Housing and the Market

For all the talk of the failure of markets, what is actually working is markets. What failed were government policies of cheap credit and attempting to make housing affordable by stimulating demand. As amply demonstrated by Thomas Sowell in his new book, “The Housing Boom and Bust,” land-use restrictions and “smart growth” (read no-growth) policies are the culprit for the lack of affordable housing. Stimulating demand through cheap credit only fuels unsustainable price bubbles. The way to avoid a future housing bust is to stay away from demand-stimulating and supply-restricting housing policies. Meanwhile, keep letting markets work.

via O’Driscoll: Signs of Life in the Housing Market – WSJ.com.

All of the talk about “market failures” seems to come from people who don’t understand markets or don’t like them very much.

Health Reform and Cancer

Despite its warts, our system works. Carelessly tinkering with it will have a world-wide penalty—the stifling of new drug development. What company would spend a billion dollars to develop a drug that will not be reimbursed by the new health plan? This would be a direct, devastating blow to the most vulnerable Americans.

In spite of the president’s assurances, there is every sign that this plan will be financed by deep cuts to Medicare, which, like the public option, will limit payments for specialists, radiology scans, and cutting-edge cancer drugs. These are prime targets because they are more expensive than other services. But are we really expected to forgo new medical technology and return to the cancer care of the 1970s?

When members of Congress are asked if they will opt for the public plan, they say no. That’s for the rest of us.

The number of Americans who have cancer exceeds 10 million. It’s time for cancer patients and their families to remind those on Capitol Hill that health-care reform is a matter of life and death for us.

via Health Reform and Cancer – WSJ.com.

In thinking of health reform, anyone with cancer, or anyone who worries about cancer, ought to read the entire article.

Obesity

Lately you can’t get away from people talking and writing about obesity. Megan claims that our thinking about obesity is largely wrong. Given her track record, I’m inclined to believe her. Before you get morose about your own extra pounds or think that some kind of War on Obesity will solve the health care problem, give her a read.

What Samuel Said about Solomon

The state is not, as most political scientists would make it, an inanimate thing; it consists of people, human beings, each of whom operates under an inner compulsion to get the most out of life with the least expenditure of labor. They differ from other human beings only in the fact that they have chosen (because they believe it to be easier) the political or predatory means of satisfying their desires, rather than the economic or productive means.

via What Samuel Said about Solomon – Frank Chodorov – Mises Institute.

Chodorov examines the Biblical history of libertarianism. Interesting. and full of good insights.

Bad PR

The only theory which can accurately and completely explain each phenomenon taking place in the nationwide market is the Misesian-Hayekian theory of the business cycle.

via Correcting Thomas Sowell on Boom-Bust – Eric M. Staib – Mises Institute.

I happen to agree, but who’s going to look into something so strangely named? Can’t someone come up with a better name. How about the Theory of Allocating Resources for Future Output? On the other hand, who could take ARFO seriously?

Sinking

Truth is, we need more speculators, not less. They’re the people who can help prices find the right level, because there is no “right” level other than the one the market gives us. And that’s why, in turn, excessive speculation is nothing more—or less—than a convenient fiction for when prices don’t move the way politicians would like.

via CFTC Blames Speculators Again for High Oil Prices – WSJ.com.

It’s sad to watch the Obama administration sink to ever greater depths of economic ignorance.

Inevitable Reform?

In a simple median voter model, it never matters which party is in control. Whoever runs the government does as the median voter commands.

In the real world, however, politicians often have some political slack – a range of electorally safe options. They can use this slack is all kinds of ways: To pursue their own vision, to sell out to special interests, to cheat on their wives, whatever.

Question: Where does slack come from? The main answer: Slack exists insofar as the median voter is roughly indifferent. (Imperfect information, contrary to conventional wisdom, does not imply slack; rationally ignorant voters could easily discipline politicians with Beckerian punishment strategies). Politicians can safely do A instead of B as long as voters are – out of apathy or deference – indifferent between them.

OK, so what’s the difference between health policy and foreign policy? For health policy, the median voter has fairly specific preferences. He knows he likes giving free medicine to the American elderly, he knows he hates rationing, and he knows he doesn’t want to listen to fiscal Cassandras. Hence, the political juggernaut that is Medicare. For foreign policy, in contrast, the median voter has a big range of indifference. If the President says we need to invade Iraq, he’ll go along with it for a couple years at least; if the President says Iraq isn’t a problem, the median voter will go along with that, too.

Bottom line: Libertarians should fear government-run health care no matter who’s in charge. For liberals, however, it doesn’t make much difference. As long as public opinion is firmly on your side, it doesn’t matter who runs the government – venality and stupidity notwithstanding.

via Why Liberals Needn’t Fear Republican-Run Welfare States, Bryan Caplan | EconLog | Library of Economics and Liberty.

This analysis makes sense to me. Notwithstanding the huge downside to health care reform there is an aura of inevitability – unless voters start to understand the downside.

To Your Health

The way I look at it, one hundred percent of the population is going to die of something that we can’t currently cure, but might in the future . . . plus the population of the rest of the world, plus every future generation. If you worry about global warming, you should worry at least as hard about medical innovation.

via A Long, Long Post About My Reasons For Opposing National Health Care – Megan McArdle.

Megan has indeed created a long post, but it’s worth reading and gets to the heart of the matter.

Read Me

Just a reminder: when I find a good blog post and have little or nothing to add, I publish it on my Shared Reader page, not here. Recent topics include the nature of regulation, health care reform, Government Motors (GM), confirming judges, the problems of elitism, and more!

Why No Jobs? Hurricanes!

Celebrated blogger Mark Thoma picks up an issue raised by celebrated blogger Arnold Kling: why is the recovery of modern labor markets so slow? Kling points out the mismatch of skills – the newly unemployed don’t have the skills desired by consumers. Thoma seems to agree, but also notes that jobs aren’t being created in sufficient quantity. Thoma then refers to some scheme to allow the government to soften the blow for the unemployed.

That’s treating the symptom and not the disease. New jobs come from expanding businesses (of which there are not many) and new ventures. New ventures? Who in his right mind would undertake a new venture in an environment where the government is changing the rules of the game faster than you can write a business plan? What could impact business plans? New expenses (health care reform), higher costs (green energy schemes), higher taxes – all of which are being bandied about daily in Washington. The prudent capitalist will simply wait until the dust settles and there is better visibility and more hope for stability. Oh, a new unemployment scheme simply aggravates the core problem.

Rare is the captain who has the courage to plot a course through a hurricane.