BAKE ME A CAKE AS FAST AS YOU CAN, part 2.0

A thoughtful reader has asked, how can the religious baker execute certain designs but be allowed to refuse others?  Is it OK if you do custom designs that show stuff you agree with but refuse to do designs that show stuff you disagree with?

First, some hypothetical questions:  what if a customer requested a cake custom-decorated with a 3D representation of the infamous “Piss Christ” photograph (see   https://en.wikipedia.org/wiki/Piss_Christ  )?  What if a customer requested a custom cake depicting a priest and a nun copulating?  A cake depicting a headless president whose head is held aloft by a (you-know-what)?  Wouldn’t it be OK for the baker to refuse, in each of the three cases?

Answer:  Of course.  The focus belongs on the reason for the baker’s refusal of the customer’s request.  If the baker refused to bake a birthday cake for the birthday of a man he knew to be gay, even if the design was to contain no clues as to the man’s sexual orientation, that might have been illegal discrimination.  But if the baker balked because the request was for a cake that depicted or celebrated an act that the baker believed to be sinful under the teachings of his religion, that is different.  The reason for the baker’s refusal was not that the customer was gay, it was that the baker was unwilling to commit a sin, to abet the celebration of a gay marriage. The baker’s intent was not to discriminate, it was to follow his religion faithfully.

Granted, there are certain practices of certain religions that our culture regards as so repulsive, so barbaric, that religious belief cannot be a legitimate excuse for engaging in such practices in this country.  Certainly a refusal to assist in the celebration of a gay marriage is not in any way comparable to, say, committing an honor killing.

BAKE ME A CAKE AS FAST AS YOU CAN

If you offer a product or service to anyone, you must offer it to everyone, but you don’t have to accept an order for something you are not in business to build, even if the would-be buyer is gay.

Based on initial reports of the Supreme Court’s oral-arguments phase of the appeal on the Colorado baker who refused to bake a wedding cake for a gay wedding, sounds like the Supremes might be inching toward what this observer considers the crux of the case:  just what, exactly, did the baker refuse to do?

Seems clear enough the engaged couple made it known they were gay (i.e., they introduced themselves as the parties to be married), and asked the baker to bake them a wedding cake.  Also seems clear enough that in the end, the baker refused to bake them a wedding cake.  What has been missing from press accounts of the case is this:  did the customers indicate what kind of cake they wanted?  Did they want any old wedding cake, like one of the cakes on display, or a cake of a particular design, like a design that in some way commemorated the fact that it was in celebration of a gay wedding?  More specifically, did the customers indicate they wanted the design to include, for example, two male figures as the wedding partners, or some other design that denoted, at least to the congnoscenti, that it was a gay marriage – e.g., the special flag that the celebrants eventually ordered and bought from another baker?  Initial accounts suggest that Justices Kennedy and Gorsuch, through their lines of questioning, were heading toward this issue.

Why does the design of the cake matter?   Answer:  (i) no problem if the guys wanted a generic cake, like the ones the baker displayed – it is indisputable that the baker offered to sell them a standard-design cake, despite their being gay.  In other words, the baker will sell all of his conventional cakes to anyone, regardless of the customer’s sexual orientation;  but (ii) big problem if the customer wants the baker to produce a transparently-gay cake.

The law is, you cannot offer a particular product to some people but not to others, when the reason for the discrimination is the others’ sexual orientation.  But what about refusing to make and sell a particular product that you do not offer to anyone, regardless of their sexual orientation?  If that behavior were illegal, then a person could walk into a bakery and order cupcakes and a new Mercedes, and if that person were gay, the owner would have to build him a Mercedes. Moral of the story:  if you offer a product or service to anyone, you must offer it to everyone, but you don’t have to accept an order for something you are not in business to build, even if the would-be buyer is gay.

SMALL GOVERNMENT VS STINGY GOVERNMENT

Please consider this excerpt from The Road to Serfdom, by Friedrich Hayek, the legendary free-market economist, appearing at page 87 of the Bruce Caldwell “Definitive Version” of the work:

“There are, finally, undoubted fields where no legal arrangements can create the main condition on which the usefulness of the system of competition and private property depends: namely, that the owner benefits from all the useful services rendered by his property and suffers for all the damages caused to others by its use. Where, for example, it is impracticable to make the enjoyment of certain services dependent on the payment of a price, competition will not produce the services; and the price system becomes similarly ineffective when the damage caused to others by certain uses of property cannot be effectively charged to the owner of that property . . .  Thus neither the provision of signposts on the roads nor, in most circumstances, that of the roads themselves can be paid for by every individual user . . .   In such instances we must find some substitute for the regulation by the price mechanism.  . . . “

English translation:  Free-market competition yields better outcomes than governmental action (“central planning,” in Hayek’s lexicon), with only one exception:  where too many of the people who would benefit from a project or enterprise would be unwilling or unable to pay for it.  Everyone uses the roads, but not enough people could afford to pay their usage-based share of the price for the building and maintaining of them, so the roads would not get built without governmental action.

A suggested corollary to the Hayek proposition:  Just as government should do what only it can do, government should not do what the private sector can do better or at lower cost. Government should outsource everything but its core competencies, which are few.

Hayek would have been fine with President Eisenhower’s decision to fund and manage improvements to the nation’s infrastructure, such our interstate highway system, built during the 1950s.  (See William J. Bennett for corroboration of  this inference:

https://books.google.com/books?id=X4c5YV7XNdAC&pg=PT708&lpg=PT708&dq=william+bennett+on+hayek+on+interstate+highway+system&source=bl&ots=huaoCuzapi&sig=LBuTsiDa4NkEja0gZjjvfK1alPk&hl=en&sa=X&ved=0ahUKEwj59LqqnazWAhXGYiYKHbrkAOkQ6AEIJjAA#v=onepage&q=william%20bennett%20on%20hayek%20on%20interstate%20highway%20system&f=false

We already had toll roads by the ‘50s, and many more have been built since them, and some can be maintained primarily through toll revenues, but it has always been unrealistic to assume that tolls would pay for the original construction of a toll road.

* * * * * * * * * * * * * * * * * * *

President Trump is a Hayekian (even if not a conventional “conservative”), in that he would build infrastructure but avoid regulating it.   He believes improved infrastructure would contribute mightily to the nation’s economic growth, but excessive regulation would impede growth.

Republican opposition to Mr. Trump’s economic policies is curious.  The ideological Right, while continuing to belittle him for tastes and manners that might be OK at Wharton but not at Yale, senses the president is not one of their own; they are scandalized not only by his manner but by his apostasies involving increased federal-spending and modified  trade-relationships.  The moderate Right is even-less reasonable: they claim to seek healthcare reform and tax reform but find excuses to oppose initiatives to achieve them; they are stunned when the president takes seriously his pledge to restore free-market pricing to healthcare and economic sense to our tax structure.  Neither the ideologues nor the moderates seem won-over by the president’s nomination of an original-meaning jurist to the Supreme Court, his revocation of Obama’s DACA executive “memorandum,” or his massive reductions in federal regulations.  They seem frightened by his switch to a “big stick” posture on national security.

The suggestion here is that the president is essentially a conservative, and that he is misunderstood because few people are willing and able to distinguish between reducing government regulations (the “size of government”) and reducing government expenditures.  The president wants to reduce regulations; red tape drives him wild.  He hates it when meritorious business ventures, like the Keystone Pipeline, are held back by regulators with political agendas.  But he supports federal assistance for recovery from major disasters (viz, Hurricane Harvey) and resists cutting Social Security and Medicare. (He does not seem to share Hayek’s ambivalence about whether entitlements are re-distributive steps down the road to serfdom.) The president’s main priority is economic growth, which is needed if we are to pay for entitlements.

The president is more of a conservative than many of his detractors, even though his conservatism is based upon his business experiences and instincts.  He is anti-regulation but not anti-government.  He is pro-markets but willing to provide governmental assistance.  Do his critics miss the point because they, too, are distracted by matters of taste and manners?

Leadership For Healthcare Reform

To everyone who mocks the Republican Party leadership for breaking their promise that they would repeal and replace Obamacare as soon as the Republicans achieved a majority in the House, or as soon as the Republicans also achieved a majority in the Senate, or as soon as the Republicans also captured the White House:

The Senate is not controlled by Republicans.  John McCain, Susan Collins, and Lisa Murkowski are not Republicans in any meaningful sense of the term, certainly not when it comes to important legislation. The three, like too many of the other 49 nominal Republicans, are fine for the occasional show-vote, where they get to propound Republican values (pro-life, make America great again, etc.), but when it comes to the hardcore stuff of Republican principles, like free markets and limited government, they are not Republican or conservative at all.

One could blame the healthcare debacle on insincerity and ignorance, but that is only part of the story.  The missing Republicans are not the root cause of our failure on healthcare-reform, just as they will not be the cause when tax-reform suffers a similar fate.  The root cause is a failure of leadership.  We already knew that Majority Leader McConnell is a parliamentarian but neither a conservative nor a leader, and we already knew that Speaker Ryan, who could not explain the meaning of “good morning” in fewer than 100 pages, is certainly not a leader.  What we did not know was whether our president, despite his crudeness, vulgarity, and other shortcomings, could translate his unquestioned skills as a communicator into a functional form of leadership.  Short answer:  so far, not so good.

Possible cause: the president has neither the patience nor the skill-set to study-up on the healthcare problem and master it sufficiently to “sell” a conservative/Republican solution to the American public and the Congress.  It is not as though the solution were a mystery:  free-market pricing of healthcare and insurance (to satisfy the Republicans), coupled with financial assistance to the needy and the people with pre-existing conditions (to satisfy the Democrats).  Democratic generosity, Republican competitiveness, combined in one easy package.  That is the bi-partisan solution, the one that would satisfy both parties if they were in fact really looking for a solution.  But are they?

 

EPITAPH FOR HEALTHCARE REFORM

Where did it all go wrong for repeal-and-replacement of the Affordable Care Act?

Short answer:  pre-existing conditions (PECs).  The PEC solution in the ACA is the one part of the law that most people want to rescue, the one that represents financial protection of people who are unable to obtain healthcare insurance because their health issues make insurance unavailable or prohibitively expensive.  But the Republican Congress was unable to agree on a PEC fix.

Longer answer:  the conservative mantra, a big factor in the Republican wins last November, was that healthcare insurance (and healthcare itself) should be offered and purchased in a free market, where the competitive forces of supply and demand would drive down the prices of insurance and care.  But after the dog chased the car for 7 years and finally caught up with it, the dog had no idea what to do with it.  Republicans seemed stunned to learn that the public cared more about taking care of people with PECs than it did about free-market competition for the pricing of healthcare and insurance..

The problem:  after 85 years of living with ever-increasing governmental regulation and price controls, America no longer remembers how markets work.  The ACA solution fixed prices and had people with PECs paying the same prices for insurance as everyone else, which amounted to a cross-subsidy – people without PECs would pay more than they should, in order to allow people with PECs to pay less.

Conservative Republicans in Congress were put-off by the price-fixing/cross-subsidy apostasies.  Recalling the 1970s oil-price debacle, they knew that price-fixing never yields sustainably-lower prices.  Recalling Economics 101, they regarded cross-subsidies as “re-distribution of income,” a sad relic of communism.  But only Sen. Ted Cruz seemed to consider that there might be a way to avoid price-fixing and automatic re-distributions while still taking care of people with PECs.  The Cruz amendment would have been the gateway to a format that Nobel economist Milton Friedman had discussed decades earlier,  vouchers:  first you free up the markets for healthcare and insurance, which drives down prices, and then you give money (or vouchers) directly to people who cannot afford to pay market prices – whether because they are broke or because their PECs put the cost of insurance beyond their means.

It is clear that Americans want to help those in need.  The stumbling block is not a flaw in our moral character, it is a flaw in our governmental approach.  The Cruz approach was to separate the pricing of healthcare and insurance from the granting of assistance to people with PECs.  To those who might ask whether this would induce everyone to put off buying insurance until he or she developed a condition that required healthcare services, the answer is simple:  put the feds in charge of deciding who is entitled to assistance, when, how much, and for how long, and make sure no one gets any money without first having substantially exhausted his or her financial resources. Gaming the system, as people have been gaming the ACA, would be minimized.

A pair of concise summations of this approach:  “If we’re going to subsidize Americans who can’t afford health insurance, do it directly. Don’t do it through the premiums of others,” said Sen. Jeff Flake (R., Ariz.).  “The obvious compromise, the only good solution, is to do both: free-market pricing of healthcare and insurance in order to drive down prices, coupled with government subsidies for the needy to enable them to buy care and insurance at market prices,” said your humble scribe in an earlier blog post.

So, why was the Cruz model rejected?  Were the Republican resisters just under-informed, or should we be more cynical about their motives?  Did the insurance industry or anyone in the “swamp” really want a free-market solution? Why didn’t the Trump administration endorse and sell the Cruz draft proposal?  Does anyone believe that repealing ACA or letting it die on its own would be anything but a meaningless stunt, possibly an invitation to financial or civic chaos, with no way to sustain American healthcare without massive infusions of new money our government does not have?