Publius

The Voice of Reason. A look at contemporary philosophy and politics from outside the Left vs. Right continuum. RSS FEED

Sunday, August 30, 2009

The Great Health-Care Debate Straw Man

The socialist left has set up a massive straw man in the health care debate.

It is, in short:

"Opponents of Obama's health-care (wait, no, health-insurance) plan want to maintain the status-quo."

This of course is a straw man and a great lie. There are clearly problems with the health care system, or more precisely, with the way that costs are growing out of whack.

Nobody says the current setup is ideal. There is legitimate disagreement, however, about whether Yet Another Government Welfare Program is the way to go.

Obama says "we need a government insurance plan to keep the private insurers honest". Even assuming that insurance companies were being dishonest (which is clearly the intention of Obama's phrasing), why not open the insurance field to MORE competition by allowing insurers to operate across state lines? That is one solution to the issue of limited competition in insurance and one which does not require a massive new federal bureaucracy and entitlement program.

Obama switched from demonizing doctors and hospitals, which turned out not to be so popular; and has started demonizing insurance companies. These are the same companies that pay for millions of cancer treatments every year. Yes, those big, bad, evil money-grubbing insurance companies! We must "keep them honest".

The second aspect of this great straw man is, "the private sector has failed to deliver quality health care". Yet there is effectively no such thing as a free market for health care services.

  1. The government controls who can be doctors, and arbitrarily restricts to MD's the right to provide simple treatments.
  2. The government controls fully 20% of all medical spending, through Medicare/Medicaid.
  3. Medicare/Medicaid result in massive cost-shifting by paying only dimes on the dollar of the real costs of those programs. That is the only reason these programs can be considered "successes". The burden is then shifted to private insurance companies, whom hospitals overbill in order to make up their losses from Medicare/Medicaid.
  4. Government strictly regulate what insurance companies can do, who they can cover, how much they can charge. In many states, government forces people to buy coverage for things they don't need and can't use.
  5. Insurance companies are forbidden from operating across state lines, further limiting competition
  6. Virtually all health insurance is delivered through employers, which means individuals typically have no real choice of insurance plan
Yeah, that sure looks like a "free market". What has in fact failed, is the current methodology of layering government intrusion upon government intrusion with no foresight applied further than the next election.

So what the naysayers to the Obama plan want, is not the status quo.
What we want is the elimination government intrusion in health care, and more private-sector competition.

So all you socialists out there, put the straw man away and let's have a serious conversation about this, ok?

Monday, August 24, 2009

Paul Krugman: Cheerleader for Socialism or just plain ignorant?

Paul Krugman always gets my blood boiling, because he is so self-righteous and yet so wrong. He writes in the pages of the New York Times, and talks about how he loves the proles and democracy - but unlike virtually every other media outlet, the New York Times has no reader comment feature. What Krugman really likes, is to pontificate to the masses from atop his ivory tower, and not have to listen to anyone tell him he's wrong.

And how wrong he is. In a recent New York Times op-ed (1), Krugman writes:
Washington, it seems, is still ruled by Reaganism — by an ideology that says government intervention is always bad, and leaving the private sector to its own devices is always good.
First off, Krugman like other Socialists just can't get over Ronald Reagan. They are still campaigning against him even though he's been dead for years. Earth to Krugman: Obama is the President now. Blaming Reagan for today's crises is even more daft than blaming Bush.
"Let’s talk for a moment about why the age of Reagan should be over.

First of all, even before the current crisis Reaganomics had failed to deliver what it promised. Remember how lower taxes on high incomes and deregulation that unleashed the “magic of the marketplace” were supposed to lead to dramatically better outcomes for everyone? Well, it didn’t happen."

(It's only "magic" to someone like Krugman who doesn't like the economic decisions you make and wants to replace them with his own).

Let's see. We went from the 70's, a decade of negative real GDP growth after inflation, to amazing real growth in the 80's and 90's.

Krugman refers to supply-side economics (the theory that reducing top marginal income tax rates stimulates economic growth) as "Reaganism", though it would be more accurate to refer to it as Coolidge-Kennedy-Reaganism, since all three of these Presidents enacted marginal tax rate cuts and with the same effect every time - turning stagnation or negative growth into large, positive economic growth. While supply-side is most firmly associated with Reagan, the negative impact of high marginal tax rates was known and commented on by Adam Smith in the 1600's.

Krugman may be good at math (though this is in some doubt), but he is clearly terrible at history.

To be sure, the wealthy benefited enormously: the real incomes of the top .01 percent of Americans rose sevenfold between 1980 and 2007. But the real income of the median family rose only 22 percent, less than a third its growth over the previous 27 years.

Yes, lower marginal tax rates were good for the wealthy. Duh! Krugman brings out the class warfare bludgeon early in his article. He mixes two units here, disingenuously: he compares the growth of real income of top earners with "median family income". These are very different metrics.

First off, I wish the socialists would decide which rich they want to demonize and stick with it. Is it the top 0.01%? Is it the top 10% Is it the top 1%? The top 0.01%, the targets of Krugman's current class attack, are 30,000 people. If 30,000 people increased their income by 7x I say good for them! We should not institute draconian, punitive economic policies just because Paul Krugman is pissed off at 30,000 productive people. So let's just forget about that, and go right to the middle class, who Krugman attempts to pander to in his tract.

So apparently according to Krugman, the 15% inflation and 20% interest rates under Carter were good for "median families". Krugman's history also fails in remembering that Reagan was not the President in 1980, and that Reagan's tax cuts were not signed until 1981 and that recession did not end until 1982. So why does Krugman include 1980 in Reagan's legacy? Paraphrasing, "never let a good recession go to waste". He includes it because it makes Reagan look bad, not because Reagan's policies actually had any blame for the poor performance in 1980 to 1982.

Krugman also compares rise in real income between two very different periods. The first period is apparently 1953 to 1980, the second 1980 to 2007. These periods are very different - the 50's and 60's were America's second industrial revolution - and economic growth is fueled by many things, but a large impact on economic growth is population growth. The US population growth rate has been steadily declining from its average 2% peak in 1947 and 1950, to less than 1% today.

But what is this "real income of the median family"? What the heck is that? Is he saying, median real income of families? Real income of average-sides families? He's pulling a fast one on us here.

First off, median household income data was not available before 1967. So what is Krugman using for periods prior to that?

Second, If we're comparing post-WWII to 1970, family income rose dramatically because women in the family went to work en masse for the first time in history. Income would almost double in any family where the woman went to work. By the 1970's that trend was largely completed, so clearly "family income" growth rates would decline accordingly.

Third, many people now choose to work part time. Many people have "enough" money and value free time more than additional marginal income - time to spend with family or other pursuits. While median family income growth has declined, median individual income has continued to rise unimpeded. Clearly then we are looking at information that says something other than "Reagan's policies don't work." We are seeing a shift away from both parents in a family working full-time.

Since we can (and Krugman does) play games with statistics and start and end points, we should look instead at the sustained slope (long-term growth rate) of family income. Note the "Real Median Household Income" chart about halfway down the WikiPedia "Median Household Income" entry (2) (2.http://en.wikipedia.org/wiki/Median_household_income

). Really, pull it up now, the chart is important for many reasons, but mainly because the data Krugman purports shows the failure of Reaganomics, actually shows its success.

Between 1970 and 1982, at the height of the Socialist/Keynesian government interventions Krugman so loves - price controls, rent controls, wage controls, massive regulation and intervention - carried through three administrations (Nixon, Ford, Carter), we had not one but four recessions. In 1982 the median household income was the same as it had been in 1970. By the way Krugman, it's this sort of data that casts doubt on your theory that "government intervention is always good".

But by the end of 1982, the economic miracle that Krugman claims never happened, began. The Reagan tax cuts kicked in, and by 1990 real median family income (adjusted for inflation) had increased 13% over 1982's low.

In 1990, Bush I raised the top marginal tax rates, breaking his campaign pledge of "No new taxes". By late 1990 we were in a recession again, and median family income dropped for the following two years. But 1993 the economy recovered and the miracle resumed: by 2000, median family income had risen another astonishing 17%. In total, from 1982 to 2000, real income after inflation rose 25%.

Is Krugman seriously comparing the period 1982 to 2000 to 1967 to 1980, and saying that Reagan's policies came up short? I mean, LOOK at it. You don't have to take my word or Kruman's word. The data is there for all to see - Reaganomics worked. Whatever Krugman is smoking, I'll take two.

Krugman ballyhoos the economic growth during Clinton while pretending that same growth under Reagan didn't exist:

"Moreover, most of whatever gains ordinary Americans achieved came during the Clinton years."

That's just dumb, Krugman. It's dumb because you ignore the same annual median income growth rate during the 1980's, it's dumb because you ignored the Bush I tax increase that led to a recession, and it's dumb because even though Clinton was in office, Reaganomics was still in power driven by a Republican Congress which kept government growth in check. Clinton did very little that wasn't in line with Newt's Congress (except sleep with every woman he could get his hands on).

Reaganomics did not suffer any serious setbacks until Bush II. While Krugman clumps Bush II in as a "Reaganite", he's dead wrong:

President George W. Bush, who had the distinction of being the first Reaganite president to also have a fully Republican Congress, also had the distinction of presiding over the first administration since Herbert Hoover in which the typical family failed to see any significant income gains.

George W was many things, but fiscal conservative he was not, and by 2002 the Republicans in Congress had gone astray and become just as bad as the Democrats had been before Reagan, spending like drunken sailors.

And here again, Krugman conveniently forgets that Islamic terrorists murdered 3,000 people and blew up tens of billions of dollars worth of New York City. The ensuing economic dislocation has nothing to do with overall poor economic results in the 2000's according to Krugman. No, it's all the fault of that Reaganomics!

See, Krugman wants you to confuse the specific policies of Reagan, with those of later Republicans. Bush made taxes the most "progressive" in 30 years by giving money away on the bottom side instead of taxing it at the top. But the effect on people's behavior is the same - people will not work for that which is given away for free. That was not Reagan's vision, Krugman, and you are disingenuous and dishonest for claiming that it was.

Finally, Krugman brings up the current recession, and blames Reagan again:

There’s a lot to be said about the financial disaster of the last two years, but the short version is simple: politicians in the thrall of Reaganite ideology dismantled the New Deal regulations that had prevented banking crises for half a century, believing that financial markets could take care of themselves. The effect was to make the financial system vulnerable to a 1930s-style crisis — and the crisis came.

The Socialists ought to decide whether it was Reagan, or Bush II, who caused the recession, and stick to the script. Their waffling on this issue is becoming confusing.

As a "nobel prize-winning economist" Krugman ought to know that the 1930's and the current crisis have something else in common - they were preceded by massive government intervention in the marketplace.

In particular, Barney Frank and his cadre of Capitol Hill do-gooders shoved requirement upon requirement on banks to give mortgage loans to people who in sane times no bank would have agreed could afford it. 0%-down lending programs have been forced by the government on lenders four times in the past century, with exactly the same results each time: skyrocketing default rates and a subsequent crash in the housing market. Congress is insane, by the common phrase "insanity is doing the same thing each time, and expecting a different result".

Washington, it seems, is still ruled by Reaganism — by an ideology that says government intervention is always bad, and leaving the private sector to its own devices is always good.

Krugman wants us to believe that Barney Frank leaning on banks and saying "Don't worry, the government will pick up the tab if anything goes wrong" is somehow a failure of the private sector.

But since we already know Krugman is bad at history, maybe we should forgive him this last of many lapses?

Not a chance.

Krugman isn't ignorant. He's a socialist, and the only way he can defend his ideas is by pretending that they haven't already failed multiple times in the past 100 years; by writing pieces which make claims about the results of Reagan's economic policies which are demonstrably false; and by blaming the private sector for economic dislocations caused by bad government policies.

Private enterprise isn't perfect. But it's free. Free people make mistakes. Government makes much more, much bigger mistakes, by shoving people around and replacing their judgement with that of some unaccountable bureaucrat's. What's good, is people being free to decide things for themselves. What's bad, is someone else forcing them to act against their will.

To the extent that "Reaganism still rules in Washington, DC", we should be grateful for it. As long as Reagan's ghost roams that perverse city, we will all be a little freer and a little richer.

1. http://www.nytimes.com/2009/08/24/opinion/24krugman.html?_r=1

2. http://en.wikipedia.org/wiki/Median_household_income

3. http://www.questia.com/googleScholar.qst?docId=5001685505


Sunday, August 16, 2009

The Democrats' Health-Care Scapegoat -- and the truth

Barack Obama just launched a sleazy attack on many of the companies that make it possible for most Americans to have and pay for life-saving medical care - insurance companies.

While this is the now well-defined scapegoat, they are still trotting out some tired straw man arguments too.

1. Health insurance companies are the problem!

After talking about "health care" reform for years, Barack has found his scapegoat - insurance companies. Now the pitch is "health insurance reform". Never mind the thousands of pages of government regulation of insurance companies, the idea of insurance companies as 1800's-style robber barons oppressing the medical proletariat may be fashionable, but it's total bunk. Few industries are regulated as heavily as medicine and insurance.

Barack's new solution, to make it illegal for insurance companies to cancel plans for any reason, will obviously cause a rise in premiums - just as the regulations forbidding companies from filtering out preexisting conditions caused a rise in premiums.

2. Opponents of my health care reform efforts are for the status quo.

Barack ole buddy, we are opposed to Socialism, not reform. Since every year brings more regulations and higher costs, perhaps you should take responsibility for your role as head of government, take a hard look in the mirror and ask yourself if there's a connection between ever-increasing government intrusion into medicine and insurance, and ever-increasing costs.

3. The free market has failed.

Actually, the free market has never even been tried in modern medicine. From the very beginning, government has controlled licensing of doctors, regulated insurance companies for "the public good", forced hospitals to give away free care to indigents, and shifted costs by dumping the Medicare/Medicaid burden on the system yet only paying for a fraction of Medicare/Medicaid bills.

If you want to see the free market at work, take a look at the explosion of walk-in clinics. I call these the "Wal-Mart of health care" but they are a clear identification of market need - walk in to a clinic any time, and pay cash for services. No waiting, and you can have basic stuff diagnosed and treated quickly.

We need more of that, not less.

The fundamental problem with the medical industry is twofold but comes down to the same thing: patients are disconnected from the costs of their medical care. This means they are disconnected from the pricing mechanism and as has been shown over and over through history, when the pricing mechanism is broken prices will spiral out of control.

1. Individuals don't pay for their medical care, their employers do.
2. Individuals don't pay for their medical care, insurance companies do.

This scheme has been going on since the 1940's. When it was a company doctor, it made some sense. But now there are two tiers protecting patients from reality.

I will give one example of this: America is now the fattest nation on earth. Obese people have 30% higher health care costs than non-obese *1. Currently due to regulations on insurance companies, these costs are eaten by the insurance company and passed on to everyone else. So fat people have no financial incentive to change their behavior, and the costs these people incur are passed on to others. That's certainly good Socialism, but it's bad public policy.

The other item that bears consideration, is that insurance by its nature protects against risk. But if the risk is 1:1, that is, if an event is guaranteed to happen, then insurance simply doesn't work.

Insurance can protect against cancer, or getting hit by a truck. But it is not a useful tool if you're going to the doctor every time you get the sniffles. It is not a useful tool even for routine medical checkups, because these costs are guaranteed and cannot be shared out in a risk pool.

A start to a true free-market solution to health care would be something like this:
1. Eliminate all regulations on health insurance. This will allow insurance companies to do what they do best - identify at-risk populations, and identify the costs of long-term care.
2. Create a national market for health insurance by eliminating state-line boundaries to health insurance companies.
3. Encourage individuals to purchase insurance directly so that it is not tied to an employer, and thus becomes portable.
4. Encourage individuals to take responsibility for their own routine care, by allowing insurance companies to charge less to people who demonstrate good practice. Want to lower your premium? Stop smoking, lose weight, and come in for your checkups every year.
5. To help ease the transition to a truly private market, change Medicare/Medicaid to a direct cash subsidy paid to low-income individuals, merging it into the Social Security system. Phase out over a 10-year period, including elimination of the Medicare payroll tax. Private and religious charity (including many hospitals) will take over responsibility for this. It can't be any worse than fraud-ridden Medicare, stands a good chance of being better, and it will be back to voluntary charity instead of 'charity at the point of a gun'.

This provides a system where even if you lose your job or move to another state you can keep your insurance, there is built-in feedback in insurance pricing to encourage good health practices on the part of individuals, and government bureaucrats have no say in anyone's health care.

See Mr Obama, I am not opposed to reform. I am opposed to Socialism.

Publius


* 1. http://www.medicalnewstoday.com/articles/158948.php

Tuesday, August 11, 2009

Cover your ears, Diana

Congresswoman Diana DeGette of Colorado recently held an "online, interactive town hall". That's fancy talk for a "telephone conference call".

While I of course applaud the idea of elected representatives putting themselves in the middle of the crowd to hear their ideas, this particular one was fishy.

First, to participate, you had to fill out a form on DeGette's web site. Then, they would tell you five minutes before the event whether you were invited to the event. If invited, they would give you a call with the teleconference number. Then, they would offer certain participants the right to ask a question.

Some "town hall". This is more like an infomercial. Clearly DeGette's crew was screening participants in order to avoid tough questions. They then further screened questions. Nothing would be asked of DeGette that wasn't doubly screened and allowed.

This all amounts to Diana DeGette covering her ears and shouting "la la la la la la!" so that she doesn't have to hear anyone critical of her or her president's socialist policies. Nobody should be surprised, she's a big city socialist and this is how they behave.