Healthcare Costs

Most of what is being written about healthcare is rather shallow and uninformed. I recommend an exception here, courtesy of Arnold Kling. One commenter on this post made an exceptionally insightful observation: the issues of healthcare costs involve far more than economic efficiency. There are deep ethical issues as well. The commenter said it well:

Nothing short of brutal, heavy-handed rationing can control health care costs. The problem with Kling’s voucher plan is that it makes this explicit. It would make each of us ration our own care (maybe half of us could cope with that). But it would also force people to ration care for their family members. I think most people know, deep down, that this must be done, but, come hell or high water,they will not do this individually. Just as people hate to take responsibility for their choices in the mate market, people desperately need a way to ration care while pretending they aren’t.

Governments fill this role. In Britain, NICE is the whipping boy. People rage at the bureaucrats so they don’t have to feel guilty for not dialyzing their demented octogenarian grandparents.

Maybe private insurance companies could ration care if they had the backing of the government (e.g. approved guidelines and procedures which make it virtually impossible to win a lawsuit against a compliant insurer).

Maybe doctors could enforce the rationing. They can pretend nothing more can be done. . . . I think the Swiss system may be something like this, though I’m not sure.

It takes two executioners simultaneously turning two keys to start a lethal injection machine. That way no one person can be held directly responsible for killing another. We get to pretend the “state” did it.

Controlling costs means denying care. Denying care means killing, even if we do it softly.

It’s worth noting that Public Choice theory says that politicians would never ever make rules for rationing. They will, of necessity, pawn it off on a bureaucracy. Maybe all those lunatics talking about “death panels” aren’t so lunatic after all.

College Debates

This debate about the future of higher education is interesting. What surprised me is the dog that didn’t bark. No one mentioned that a big reason for employers requiring a B.A. is that employment tests have become problematic due to court rulings. It’s too easy to argue that a test is racially or culturally biased. Fearing lawsuits, employers have increasingly relied on colleges and universities as a screening mechanism. Caplan is right – a degree is a signaling mechanism that shows the graduate can work hard, show up on time, read, and write. While there are notable exceptions, the subjects studied and learned have little bearing on future employment.

Climate Change Progress

Recently, the U.S. House of Representatives took time out from fending off the world and exempted large cattle-, dairy- and hog-producing operations from an Environmental Protection Agency requirement for reporting greenhouse gas emissions. And 13 Great Lakes cargo ships were exempted from a proposed mandate requiring the use of low-sulfur fuel. When constituents’ interests conflict with global grandstanding, Congress’s rule is “act locally, think globally tomorrow, maybe.”

via George F. Will – George F. Will on the changing climate for a global warming treaty – washingtonpost.com.

No student of Public Choice theory would be the least bit surprised. Elected politicians will act to increase their chances of re-election or post-career economic well being. Politicians from farm states know not to aggravate their farmers. That’s why the government pays farmers to grow tobacco. Politicians from industrialized states know not to aggravate the unions. That’s why public education has almost no chance of improving. Politicians who receive huge campaign funding from lawyers know not to aggravate the lawyers. That’s why there’s no interest in reforming malpractice insurance.

I’m not a big believer in taking urgent action on climate change, but even if I did think something was required, it’s apparent that there’s not enough campaign cash flowing through the political system to make a difference. We might get a “cap and trade” law to supposedly help the climate, but it’s main effect will be to reward campaign contributors and punish non-contributors.

The End of Newspapers

That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place.

via Newspapers and Thinking the Unthinkable « Clay Shirky.

Newspapers are obviously in trouble and a tons of ink electrons are being spilled writing about it. I view this with only mild interest. However, the article referenced above has some interesting insights about the nature of technological disruption and some interesting observations about a previous revolution – the one that Gutenberg started.

10.2%

The unemployment numbers are awful and, at the same time, wildly understate the depth of the employment problem. So where do we go from here? John Mauldin lays out the options. Note that all the options are grim and painful. Note also that several options are highly improbable due to the lack of political will in both parties. It looks like we’re in for years of pain, higher taxes, and reduced standards of living. Under the rosiest scenario, the Republicans will gain political control and ultimately get it fixed in 5 to 10 years. Under the worst scenario, the Democrats will maintain control and our condition will be perpetual, if not actually worsening. Reality is somewhere in between, so I think counting on a “lost decade” similar to Japan’s is the most likely outcome.

How’s the Economy Doing?

There are any number of analysts and pundits who attempt to answer that question, and I read what a lot of them write. For my money, the best overviews are published by Jeff Harding at The Daily Capitalist. Today’s overview is excellent. The economy is not.

Tradeoffs in Everything

Every decision in life involves trade-offs. Sometimes they’re obvious, sometimes not so obvious. Ed Glaeser points out one trade-off that most people miss: our housing policy vs our environmental policy. Will Congress and the President sacrifice the environment in order to stimulate the economy? Or will they leave a moribund economy alone in the quest to counter global warming? Whichever they do, someone is going to be upset. Let’s see – who has the most votes? Oops – too bad for the folks concerned about global warming!

Public Banks

One of the more unusual ideas floating around the Internet is the creation of public banks. This strikes me as an especially bad idea, even though it has apparently been successful in North Dakota. Their success appears to come from prudent banking practices, which is a good idea for all banks.

The problem with publicly owned banks would be politics. Just look at how politicians have interfered with the publicly owned auto companies and the banks already partially owned by the government.

The motivation of the proponents is ire at the banks and our ongoing financial turmoil. But many analysts say that the banks acted rationally given the crazy rules that politicians put in place. Our government created a market for shaky debt (see Fannie Mae) and otherwise pressured banks to make shaky loans (see HUD, federal bank regulators, etc.). Our government created a moral hazard which encouraged excessive risk (see FDIC) and established bizarre accounting conventions. It’s hard for me to see how any other outcome was possible!

The real tragedy is that this was a true bipartisan effort spanning multiple presidencies and Congresses. The only conclusion I can draw is that ideas with strong bipartisan support can sometimes be real stinkers.

Capitalism Defended

The system of voluntary exchange and experimentation based on secure private-property rights — what we loosely call “capitalism” — expands rather than restricts our material and nonmaterial opportunities. Substituting elite power for voluntary exchange invites all sorts of epistemological problems and moral disasters.

Thus concludes Art Carden in a wide ranging defense of what we loosely call capitalism. His comments on health care are especially intriguing.

High Taxes and Lousy Service

This article provides an interesting comparison of between the governance and outcomes of California and Texas. It contrast not only how much they tax, but how they spend, and who benefits. The story of California is instructive, especially for states like Minnesota, where there is a long running debate between the “high tax” and “low tax” camps.

What makes this interesting is that California’s large revenue streams are spent so differently. The big beneficiaries are state employees. It’s difficult to see how California will work its way out of the mess it’s in. The same probably applies to other “tax and spend” jurisdictions like New York and New Jersey. My worry is that many politicians in Minnesota seem eager to adopt the policies that have gotten those states in so much trouble.