Confusing Price Index

Virginia Postrel ("Priced to Move,"February) makes a good case against the consumer price index but omits the obvious conclusions: Ditch the CPI and close the Bureau of Labor Statistics. Like most government agencies, the BLS is not just wasted money: It is a public- choice headache. A wise governor of Hong Kong blocked official collection of economic statistics lest he be pressured to do something about them. We can learn from him.

Roberto Alazar
Irvine, CA

Normally I reconsider my position whenever I disagree with Virginia Postrel on the subject of libertarianism. On the subject of the consumer price index, reconsidering my position is not working. I suspect that the purpose of the CPI was never to make everybody feel good by showing how technology can improve the quality of life. If it's to make any sense, the CPI market basket must be confined to items fundamental to living that have not changed. If an item has changed, we should be on guard both for indications that the quality of life has fallen and for effects of technology that must be discounted.

For example, choosing to rent a movie on videotape because theater crowds have become rowdy and the car is no longer safe in the parking lot suggests that we're worse off, as you may have meant to imply. Being able to buy a movie and watch it at any time, a luxury unavailable to kings centuries ago, is a benefit of technology and has nothing to do with prices. Substituting a phony synthetic breakfast drink for fresh orange juice may reduce the quality of life, while a lower price for fresh oranges may represent only a benefit from better transportation technology.

Government propaganda is certainly not likely to provide insight; their suggestion that people will cheerfully buy less-desirable foods and from a discount store reveals only their effrontery.

William J. Roberts

The thrust of Virginia Postrel's February editorial, "Priced to Move,"and of your December 1995 article "The Good Old Days Are Now"is that we are all better off than we were 10 years ago.

Are we? Ten years ago I lived in a large modern house on a large lot in a nice neighborhood. Today I live in a small old house on a tiny lot in an old neighborhood. What does it avail me that new cars are better than 10 years ago? I drive a 12-year-old car and see no prospect that I will ever again be able to buy a new car. I do not have air conditioning or a VCR or a cell phone. My TV is dying, and when it goes, I will not replace it. I cannot afford restaurants or movies, much less an airline ticket to anywhere. I do have a computer, this being a necessity for writing résumés and cover letters, having been laid off for the second time in five years. This is my reward for having invested years of hard work earning a Ph.D. in engineering.

I suggest that REASON's readers would be better served if you stopped printing these pieces by rich people who only talk to other rich people and get a writer who actually has some contact with common people.

James W. Austin
Bellevue, NE

Virginia Postrel replies: Mr. Alazar and Mr. Roberts both point to fundamental problems in computing a cost-of-living index–the temptation to political shenanigans and the difficulty of comparing today's apples with yesterday's oranges. Although Mr. Alazar's prescription that the government collect no economic data might have some positive effects in such areas as trade statistics, where the existence of the statistics creates the issue, I'm quite sure that private researchers in both academia and business would still be interested in the questions the CPI attempts to answer. Indeed, far from being easily dismissed "government propaganda,"the Boskin report represents a consensus of privately employed economists who have worked in this area over decades when lawmakers had no particular interest in the subject. They will continue to research and publish regardless of whether any legal changes are forthcoming, because they are interested in fundamental questions about the relations between prices and living standards.

In this regard, some of the most interesting and provocative work has been done by economist Robert J. Gordon of Northwestern University using not government data but a century of Sears catalogs. Gordon's work suggests quite convincingly that living standards have risen dramatically. If given, say, $1,000 to spend at list price on goods from the Sears catalog, most people would choose to spend only the first few hundred on standard, unimproved goods even when offered old-fashioned prices. The rest they would spend on today's goods at today's prices.

Mr. Austin's letter represents a common fallacy. He not only generalizes a nationwide trend from a single data point–his own experience–but also confuses economic turbulence with declining living standards. No one, least of all me, claims that the economy is calm and stagnant. The changes that produce progress also create disruptions, as once-dominant businesses fade and once-valued skills become less so while other businesses and skills rise. That means trouble even for some well-credentialed people, especially if they live in areas like Nebraska where the population is rapidly draining away. But Mr. Austin is hardly the first engineer ever to lose a job–my own father and father-in-law both had that experience back in the good old 1970s–nor is he the first Ph.D. to find that the market values things other than how many years one spent in school. (All investments have risks, and I have the "upside-down"home mortgage to prove it.) Finally, as someone who drives an 11-year-old car, I'm very glad it was made in 1986, not 1976; quality standards improved dramatically.

Thugs, Not Drugs

Nick Gillespie gives a balanced and well-reasoned analysis of Arizona's Drug Medicalization, Prevention, and Control Act of 1996 (Prop. 200) in "Prescription: Drugs" (February). The reaction of the feds since the initiative's passage has raised the potential significance of Prop. 200 to a higher level. By insisting on FDA approval for medical marijuana, for example, the feds remind citizens of how the FDA so often is in the way of getting helpful drugs to patients in dire need.

Readers of REASON are well aware of the FDA's responsibility for the avoidable deaths of millions of Americans. By attempting to nullify the change in treatment of nonviolent simple drug possessors (probation for the first two offenses) and the release from prison of simple drug possessors now serving time, both made possible by Prop. 200, the feds knew they would violate the 10th Amendment, recently rediscovered by the Supreme Court in the Lopez decision. So they switched tactics. They now threaten to pull doctors' narcotics licenses for handing a prescription (simply a written medical opinion) to a patient, which, pursuant to the law, would serve as a legal defense in the event that the patient is arrested for possessing marijuana.

In providing the patient with a prescription, a doctor is not giving or selling him marijuana, or even telling him where to get it. He is simply rendering a professional opinion regarding the drug's efficacy and applicability in that given clinical situation. This is an exercise of his right to free expression as guaranteed by the First Amendment. Thus, in order to avoid a 10th Amendment violation, the feds are now swerving into a First Amendment violation.

Prop. 200 is no longer just about drug policy reform. The federal response has raised questions about regulatory reform, states' rights, and the relationship between the people and the state. The behavior of the feds has provided Arizonans and all Americans with a concrete demonstration that the federal government is no longer the servant of the people, the protector of their liberty. Rather, it has become their master.

Jeffrey A. Singer, M.D.
Medical Spokesman
Arizonans for Drug Policy Reform
Phoenix, AZ

School Days

Regarding Rick Henderson's article on school choice, "Schools of Thought"(January): Libertarians who argue for vouchers because private schools cost less than public schools should know better. Of course private schools cost less now, but just wait until they've been funded with tax dollars for a while.

If vouchers prevail, private schools will suddenly have an interest in increased education spending. School administrators will hike tuitions, knowing that politicians will–"for the children"–increase the size of vouchers. Those who object will be political pariahs. We've been down this road before with Pell Grants and student loans, both of which contributed to massive tuition increases. Should limited-government advocates really seek new constituencies for government spending?

It's also surprising that Henderson doesn't more fully explore church-state objections to vouchers. Parents with vouchers will decide which religious teachings other taxpayers must finance. (Parents aren't the only taxpayers.) Mormons will be forced to finance the teaching that Joseph Smith was not a prophet. Jews will be compelled to support schools associated with the Nation of Islam. Evangelicals will have to finance the teaching of papal authority. This may seem trivial to many, but some of us take religion seriously. If this is trivial, then so is the issue of workers being coerced by unions into supporting political speech.

Voucher proponents usually respond that government programs already support religious education (G.I. Bill, Pell Grants), or allow recipients to spend other people's money on religion (Social Security, welfare). But isn't it a little bizarre for libertarians to justify coercion by citing programs that they don't think should exist?

Timothy Lamer
Falls Church, VA

Rick Henderson claims that Milton Friedman invented the idea of education vouchers. Certainly it was he who introduced that expression as the label for a policy proposal which he has done so much to popularize. But the policy itself seems to have been advocated first by Tom Paine in his 1791 publication The Rights of Man.

Arguing that "a Nation under a well-regulated government should permit none to remain uninstructed,"Paine urged the payment "to every poor family …of four pounds a year for every child under fourteen years; enjoining the parents of such children to send them to school, to learn reading, writing, and common arithmetic."

Paine also straightaway provided an example to all subsequent proposers of costly reforms by proceeding to work out what taxes would be needed to finance this proposal and to indicate administrative means of insuring that his education allowances would in fact be spent, as intended, on elementary schooling.

Professor Antony Flew
Reading, England

Rick Henderson's comprehensive article on school choice unfortunately gives a misleading impression of my attitude toward low-income voucher programs and the activities of the Institute for Justice in defending them against challenges in court.

I do believe that a universal plan should be our goal. At the same time, I have consistently supported many programs, such as the Milwaukee and Cleveland plans and the CEO private voucher plans, that provide some parents with a wider choice and their children with an opportunity to benefit from better schooling. However, unless the means-tested plans prove to be steppingstones toward universal choice, I believe the end result would be to stymie effective reform of our educational system.

I commend the Institute for Justice for its dedication to promoting economic freedom not only in this area but in others and for their effectiveness in doing so.

As Henderson reports, my wife and I have set up a foundation to promote universal school choice. However, that foundation is located in Indianapolis and is being run by its president, Gordon St. Angelo, and his staff, not by us.

Milton Friedman
Senior Research Fellow
Hoover Institution
Stanford, CA

Rick Henderson provides fresh insights into the battle over school vouchers. He errs seriously, however, in describing the Institute for Justice and Milton Friedman as representing "poles of the debate"between universal and means-tested vouchers.

I.J.'s mission is to promote and defend educational freedom, and the entire movement owes an enduring debt to Dr. Friedman for pioneering the most effective means to do so. Our goal is to create legal precedents that recognize parental autonomy, and we defend against legal challenge school choice programs, whatever their contours. The Milwaukee and Cleveland programs are means-tested, while the Vermont program for students in rural school districts is universal. As we succeed, school choice programs of all varieties will blossom.

As for the "separationists,"the goals are laudable but the tactics counterproductive. The real debate today is between defenders of the status quo and champions of school choice. When separationists gratuitously trash vouchers, they aid and abet the public school monopoly, creating a division among advocates of educational freedom that the National Education Association gleefully exploits. If we lose the battle over parental sovereignty, how can we expect to win the far more difficult battle over separation of school and state?

Clint Bolick
Chip Mellor
Institute for Justice
Washington, DC

Rick Henderson replies: One section of my article addressed the public-choice objections to vouchers that Mr. Lamer cites. I pointed out, for instance, that unions and education bureaucrats would be tempted to impose new regulations on voucher-accepting schools and that many separationists worry that parents may perceive vouchers as a new welfare entitlement. Yet I said that countervailing forces–including the resilient network of parents who already educate their children in religious institutions or at home–could restrain overreaching regulators.

But Mr. Lamer is not objecting to tuition vouchers so much as he is to tax-funded schooling of any kind. As I wrote, taxes have supported elementary and secondary schools in this country since before the Constitution was ratified. Those of us who would like to see the state's role in education limited, if not eliminated, should acknowledge the political obstacles that face anyone who opposes a tradition perhaps more American than apple pie.

I thank Professor Flew for pointing out that liberty lovers appear to owe yet another debt to Tom Paine.

A careful reading of the letters from Professor Friedman and Messrs. Mellor and Bolick merely underscores what I said in the story: The Friedmans and the Institute for Justice aren't at war with one another; they just believe in different paths to a similar goal. Milton Friedman will support tax-funded vouchers only if they will result in a universal program. I.J. defends all school choice proposals, "whatever their contours."