How a Death with Dignity Bill will pass in New Zealand

The right to die with dignity has long had substantial public support in New Zealand. Opinion polls show that about 60% of the population support it and these opinion polls date back 20 years.

Members of Parliament won’t touch it. Late last year, a backbench Labour MP withdrew from plans to put a Death with Dignity Bill in the ballot for private members’ bills. This was done because of pressure from Labour Party colleagues not wishing euthanasia to be a distraction in the forthcoming general election.

The two previous attempts at passing a Death with Dignity Bill failed despite widespread public support:

In each of these cases, the MP concerned had a compelling personal narrative about the loss of family member or friend after a long fight with cancer as their motive.

Any future attempt to introduce such a bill will also require the MP concerned to have such a personal narrative. It is also not unimportant that both MPs that introduced the previous bills were little-known and their particular activities had nothing to do with whether they got re-elected or not.

Peter Brown was a list MP whose presence in Parliament solely depended on the popularity of Winston Peters. New Zealand First is a one-man party. Michael Laws had quit the National Party and was sitting as an independent.

The law has long acted to prevent, by force if necessary, suicide – including suicide by refusing to take appropriate measures necessary to preserve one’s life after the point at which life become unbearable. Justice Scalia argued that:

I believe in liberal democracy, which is a democracy that worries about the tyranny of the majority, but it is the majority itself that must draw the lines.

Whether the patient’s wishes to be honoured in this area is left to elected representatives to legislate. Justice Scalia asks

Are there, then, no reasonable and humane limits that ought not to be exceeded in requiring an individual to preserve his own life? There obviously are, but they are not set forth in the Due Process Clause.

What assures us that those limits will not be exceeded is the same constitutional guarantee that is the source of most of our protection – what protects us, for example, from being assessed a tax of 100% of our income above the subsistence level, from being forbidden to drive cars, or from being required to send our children to school for 10 hours a day, none of which horribles is categorically prohibited by the Constitution.

Our salvation is the Equal Protection Clause, which requires the democratic majority to accept for themselves and their loved ones what they impose on you and me.

Many who support euthanasia in principle have serious reservations about the ability to craft a Bill that prevents abuses. Parliaments have an interest in protecting vulnerable groups–including the poor, the elderly, and disabled persons–from abuse, neglect, and mistakes.

The democratic process must strike a proper balance between the interests of terminally ill, mentally competent individuals who would seek to end their suffering and the State’s interests in protecting those who might seek to end life mistakenly or under pressure.

The pros and cons of euthanasia as a practical matter is ably summarised by Richard Posner:

 Countries and states that authorize physician-assisted suicide impose strict requirements that minimize the danger of involuntary euthanasia—too strict, some believe (such as the requirement in Dutch law that the patient’s suffering be “unbearable” before he can invoke physician assistance to end his life).

These requirements (which further reduce the stigma of physician-assisted suicide by confining the practice to cases of genuine desperation) are not airtight, or uniformly observed. Any system will be abused. The question is whether the incidence of abuses, combined with the other costs of the system, outweigh the benefits.

Gary Becker has written frequently on the issue of euthanasia and suicide. Indeed, he wrote the Economic Theory of Suicide, not long after his wife took her own life in the early 1970s. He argues well about people’s ability to weigh the considerations:

Rational forward–looking persons with good information about their future circumstances would commit suicide only when convinced that they would be worse off by continuing to live.

David Hume said (in his Essays on Suicide and the Immortality of the Soul) “That suicide may often be consistent with interest and with our duty to ourselves no one can question, who allows that age, sickness, or misfortune may render life a burden, and make it worse than annihilation.”

Schopenhauer was also confident about the rationality of suicide, “It will generally be found that, as soon as the terrors of life outweigh the terrors of death, a man will put an end to his life” (Parerga and Paralipomena).

Becker also wrote insightfully of the terrors of death:

Hume adds “I believe no man ever threw away life, while it was worth keeping. For such is our natural horror of death”, and Schopenhauer makes the same observation “But the terrors of death offer considerable resistance…”

The reason why Death with Dignity Bills fail in Parliament is those in the community who are against it are passionately against that it and will change their vote if it passed. Those that are for it are not swinging or single issue voters.

Whoever moves the Bill will be a less well known MP with a personal narrative as to why they did it. What will be in that Bill? Scalia again:

Leaving this matter to the political process is not only legally correct, it is pragmatically so. That alone… can produce compromises satisfying a sufficient mass of the electorate that this deeply felt issue will cease distorting the remainder of our democratic process.

 

Gary Becker explains the economics of crime

The amount of crime is determined not only by the rationality and preferences of would-be criminals, but also by the economic and social environment created by public policies, including expenditures on police, punishments for different crimes, and opportunities for employment, schooling, and training programs.

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What is the evidence on human capital spillovers? Evidence from the mobility of knowledge workers

While there is a vast literature documenting the large private returns from education and on-the-job human capital (Card 1999; Rubenstein and Weiss 2007; Almeida and Carneiro 2008), evidence of human capital spillovers is limited. Many studies find little evidence of spillovers from education (Lange and Topel (2005), Ciccone and Peri (2006)). Studies even struggle to find small spillovers from another year in high school (Acemoglu and Angrist 2001). Differences in human capital also explain only a small part of cross-national differences in incomes per capita (Hsieh and Klenow 2010; Parente and Prescott 2000, 2005).

The R&D industries offer a case study of the likely size of skills spillovers from worker mobility from large firms. The mobility of technical personnel and the human capital embodied in them across R&D firms is a substantial source of knowledge transfer (Møen 2005). For there to be a spillover, the new employer must pay recruits less than the value added by the job experience and skills they bring to the fold.

A key advantage of studying the mobility of R&D workers for skills spillovers is these industries are populated with many spin-offs founded by the ex-employees of larger firms. R&D spin-offs tend to be larger on average that other new firms and initially employ more advanced, more experienced workers and more technical specialists than do other new firms (Andersson and Klepper 2013).

Capturing the value of skills spillovers from job-hopping is a major business opportunity. The efforts of entrepreneurs to create and enforce property rights over information and other resources as their value increases are central to the organisation of both markets and firms.

A litmus test for the capture of the value of skills spillover is whether wages adjust in line with evolving career opportunities. Becker (2007, p. 134) explains this process of market adaptation and entrepreneurship as follows:

Firms introducing innovations are alleged to be forced to share their knowledge with competitors through the bidding away of employees who are privy to their secrets. This may well be a common practice, but if employees benefit from access to saleable information about secrets, they would be willing to work more cheaply than otherwise.

Møen (2005), Magnani (2006) and Maliranta, Mohnen and Rouvinen (2009) found that employers capture much of the skills spillovers to others by paying R&D workers less early in their careers; later employers pay higher wages to reflect the valued added by the human capital that these R&D recruits bring.

Andersson, Freedman, Haltiwanger, Lane and Shaw (2009) found that software firms in markets with large returns from product breakthroughs pay higher starting salaries to attract star employees. Accounting and legal firms and sports teams also pay more to recruit and retain top performers (Wezel, Cattini and Pennings 2006; Campbell, Ganco, Franco and Agarwal 2012; Rosen 2001).

Employers balance skills and knowledge acquisition through recruitment with in-house development of skills and knowledge. Mason and Nohara (2010) did not find ‘any evidence’ that the external experience of scientists and engineers is any more valuable to firms than is their internal experience.

Firms will pay a wage that equalises the returns on skills acquisition through recruitment with the returns on investing in in-house training. This equalisation of the returns between internal and external sources of skills and knowledge is consistent with competition penalising firms that pay too much or too little for inputs and rewarding entrepreneurs for superior alertness to new opportunities.

The option value of founding or working for a spin-off is also captured in the wages of R&D workers (Kitch 1980; Pakes and Nitzan 1983). Central to a spin-off is carrying on with new ideas and prototypes that the leaving employees judged to be under-valued by the parent firm and they want to build on at their own entrepreneurial risk (Klepper and Sleeper 2005; Klepper 2007).

Large firms are known for incremental innovations while small firms pioneer product break-troughs whose prospects were not as well valued inside large hierarchies (Baumol 2002, 2005; Audretsch and Thurik 2003). Many R&D spin-offs continue with emerging ideas and products that their parents were in the process of abandoning (Hellmann 2007; Chatetterjee and Rossi-Hansberg 2012; Klepper and Thompson 2010). One reason is the developing idea does not fit in with the risk profile and skills of the parent so many spin-offs are friendly (Fallick, Fleischman, and Rebitzer 2006; Chen and Thompson 2011).

Founding or working for a spin-off or start-up is a real prospect. In many innovative industries, upwards of 20 percent of new entrants are intra-industry spinoffs; these firms outperform other new entrants and disproportionately populate the ranks of industry leaders (Klepper and Thompson 2010).

The evidence of large firms spawning more entrepreneurs among scientists and engineers is mixed. Large parent firm size reduces both the probability of leaving, and more so, the probability of leaving to found a spin-off (Andersson and Klepper 2013; Sørensen 2007; Sørensen and Philipps 2011). Spin-offs are less likely from large parents because more of the skills and experience accumulated within large firms is firm-specific human capital and is therefore less mobile into a spin-off.

Scientists and engineers who worked in small firms are ‘far more likely’ to found a spin-off than are their large firm counterparts, and their spin-offs are more likely to be a success (Elfenbein, Hamilton and Zenger 2010; Sørensen and Phillips 2011). Working in smaller firms allows spin-off minded employees to gain the balance and wide array of technical knowledge and management skills that are prized in entrepreneurship (Elfenbein, Hamilton and Zenger 2010; Lazear 2004, 2005).

Working in managerial hierarchies works against founding a spin-off. Tåg, Åstebro and Thompson (2013) found that conditional on size, employees in firms with more layers of management are less likely to enter entrepreneurship, self-employing or quit to go to another firm. They attributed this to the employees in firms with fewer management layers developing a broader range of skills; multiple layers of management offering more promotion opportunities; and skill mismatch is less problematic in more hierarchical firms because there are more chances to move. The higher pay and better career opportunities in larger firms reduces job quits, and with it, skills spillovers and spin-offs.

The wage adjustments for current skills and knowledge transfer opportunities to future employers, start-ups and spin-offs are large. New science graduates accept 20 per cent less in starting pay to work where they can publish more in their own names (Stern 2004).

Scientists and engineers working in R&D accept 20 per cent less pay than other scientists and engineers who work in technical and managerial occupations to secure this more interesting work (Dupuy and Smits 2010). Gibbs (2006) suggested that the U.S. Department of Defense is able to recruit and retain engineers and scientists on low pay because they offer work on some of the most advanced technical research in the world.

Employers who pay full value in wages, share options, learning and R&D opportunities in exchange for the labour and human capital of employees are not benefiting from a skills spillover.

The evidence just reviewed identifies market processes that minimise skills spillovers from large R&D firms to spin-offs. Large firms train their employees in skills that are more often firm-specific and adjust wages to account for the career opportunities that might arise from on-the-job training that is more mobile. The employees of larger firms have longer job tenures in part because their human capital is less mobile.

Gary Becker summarises the analysis of human capital

Human capital analysis starts with the assumption that individuals decide on their education, training, medical care, and other additions to knowledge and health by weighing the benefits and costs. Benefits include cultural and other non-monetary gains along with improvement in earnings and occupations, while costs usually depend mainly on the foregone value of the time spent on these investments.

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Economics is a social science alert: Gary Becker on the flaws of behavioural economics

Have We Lost the War on Drugs? – Gary Becker and Kevin Murphy – WSJ 2013

One moderate alternative to the war on drugs is to follow Portugal’s lead and decriminalize all drug use while maintaining the illegality of drug trafficking. Decriminalizing drugs implies that persons cannot be criminally punished when they are found to be in possession of small quantities of drugs that could be used for their own consumption.

Decriminalization would reduce the bloated U.S. prison population since drug users could no longer be sent to jail.

Decriminalization would make it easier for drug addicts to openly seek help from clinics and self-help groups, and it would make companies more likely to develop products and methods that address addiction…

A study published in 2010 in the British Journal of Criminology found that in Portugal since decriminalization, imprisonment on drug-related charges has gone down; drug use among young persons appears to have increased only modestly, if at all; visits to clinics that help with drug addictions and diseases from drug use have increased; and opiate-related deaths have fallen.

Have We Lost the War on Drugs? – WSJ.

Gary Becker: Fear, Technology, & Education

A Conversation with Gary Becker: The Future of US Economic Policy

Human Capital, Development, and Growth | Lars Peter Hansen, Edward Glaeser, Claudia Goldin and Robert Lucas

Impact of the Work of Gary S. Becker | James Heckman

The Economics of Crime and the Law| Levitt, Landes, Mulligan and Peltzman reflect on Gary Becker’s legacy

Conversations with History: Gary Becker (May 2, 2013)

Gary Becker on the economic way of thinking

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Actual discrimination in the marketplace depends on the combined discrimination of employers, workers, customers, schools and governments – updated

A literature has developed on whether discrimination in the marketplace due to prejudice disappears in the long run. Whether employers who do not want to discriminate will eventually compete away all discriminating employers depends not only on the distribution of tastes for discrimination among potential employers, but critically also on the nature of firm production functions.

Of greater significance empirically is the long run discrimination by employees and customers, who are far more important sources of market discrimination than employers. There is no reason to expect discrimination by these groups to be competed away in the long run unless it is possible to have enough efficient segregated firms and effectively segregated markets for goods.

Gary Becker (1992).

When the disfavoured group had few members, the wage difference between the favoured and disfavoured would be very small or non-existent because they could find employers who had little distaste for working with them. For example, African-Americans suffered more from discrimination than did Jews because blacks constituted a much larger population. Becker explains:

Employee discrimination against minority fellow workers-such as a male worker who does not want to work for a female boss- cannot be so easily competed away by non-discriminating employers. For they have to pay discriminating employees more, perhaps a lot more, to work with minority members. A similar argument applies to consumers who do not want to be served by particular minorities…

Segregation can serve as a way to bypass the prejudices of other workers, consumers, and employers. When Jews could not get work in the banking industry at the turn of 20th century, they began to open their own banks that hired mainly other Jews. African-American doctors and dentists in the old South catered to other blacks as their patients

Competition from more rational firms might gradually eliminate employer discrimination, market forces alone would rarely erode discrimination rooted in the tastes of workers or consumers.

The market will not compete away customer discrimination because the market is good at giving customers what they want. It is not necessarily possible for disfavoured groups simply  to take jobs where there is no customer contact, particularly if they are large in number relative to the total population. It is also the case the customer discrimination is largely immune from antidiscrimination laws except in blatant cases.

Customer discrimination results in employment segregation, which adds further to the job search costs of minorities as they must find jobs with less customer contact. This lowers their asking wages to save on job search costs and time unemployed.

Customer discrimination can linger because their attitudes may change only slowly, and the preferences of a wide group of individuals may need to change.

An entrepreneurial opportunity arises to those entrepreneurs who are first to alert insert murders of the costs of the prejudice. This is a far more successful way of bringing racial segregation and discrimination to an end. Entrepreneurs put an explicit price on  each and every form of discrimination wherever it might be. 

In professional sport, for example, racial integration came from entrepreneurs risking the loss of some of their existing fans in return for the anticipated cost savings and greater commercial and sporting success from hiring talented minorities and foreigners. Consumer prejudices were eroded by entrepreneurship.

The art of business consists of identifying assets in low-valued uses and devising ways to profitably move them to higher-valued ones. Entrepreneurs profited from finding ways to eliminate discrimination as quickly as possible.

Gary Becker on the economics of natural disasters

In the 19th century, John Stuart Mill commented on the rapidity of economic recovery from national disasters and wars. He recognized that nations recover quickly as long as they retain their knowledge and skills, the prime engines of economic growth.

America retains its vast supply of both, which suggests that, contrary to fears, the Sept. 11 attacks are unlikely to worsen the medium- to long-term economic outlook.

The effects of the earthquake that hit the Japanese city of Kobe in 1995 illustrate Mill’s conclusion. This quake destroyed more than 100,000 buildings, badly damaged many others, and left hundreds of thousands homeless. Over 6,000 people died. Estimates place the total loss at about $114 billion (more than 2% of Japanese GDP at the time). Yet it took only a little over a year before GDP in the Kobe region returned to near pre-quake levels.

Gary Becker and Kevin Murphy

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