This week, we sit down with Jeffrey Miron, a professor of economics at Harvard University and the director of economic studies at the CATO Institute. Mr. Miron is an expert in the economics of libertarianism, and has advocated for many libertarian policies, including legalizing all drugs and allowing failing banks to go bankrupt.

Caroline Vik:  let’s get started. I’m excited to have you here today.  I loved taking your class back in the day, the clearest framework in the game in my opinion.  I’m so excited that you’re writing Libertarian Land for us.  So how about we start by hearing your concept of Libertarian Land?

Jeffrey Miron:  So the big picture is that in Libertarian Land there is much, much less government than there is any modern society and that is true across the board.  It’s true with respect to policies that one might think of as the favorites of the left like redistributing income, subsidized education.  It’s also true of many policies of the right and prescriptions on private behavior like drug prohibition, abortion, or laws aimed at homosexuality.  In some cases, policies that are popular between both the left and the right like restricting immigration.  So the first approximation, the amount of government would look like the amount we had in the nineties — and I mean the 1790s — so that’s a very broad question.

Vik:  Got it.  So the Fed raised rates yesterday to combat inflation.  What do libertarian economics and Libertarian Land say about inflation and what would they do about the recession we may see going forward?

Miron:  Well libertarians are very skeptical of central banks to start with.  So in Libertarian Land, there might well not be a central bank at all of any kind.  So there’d be very different sorts of conversations.  If there were a central bank or any federal authority that was determining the path of the money supply and interest rates, it would be asked to stick to very specific, easily monitored rules rather than having the discretion that modern central banks have. It’s unclear that you can actually write down rules and enforce that any central authority follows it.  Say you have the kind of thing that people talk about, which is targeting nominal GDP — that is trying to get nominal income to grow at a given rate.  There’s so much noise in the data.  There’s so many measurement issues.  There’s so many lags in when we have the data that a clever central bank could probably circumvent that rule and have a lot of discretion.  Same thing with an interest rate rule, or a price level targeting rule.  I think what everybody has to accept is two things.  One, we can’t actually imagine an uber-libertarian view on central banks and monetary policy because as long as the government exists, it needs to raise some tax revenue even if it’s a very small amount.  It needs to make some expenditure to hire judges and military and things like that.  Once the government does that, it has to decide how it’s going to pay for those things and how it’s going to collect revenue.  It will choose something like the dollar or some kind of currency, but that’s gonna tend to define what is accepted broadly as payment.  So the government’s always going to have a lot of control over the money supply.  I don’t think that even in uber-Libertarian Land you can avoid that.  And so it’s really hard to know what the right thing to do is there.  It’s very much in the weeds as to whether the current debates are sort of constructive or not.  I think the first order thing that people are not talking about enough is we have this huge looming fiscal deficit.  If you look at projections from the Congressional Budget Office and others, debt relative to the GDP is forecast to just grow without bounds.  Sooner or later, that means you can’t pay for it because interest rates go up and the cost of servicing your debt is more than the entire GDP.  That is going to drive inflation no matter what is true about supply chains, no matter what is true about Ukraine, no matter what is true about current policy.  And so nobody’s really talking about that or dealing with that.  To me, that’s the key thing driving what’s going to happen over the next ten or twenty years.

Vik:  That’s a good point.  When I worked at the Department of Defense, we talked about how, if interest rates rose by one percent, the US government would spend more on interest payments than we do on the military.  And so that’s about to happen I guess.

Miron:  It’s very, very likely.  There’s been all this discussion about, well, interest rates are low so the cost of having more government is low or debt is low, and implicitly assuming that that’s going to last forever but as you just said, it’s not going to last forever and it’s already changed a bunch.  And that means the debt service costs are going to be much higher looking forward.

Vik:  On the monetary questions, what is your view of denationalization of money and how are you looking at crypto broadly, Bitcoin more specifically, and what you think its ideal role is if any?

Miron:  So I don’t see any good reason for the central government, the Treasury, or the Fed, or whatever to be restricting private kinds of payment systems.  Indeed we have some of that — credit card systems are a mainly private mechanism for making payments.  Crypto was billed as potentially being a way of making payments — it doesn’t seem to have happened very much so far.  So far it mainly seems to be a speculative asset.  So I think the right libertarian view is we want the government to deregulate as much as possible to allow all these other kinds of assets or means of payment to exist if the market seems to want them to exist and not try to regulate them out of existence.  At the same time I’m not as convinced as some libertarians that crypto was somehow going to keep the federal government from being as big and as bad as libertarians think it is.  I think that’s really just a separate issue.  Partially, the federal government will always regulate crypto enough that it’s not serious competition for the government source of money.  The government doesn’t want more competition for the  dollar.  And so I think the benefits of crypto are really quite mild, but there’s no reason to try to prevent people from owning it, using it, speculating it as much as they want.  I just dont think that’s actually going to happen so much once people realize it’s not really solving any major problems it’s just another speculative asset. 

Vik:  It’s been interesting to watch the crypto markets collapse alongside everything else because, at least, you know, among a certain group of “true believers,” Bitcoin is the ultimate anti-inflationary asset, but we’re not seeing that happen in this instance. 

Miron:  It’s not happening.  The inflation that is happening in the dollar is, of course, devaluing the value of anybody’s crypto assets the same way as devaluing your stock holdings, or bond holdings, or your income.  So that claim just never quite made sense to me.  More fundamentally, what is crypto good for?  What does it accomplish that doesn’t already exist?  We have a means of payment, the dollar and things built on the dollar like credit cards.  Now those are more costly, and it’s time-consuming, and over-regulated — and they should be — but the best response to that is to scale back all the regulations.  But a few more questions, for example, I heard that if you want to make payments, if you’re an immigrant, you want to send payments back to your family in your country of origin, it’s very expensive.  You lose a huge amount in all the transaction fees you have to pay.  So that’s potentially a role for Bitcoin or other crypto.  The best solution is to get rid of all those fees that are causing it to be expensive just to use the dollar to make transfer payments back to your families.  Crypto is not really the answer to any obvious question unless a lot of people really wanted to start making payments with crypto.  But that assumes that there’s going to be fluidity between crypto and other assets.  And that seems to have been hard to achieve so far.  And so there’s very little actual transactions other than, in crypto, but other than transactions for buying a toaster oven, it doesn’t happen.

Vik:  Many cryptos ended up being more store value.

Miron:  And a very noisy store value so far.

Vik:  Interesting.  I was talking to a sort of founder in the NFT space earlier and his point was that NFTs are really about providing digital property rights and that it is very hard to predict all the different applications of that. NFTs, he argued, are really a file type that enables digital property rights, which I thought was an interesting frame.  But I take it you are crypto skeptic?

Miron:  It’s not even skepticism.  It’s a live and let live.  Government should leave it alone, but I personally wouldn’t advocate that anyone, you know, buy a lot of crypto.  I mean there’s a standard model economic that says everyone, to be diversified, should own a little bit of every sort of asset.  So maybe everybody should own a little crypto just because that helps diversify.  My big regret about crypto is that I heard about it, I heard about Bitcoin back in 2008, very, very early on, and I went to my wife and I’d say “will you let me invest $1,000 in Bitcoin?”  She said “yeah, $1,000.  I’ll let you do that.”  At that point nobody had any idea how this was happening.  I went online and I tried to find a way to buy it, and it just felt a little sketchy. 

Vik:   Well it was fringe then.  That was the point, right?

Miron:   Exactly, but had I done it, even with the recent declines, I would’ve had a lot of money.

Vik:   It really did originate in committed libertarian circles for the most part.  So, getting back to key stories of the day — oil prices, gas prices, the Biden administration is talking about taxing windfall profits from oil and gas companies — what would you say is the right approach to this problem?

Miron:  First, I don’t think there’s an obvious solution to the problem.  Gas prices are high partially because of general inflation, partially because of the war in Ukraine, and some miscellaneous other supply chain type of issues.  It’s not clear what any policy makers — in the U.S. or elsewhere — can do other than hoping or doing something to end the war in Ukraine.  The things that people are proposing are just completely misguided.  That’s going to have absolutely no beneficial effect on anything.  One of the things I think is so funny is the same crowd, like the Biden Administration, that’s now so worried about gas prices, should be cheering for them because they are worried about global warming.  And if you’re worrying about global warming you want less use of carbon-based fuels and the high gas prices are doing that.  You know, a carbon tax would be another way of doing it and of course the distributional implications of what happens if gas prices just go higher are different than if we had a carbon tax.  But they should be, at one level, perfectly content to see the prices be high because that will shift people to other kinds of energy.  

Vik:  Do you think some people are content to watch this play out for that reason?

Miron:  Yes and no, but I mean, the politicians are not consistent.  The politicians are worried about getting elected and the electorate doesn’t like high gas prices.  I think that’s the one thing that’s not very controversial at all.  The administration is obviously worried about it and that’s why their concern about global warming has temporarily kind of gone out the window like releasing more reserves from the Strategic Petroleum Reserve and things like that.

Vik:   You don’t have a view on exploration?  How would environmental policy work in Libertarian Land?

Miron:  Let’s be even a little more specific.  How would the climate policy work?  In Libertarian Land, it might include a carbon tax because there is a coherent case that burning of fossil fuels generates an externality and Libertarians do not deny that there can be externalities.  They don’t necessarily deny that the government should intervene to try to correct externalities like standard pollution, so things like the Clean Air and Water Act are plausibly reasonable responses to the fact that some activities generate air and water pollution.  And the similar thing is true about the use of carbon-based fuels, but libertarians would insist that if we introduce a carbon tax it has to be accompanied by reduction in pre-existing income or other taxes so that we’re not increasing the amount of tax revenue.  We’re keeping the size of government the same.  We’re changing the structure of taxation so that we’re taxing something which is arguably bad — carbon — and taxing less the things that we think of as good such as labor supply and savings.  If you did that and you repealed all the existing craziness of subsidies for this kind of energy, and clean energy standards, and weatherization standards, and all the miscellaneous policies we have, many of which are incredibly cost-ineffective even taking account of the social cost of carbon.  If you did that, libertarians should be at least open to it.  The problem is we know it won’t happen that way.  We know if we create a carbon tax it will be on top of the existing taxes.  We won’t repeal all the existing stupid command and control things.  So with respect to exploration and then research and development, the carbon tax will make it more attractive to use other kinds of fuels so people want to do research into those things and figure out ways to reduce the use of carbon fuels if they’ve been made more expensive by a carbon tax.  We don’t need any other specific policies.  The carbon tax, one of its attractions, is it’s sufficient.  You just have this one clear, simple policy.  It’s complicated for some other reasons of dealing with borders.  Say the U.S. had a big carbon tax, will certain companies then ship their operations to China and India where they use coal rather than natural gas?  Then actually might be a negative perspective of carbon.

Vik:  So that seems like a really big problem with carbon tax.

Miron:  It is a really big problem.  There are principles again, in a textbook, there are ways to address it by having import taxes that reflect the carbon quantity of the imports.  Designing those correctly, enforcing them in practice, I suspect, is an incredible mess.  Stuff will be relabeled as coming from a country that claims it’s using natural gas rather than using coal for the energy.  I think it will be incredibly hard to do.

Vik:  Why has the concept of a carbon tax, which seems like a measured targeted approach to this problem, not really made any headway?

Miron:  I think that’s mainly because we know we won’t end up doing it in the sensible way.  You know, in a journal article you can write down this case for the carbon tax and it all sounds good, but when in practice, we will just get a complete hodgepodge.  We will get the carbon tax on top of everything else so it will create all sorts of opportunities for crony capitalism if it’s done that way.  I think this is probably also some climate skepticism.  This is not a libertarian point per se, but I think a lot of thoughtful people are correctly challenging the hysteria over global warming.  It’s one thing to say that it’s happening.  It’s one thing to say that it’s costly.  We might want to do something about it.  It’s another thing to act as though it’s an existential threat.  None of the science says it’s an existential threat, but then when you’re told by people who claim it’s an existential threat and we should do policy X, it feels sort of awkward because you’re not quite sure what to trust.  Part of the message, the existential threat part, doesn’t seem right based on the existing science.

Vik:  Interesting.  So getting back to where we began our conversation, briefly, what is the libertarian approach towards diversity and inclusion and the current efforts on that front?

Miron:  So that’s a hard issue for libertarians.  One part of that would be anti-discrimination laws.  Should the government be imposing laws to say you can’t discriminate on the basis of race, gender, and so on?  Related to that, should the government be imposing affirmative action guidelines that try to make sure that you’re not discriminating?  If you only had the laws that said you can’t discriminate on the basis of race, most employers for example, would be smart enough that they wouldn’t put stupid things in emails that said, “I didn’t hire person X because I don’t like black people,” or anything like that.  So you would not be able to prosecute very many cases.  It would be hard to prevent discrimination if you only had those laws.  That’s why people thought we needed affirmative action to make sure that the spirit of those laws was action.  Libertarians are very skeptical about government mandated affirmative action in relation to discrimation laws.  They don’t deny that discrimination exists.  They are completely sympathetic to the problem these laws are trying to address.  There’s a spirit that laws create more problems.  They create backlash.  They create a token hiring.  They create a support for particular versions of these laws which ends up being counterproductive like Ban the Box laws and things like that.  So they would be very hesitant to impose any sort of diversity policies on private sort of actors.  At the same time, libertarians should be at the front of the line defending the right of any private institution to engage in whatever diversity practice it wants.  So there’s these two cases that are coming from the Supreme Court, cases involving Harvard and the University of North Carolina, about their admissions practices and whether they’re discriminating.  This particular case is against Asian Americans and I think libertarians should say ignoring the government funding that goes for some universities such as Harvard, and ignoring for the moment the fact that, you know, the University of North Carolina is a government institution.  If the private institutions want to have affirmative action admissions that is their business.  And if that’s what the marketplace wants, the marketplace should get that.  And as libertarians we should have no view for or against that.  It should simply be their right.  Now Harvard does take government funding and Title VI of the Civil Rights Act says explicitly institutions that take government funds cannot discriminate on the basis of race.  So I’m not a lawyer.  I shouldn’t weigh in too strongly, but prima facie, it looks as though Harvard is violating that.  And of course, then the other part of the Fourteenth Amendment that says states’ governments should not discriminate on the basis of race, U.N.C. is a government institution and it does seem to be choosing on the basis of race.  I suspect the Supreme Court is going to rule against Harvard and U.N.C.

Vik:  What do you think the ramifications of that are going to be?

Miron:  I think they will switch those schools and all other schools will switch to alternative approaches, to having a more sufficient, what they deem is the appropriate, amount of minority admissions.  And things like using zip code, like using socioeconomic status probably, most importantly.  And that’s an unfortunate outcome because that’s not exactly what they’re trying to get.  And so their ability to hire the best students, who happened to be minorities, will be restricted by being forced to not use race explicitly.  It will still, in fact, be back to being discriminating on the basis of race that will just be glossing over it by claiming they’re only paying attention to socioeconomic factors.  It’s not clear that it’s actually doing any good.  The ideal is that Harvard would step up and say “we want to do things the way we want to do things.  Federal government, you can keep all your money.  We’re going to do things the way we want to do things.”  That would be an incredibly principled and consistent perspective.  I don’t know if we’ll see that

Vik:  How much money is at stake?

Miron:  Relative to the size of the Harvard budget, I don’t think it’s that much.  It’s hundreds of millions.  I don’t think it’s billions.  So I think if they did that, they would get more private donations from certain kinds of people because they have taken this principled stance.  They might even end up better off.  Getting the federal government’s shackles off might be a good thing in all sorts of ways.  So I would like to think that they’re considering it, but I don’t know.

Vik:  Do you think the government policy should be different?

Miron:  Yes.  I think the key parts, and this is the most controversial thing one could say so I somewhat hesitate, but I think there’s a reasonable chance that the amount of discrimination, that antipathy and animosity over race, would be less if we would have a less discriminatory society or more tolerant society.  If we hadn’t had the relevant portions of the Civil Rights Act made, certainly many things were changing in the US in the direction of more diversity, more tolerance less discrimination before the Civil Rights Act came.  There were the federal government cases against states telling them they couldn’t have Jim Crow laws.  I don’t think libertarians have any issue with that action of government at all.  And then there were private actions.  One famous example is the integration of baseball.  Jackie Robinson was hired by the Los Angeles Dodgers in the early 1950s.  Baseball had previously been entirely white and then over time that changed dramatically, partially because of the good will of some of the owners, but I think especially because of competition.  Jackie Robinson was a great player and there were other fantastic baseball players who happen to be black.  Teams decided they weren’t going to be able to compete unless they started hiring blacks and the same thing was happening in other places as well.  So it’s hard to know what the counterfactual is.  The beneficial effects might happen more slowly, but there’s at least a chance that the Civil Rights Act was a mistake.  Even though, of course, libertarians accept that there was a problem that we wanted to address and even though the intentions were good intentions, part of the libertarian theme is that good intentions are not sufficient.  We have to ask how things will actually work in practice.

Vik:  What parts of the Civil Rights Act are you referring to?

Miron:  Most obviously is Title VII which outlaws discrimination in employment and hiring by private companies.  There are other parts of the Civil Rights Act that say the government should not be discriminating in hiring.  There’s absolutely no dispute about that or other parts about voting and things like that.  But Title VI is saying if you take federal funds, you shouldn’t be discriminating upon race.  Of course, in Libertarian Land, there would be no federal funds for anything.  They wouldn’t be supporting research at all and that Title would be completely irrelevant.  That’s one of the reasons I like the libertarian view.  It makes things simple and avoids these complicated messy things.  If it covers doing one thing then how does that effect, whether it’s legitimate or not, produce some other thing?  If it’s just doing neither of the above, everything is much, much more simple.

Vik:  It’s interesting because that clause, Title VI?

Miron:  Title VI is about taking federal funds, yes.

Vik:  So, the do not discriminate which, was intended to prevent discrimination, is now potentially going to be the reason why Harvard can no longer pursue affirmative action in the way that it has, which you could say, was the spirit of Title VI to begin with, right?  Now it’s really going to maybe block the very thing that it was kind of intended to do.  On a private institutional basis, do you think Harvard’s approach towards diversity in the student body is a good one that they should continue?

Miron:  Overall, absolutely.  Specific details, exactly how much weight should be put on having   lots of acapella groups on campus, how much weight should be on race or gender, how much should be on sports, how much should be on whether your parents went to Harvard, or whether you were the son or daughter of a faculty member, I don’t know the details.  I’ve never been involved in admissions, but I think having a diverse university is much, much more interesting than simply admitting the 2000 nerdiest people you can find with the highest GPAs and GREs.  In contrast, what a lot of libertarians might say is, “I’m not saying we should also include viewpoint diversity because I think that’s really messy.”  Again this is not really a libertarian issue because it’s not about policy.  This is just what kind of university would I enjoy and if you start saying you’re going to explicitly admit people or hire people because you want a balance of conservatives and liberals, it makes the whole thing more political and I guess I think that’s going to be bad and divisive.  I would much rather be focused on who has talents that make it an interesting place.

Vik:  Let’s move to another hot button issue.  Roe v. Wade is likely to be overturned.  What is the libertarian perspective and how do you see this playing out?

Miron:  So libertarians will pretty consistently say there is not one libertarian position on abortion or on Roe and that’s because different people who are libertarians in other respects have differed on whether an early stage fetus is a life or not.  If you think that it’s a life and you think the government, of course, has laws to protect life and to prevent murders, then restricting or banning abortion seems to make sense.  If you don’t think that that fetus is a life until it is born, or at least it’s not a life in the same way as a child that’s actually been born, then you might have a very different view.  Likewise on Roe, I can see, again I’m not a lawyer, but my casual observation is you can tell a kind of interpretation of the Constitution that would support Roe and I think you could give interpretations which are not supportive of Roe.  I don’t know whether that was a compelling decision in either direction.  I’m personally — probably one of the very, very few people who holds this combination of views — very strongly pro-choice at the state level.  I would argue vehemently and for legal abortion.  Indeed I would argue for it through the third trimester because I want the government’s authority over any person, at a minimum, to stop at the point where that person’s skin begins.  I don’t want the government telling me what I can put in my own body, what I can do inside my own body, et cetera.  But if we hadn’t had Roe, we still would have had a substantial expansion of legal abortion across a lot of states.  There’s already been 12 or 13 states which legalized partially in the 1960s.  In the 1970s New York and California legalized abortion on demand.  Lots of people, women living in other states that were next to New York or California, had some degree of access.  In Libertarian Land, RU486, the abortion pill, would be completely unregulated so anyone anywhere could go on the internet and order it and have it delivered by mail so many women would have access to a legal abortion, a safe abortion.  Maybe all the animosity, the country having been consumed by this abortion debate for the last year 30 or 40 years, would not have happened if it isn’t simply left state-by-state, which is what will happen if Roe is reversed.  In terms of predictions, I don’t know.  I think there’s a chance that Roberts is going to prevent the other conservatives from completely reversing it and is simply going to say that the Mississippi law is constitutional, but not entirely reverse Roe.  Roberts seems to be very concerned about the Court not being perceived as overly extreme, but who knows?  That would be like what he did with the Obamacare decision where he took exception to completely undoing Obamacare, trying to find a middle ground. 

Vik:  One of the trends we are seeing now are legislative efforts to make it illegal for parents to do certain things like take your kid to a drag show or allow certain transgender medical actions.  Take us through how a libertarian framework would think about these things.

Miron:  I think the libertarian framework would say that if we’re going to let parents choose how to raise her kids.  We’re not going to have the government decide who gets to have kids, how many kids or when, whether you send them to private versus public school, or whether you encourage them to adopt religious beliefs or not.  If we’re going to give parents all of the decisions we currently give parents, and almost everyone would want us to give parents, trying specifically to limit their ability to make decisions about transgender issues and the like is just completely impractical and misguided because there’s so many other things.  Second, there’s not a shred of evidence that parents are systematically making bad decisions for their children.  On this basis, has any parent ever been mistaken in what they’ve allowed or recommended for their child in this dimension?  Of course it’s possible because parents are people.  They have made mistakes, but singling this out seems just kind of prejudice in a kind of backlash against a lifestyle that some people don’t like and are not comfortable with.  I think libertarians would oppose any of these laws that are trying to limit parental choices.

Vik:  So you’ve been a proponent of drug legalization for a long time and it seems to be happening, right?  Many states have legalized marijuana.  I feel like the push towards the legalization of certain psychedelics and other drugs is moving along pretty rapidly as well. What do you make of all this?  Are you happy with these states and how they’ve rolled out drug legalization? 

Miron:  Yes, so certainly we’ve made some progress with respect to marijuana. There’s also been very useful and sensible discussion about psychedelics and some other things.  There’s still a pretty bad scenario going on with respect to meth and cocaine and opioids.  The opioid restrictions are killing many, many people every year because people are going to the black market to get opioids.  Those opioids are frequently laced with fentanyl which is a super potent opioid.  Nevertheless it’s a super useful opioid.  Almost anybody you know who’s 50 or older has had fentanyl because most people who are 50 or older have had a colonoscopy and a routine medication used to alleviate the pain of a colonoscopy is fentanyl.  So things that can be super, super potent and potentially very dangerous can also be super useful.  So doctors know how to titrate the dose when they perform colonoscopies so they don’t kill anybody.  In a legal market, drugs, opioids will be packaged with the purity, with the content, and people would not be overdosing at nearly the rates.  But yes we’ve made a lot of good progress.  The rollouts, another point to raise, is a disaster in many states because the states are imposing many restrictions on who can open a retail store, where the stores can open, how much you can purchase each time you visit, whether there can be a delivery of the purchases for people who can’t easily get out of the house and things like that.  And also non-trivial taxes imposed by a lot of these states, kept a significant part of the market underground defeating one of the crucial purposes of having it legalized.  Some states are much better than others.  I suspect, over time, competition across states and the desire for the states to have more tax revenue will gradually nudge away against the more extreme things that are happening because if you limit the market too much, you don’t collect as much revenue as it stays in the black market.  But so far it’s a broad range.

Vik:  Could you can recap the main reasons you’ve supported legalization for so long?  Are there parts of it that you’re concerned about based on the way it’s being implemented?

Miron:   I support legalization for a host of reasons.  First, I think that overall people who use drugs do so because they think it makes them better off and it should be their decision not anybody else’s.  Second, even if you didn’t accept that, even if you put zero weight on the utility or the perceived utility on the drug users, trying to reduce drug use by a prohibition is the worst possible approach because it creates an underground market.  Underground markets are violent.  Underground markets don’t generate any tax revenue.  They generate corruption.  They generate the quality control problems we just discussed.  So even if you don’t want anybody to ever use any of these things, the ideal way to do it would be the best one can do from a policy perspective, is a moderate syntax as we have for alcohol and tobacco.  That will discourage use to some degree without creating a black market.  The problem that’s happened is the rollouts have involved high taxes and all sorts of regulations which raised costs in related ways.

Vik:   Fascinating.  To wrap us up, what issues are you most focused on or passionate about right now?

Miron:  An issue we haven’t discussed is the path of future entitlements.  Medicare in particular looks likely to grow one to two percent faster on average, forever than GDP.  Which means eventually Medicare is the entire economy.  That obviously can’t happen.  Something will change before we get there.  But in the meantime, we’re building up this huge debt which will have enormous interest costs.  We’re also having the government subsidize healthcare and those subsidies generate lots of costs.  The government has to set prices, decide how to reimburse healthcare providers.  That leads to distortions and causes people to consume too much health care.  No one seems to think about the fact that if we subsidize apples, people will consume more apples, but why should we encourage them as that would be too many apples.  The same is true of healthcare.  We are spending money on operations and all sorts of things which seem to me very cost ineffective.  So Medicare, Medicaid, Obamacare are growing at a rate that is not sustainable and Social Security is contributing to that in a significant way.  So shrinking the growth rate of entitlements, you’re going to want to go to Libertarian Land and get rid of these things, but you just want to make them affordable over the long haul.  We have to make major adjustments, major shrinkage in these programs.  

Vik:   So what do you think the adjustment should be in this middle ground world?  What would it look like in Libertarian Land?

Miron:  In Libertarian Land I don’t think the federal government would be able to do any of these things.  One, I don’t think there’s any authority in the Constitution for the federal government to be operating Medicare or Social Security.  That constitutional ship set sail a long, long time ago.  But at the state level I think libertarians would be less unhappy if there were health insurance provided to low-income people and maybe similarly, disability insurance programs which help people provide some basic income for people who are not easily able to support themselves, whether it is because of age or because of physical disability, or other mental health disabilities.  Given the current system, which probably we’re stuck with, I think libertarians would say gradually introduce much bigger co-pays and deductibles into these Healthcare programs and that will create some degree of cost sensitivity and discourage people from over consuming.  It will save some expenditure because you won’t be reimbursing as much and increase the age of eligibility for Medicare because when we created it life expectancy was something like 70 and now life expectancy is substantially higher so make an adjustment that reflects that.

Vik:  It’s almost striking how little discussion there has been about healthcare costs in recent years.

Miron:  I think it’s an impossibility for politicians because every voter is either getting Medicare, has parents getting Medicare, or hopes to live long enough to collect Medicare.  So where is the constituency going to come from to cut Medicare?  Everybody just wants to assume that’s people generations from now.

Vik:   I get it.  Debt is the biggest problem we face financially.  

Miron:  It is, but it’s not one that any politician wants to take on.

Vik:  Thank you so much, Professor Miron, for joining us.  

Miron:  Thank you for having me.  It was a pleasure.  

Sages of the Sun is a weekly podcast produced by The New York Sun. The Sun is committed to upholding the finest journalistic traditions and staying true to our motto, “It Shines For All.”

Seth Lipsky is a seasoned veteran of the news business, and among the most revered American editors. He previously spent 20 years at the Wall Street Journal, launched the Jewish Daily Forward, and first revived the Sun back in 2002.

Caroline Vik has more than a decade of experience in policy-making, with years spent on the Senate Foreign Relations Committee, at the Department of Defense, and on the National Security Council.