes are another policy that deserves more scrutiny than Frank grants them. His support for taxes on cigarettes is a fitting example of how Frank counts benefits without subtracting costs. His rationale for a smoker's tax is that cigarettes cause third-parties to suffer undue costs. Whatever the actual harm done by secondhand smoke, it isn't so terrible that we shouldn't tabulate the costs and benefits of a policy designed to combat it. They certainly aren't negligible. First, it is thought by some experts that smokers have a positive effect on the federal deficit. Over the lifetime of an average smoker, more taxes are paid out then benefits are received. This is because two of the largest entitlement programs: Medicare and Social Security, are paid out later in life. Smokers, who on average live shorter lives end up taking substantially less from the public
coffers. There are other problems with such taxes as well. Because every $1 increase in cigarette taxes is unlikely to cause a $1 decrease in cigarette spending, the tax isn't merely a shift of revenue from the pockets of tobacco executives to the government. Instead, many smokers will fund their habit by reducing their personal spending on other items. Third-parties suffer secondhand from bad public policy.
Those are just a couple of the bad policies that Frank seems to think only an antigovernment activist should oppose. But there are serious arguments against both of them that need to be engaged, not dismissed as obstructionism. There are other arguments in Frank's book, and I plan to address them and give credit where due in future posts.