Posts tagged ‘socialism’

The Case For Studying History













Transpartisan Plan #2: A Better Approach to Government Health Care: Focus the Government on the One Thing It Does Best

So this is my second in a series of transpartisan proposals, the unintended consequence of which is likely to have me ostracized not just by the two major parties but by the libertarian community as well.  My first such proposal, on climate, helped get me ostracized from the climate skeptic community.  Much of this article is based on a proposal I first made in 2015.

I want to say at the top that unlike my climate plan, this is not a plan so much as a concept for a plan.  As in climate, tribalism and muddled thinking about goals has made it hard to make forward progress on the role of government in health care.  The Democrats in 2008 and 2018 and the Republicans in 2010 arguably won a lot of Congressional seats stirring up fears about health care, so it is a vital issue with the public.  For those who want to just dig in their heals and wait until it all goes away, I don't think this will happen.  And I think the logic I outline is superior to the typical political process described by Megan McArdle as 

  1. Something must be done.
  2. This is something.
  3. Therefore, this must be done.

I think the key to creating a viable program for health care depends on being very clear on the goals that one is trying to achieve and matching those goals well with the capabilities of government.  Obamacare was a huge mess in this regard, weaving all over the place in terms of goals (increasing insurance coverage, lowering costs, improving care effectiveness) and assigning roles to the government that were laughably poorly matched to its skills.

Take increasing the percentage of Americans with health insurance, probably the number one goal of Obamacare and the metric most cited to evaluate its success.  Is the core need of Americans really to have health insurance, or it something else?  Is mandating that people buy insurance they don't value in order to improve this metric really improving individual well-being?  Does increased coverage really translate to increased health? (spoiler -- any causal link here is really tenuous in the data).  All these questions and more exist because increasing insurance coverage was the wrong goal.  So is anything having to do with "pre-existing conditions" as Democrats framed it (fairly successfully) in the recent election.

The #1 Consumer Need and Fear in Health Care

Here is my main assumption:  The real, core need of individuals is that a) when they or a family member get dreadfully sick, lack of money will not be a barrier to getting them the needed care and b) even if they can get the care, they would really prefer not to be bankrupted by it.  All these other things -- percent covered by insurance, mandates to accept pre-existing conditions, insurance mandates and subsidies -- are all imperfect proxies for this core need.

This is exactly the kind of need that we buy catastrophic insurance to cover.  I would be bankrupted and homeless if my house burned down and I was still responsible for the mortgage but relatively inexpensive fire insurance covers that.  Losses are not usually correlated (ie one loss does not make it more likely I have a second loss, except in flood insurance which is why there is no private flood insurance any more) so I don't worry about non-renewal even after a major fire.

But obviously health care is different.  Health problems this year greatly raise the probability of health problems in future years.  There is every incentive for an insurer to bail on you after one bad year.   This is the major fear that then follows the need - that catastrophic insurance will no longer be available after the first claim.  Had health insurance developed differently (e.g. with policies that covered more than just one year, more like term life) we might be in a different situation, but here we are.

Government is Good at Having Lots of Money on Call

And the good news is that the one thing the government is really, really good at is being an insurer of last resort -- they have the deep pockets and the fiat money power to do this better than anyone else -- that is why they are the insurer of last resort of bank deposits and for flood insurance (I am not saying that there are not moral hazards in these or unintended consequences, but the insurance works).  So there is the clear opportunity -- what people need most is catastrophic insurance even when the private market won't provide it and the government does really well is provide catastrophic insurance as a last resort.

Before we get into the plan itself, let's discuss a few things that the government does NOT do well:

Government is Bad at Cost control.

I feel like arguing that government is bad at cost control should be about as necessary as arguing that socialism always fails, but I guess it just needs to be repeated over and over.  A large part of the PPACA (Obamacare) was adding provisions meant to reap cost savings in health care.  None of it has worked.  The problem is that any real markets for health care have been disappearing for decades as more and more health care expenses get paid by third parties rather than individuals making price/value trade-offs (as they do with pretty much everything else -- the prosaic word for this is "shopping").

Now, Democrats are increasingly seeking "single payer" health care, arguing that aggregating all purchases in one entity will result in huge negotiating leverage.  But this never has been true.  It is impossible to have a real price negotiation without a market, and market price, to reference.   Look at another area of government spending where the government does 100% of the industry purchasing:  military hardware.  Do you really have the sense that the military is getting great pricing due to their purchasing power?  Supporters will site discounts that Medicare gets over other buyers for certain services and pharmaceuticals.  But note again that this is all in reference to a market price benchmark, that will disappear with single payer.  Further, many of the savings Medicare gets are not real savings, but cross subsidies where other customers end up paying more so Medicare can get something below cost.  When the government is buying everything, this cross-subsidy goes away.  And can you even imagine the lobbying and cronyism and opportunities for graft that will exist once government pricing is untethered from any market price?  Just think again about military procurement.

I suppose that the government could turn all health care suppliers into a huge regulated utility, for example paying pharmaceutical companies a utility-like cost plus a fixed return on drugs.  If this occurs, I hope you are satisfied with the range of treatments you have today because you won't get many others -- if you don't believe me, name the three most recent innovations that have come out of your local regulated utility.  Typically all they do is fight innovation (e.g. rooftop solar and co-generation).Finally, the government has a lot of regulations that Congress did not touch in the PPACA that restrict supply and greatly increase costs.  For example, many states and municipalities have certificate of need processes that prevent new entrants from adding hospitals or even new equipment without the permission of existing competitors.  The same is true in occupational licensing, which protects the most skilled (and expensive) health care workers from competition on simple procedures (e.g. why is someone required to go through a decade of medical training to put stitches in my kid's elbow?)

I will say that the PPACA has perhaps had an accidental effect on costs but not through any intended mechanism.  As deductibles in the gold/silver/bronze exchange plans have gone up to try to keep a lid on premiums, individuals previously used to first dollar health care now find themselves responsible for making spending choices.  This is a good thing, maybe the best part of the whole program.

Government is Bad at Service Effectiveness. 

The PPACA also sought to increase the effectiveness of health care providers.  The problem is that it is impossible for a small group of people in Washington to do this.  We are 300 million consumers who each make trade-offs in different ways and define effectiveness differently.  Take an example from another field:  Hair care.  In the state of AZ, hair cutters must go through 2000 hours of training to be licensed to cut hair -- they must demonstrate proficiency in all sorts of hair styles.  I personally don't give a cr*p about that -- I tend to choose the fastest, cheapest person who does a reasonable job.  But no one in government has anticipated that as a valid consumer need.

The PPACA was larded with expensive provisions that reflected the vision of a few elites about how they personally wanted health care performed.  A great example is the whole electronic medical records requirement, likely stuck in their based on a lot of intensive lobbying by makers of this software.  I have yet to meet a doctor who likes this software, or who feels that their patient service is improved by it, but everyone has to do it none-the-less.Perhaps even more than the cost issue, it is amazing to me that anyone believes that government involvement will make some service more effective.  If you think it can, I urge you to take two identical copies of documents, and go through the process of sending and tracking one by Fedex and sending and tracking one via the post office

Outlines of A Plan

I am not sure how you actually do this, but I think being clear on the goal and the useful (and not useful) roles of government in the process are good.  Rather than a plan, I offer some design goals for a plan

  1. Make the government the insurer of last resort to make sure that all Americans are protected against catastrophic health care costs in a year.  One approach, though probably not the most compact, is to make the government responsible for all non-discretionary individual health care expenditures in a year above a certain percentage of that person's adjusted gross income for that year.   I am thinking personal responsibility numbers that start at 15% of AGI and could increase in higher income brackets. Yes, if you are a person making $50,000 a year, then $7,500 of out of pocket health care expenses will be difficult -- but likely not bankrupting and not a barrier to getting needed care.   Perhaps we exclude social security from AGI and apply this to seniors as well, effectively eliminating medicare and phasing out government benefits for wealthy seniors.I am open to a more compact way of doing this. Perhaps guaranteed-entry government subsidized high-risk pools for health insurance.  The problem is that insurance companies will just dump all their expensive customers into those pools and we will end up with a system as costly to the taxpayers as the one above but less rationally organized.
  2. Shift as many of the individual spending price / value tradeoffs as possible into individual hands.  The step outlined above in #1 is a good start, at least for more routine purchases.  As a design goal, at every turn, try to build in ways for consumers to get money back or get rewarded for choices to use less or more inexpensive care.I do not think there is anything with more potential leverage for improving the health care world than bringing back individual shopping for medical care.  My kid used to injure himself a lot in sports and we had a high deductible on our insurance, so we found a sports medicine guy who charged us only $50 a visit if we paid cash.  Then he told us that when we went downstairs to the radiology company, to tell them we were paying cash.  Sure enough, the lady there pulled out a special book from behind the counter and the $300+ they charge to the insurance companies became $40 to us.  On the other hand, we have spent weeks talking to doctors and hospitals about  heart surgery my mother-in-law (who is covered by Medicare) needs.  You know what has not come up a single time?  Price.  I have zero idea how much it will cost -- but let's say it is $100,000.  Can you imagine buying anything else that expensive without discussing the price once?
  3. Any medical benefits paid by the employer become fully taxable
  4. Price transparency mandates -- every provider must disclose the best price it sells a product and service at, as well as your price.  For all but emergency procedures, a cost estimate must be given in advance (My dog had to have surgery and even in an emergency condition they gave me a detailed cost estimate in advance).
  5. Systematic review of supply restrictions and rethinking of licensing arrangements. Banning of state and local certificate of need processes.
  6. Accelerated and streamlined drug approval process.  Really what I would like to see is that there is a government led testing process that leads not to an approval/refusal but to the publication of safety/effectiveness data that doctors and patients can then use to make their own decisions.

Hat tip to Megan McArdle who has been suggesting something like this for years, probably long before I started thinking about it.

How I Am Getting Driven Towards Being A Single Issue Voter









The Good Intentions Generation

This seems to be a generation in which good intentions are enough.  Actually, I am not sure this is exactly right, let me try again.  This seems to be a generation in which the signaling of good intentions is enough.

Socialism will work because we have good intentions for it.  Trade wars will work because we have good intentions.  Tesla is valuable because it has good intentions.

Democratic socialism supporters don't even know what socialism is.  Trump supporters don't understand squat about economics but just feel that Trump genuinely wants to help them.  Tesla bulls don't even try to look at a balance sheet but just really, really love the idea of Elon Musk being a real-life but progressive Tony Stark.  Not sure where I am going with this, but just frustrated this morning trying to talk policy in a world of virtue-signalling.  In the last few elections I have been presented with discouraging but predictable choices.  Now I am presented with a choice between two parties that have both lost their minds.

Arnold Kling on the Evolving State of US Politics






Thoughts on the Oscars and Politics

I was talking to a Conservative friend the other day and mentioned that I was not watching the Oscars, that I just had not stomach for all the smug political virtue signalling.  He said that he knew why he and fellow Conservatives were not watching, but why me?  He observed that for most issues that would come up -- immigration, gay marriage, distaste for Trump -- that I probably would agree with most of what was going to be said.  My answer to him was in three parts

  1. I am exhausted by the addition of politics to every sphere of life - there is nowhere to escape any more.  This politicization of everything, including sports and entertainment, has historically been a feature of totalitarian governments.  In Hitler's Germany, you couldn't just cut hair, but you had to be in the league of national socialist barbers and be ready with a plan for how your barbering was going to advance national socialism.  yuk.
  2. People seem to like it when famous movie stars and sports stars espouse political opinions that they share.  I am not sure why.  I can only imagine that these folks are in their hearts unsure of themselves and thus get renewed confidence when some famous person agrees with them, like counting likes on Facebook or something.  I on the other hand already am pretty sure I am right and I have thought a lot about the issue including reading opposing opinions on it.  Nothing Martin Sheen or Beyonce says about the issue, unless it is related to the entertainment industry, is likely to either change my mind or make me more confident in my opinions.  In fact...
  3. Hearing actors who I know to be dumb as a post agree with me using facile and hysterical reasoning is only likely to make me question whether I really feel good about agreeing with this dolt.  When Rosie O'Donnell agrees with me, it's time to rethink that issue.  I feel like I was stampeded into supporting the Iraq war in part due to the incredible lameness of a lot of the anti-war "arguments".  That was a mistake on my part, and I own up to it, but I still feel tempted to do the opposite of whatever Sean Penn says even when I agree.

Capitalism vs. Socialism


VotingParadoxes from Paul stepahin on Vimeo.  Via Alex Tabarrok



Venezuela's Directive 10-289







Feel the Bern, suckers.

The Wages of Communism -- The Chinese Catastrophe Under Mao






Update:  Venezuela goes full Great Leap Forward.


Living Atlas Shrugged in Venezuela








If Bernie Sanders and His Supporters Get Their Way, This Would Be the Food Line

Update:  Food lines in socialist Venezuela


Progressives are going to try to memory-hole their support for Chavez and Venezuela, but don't you forget that most prominent progressives were enthusiastic supporters of the imposition of socialism by Chavez in Venezuela.  It is only now, when its predictable failures are becoming too obvious even for the American media to ignore, that progressives have gone silent on Venezuela.  Give them a few years and they will likely develop a meme that this was some sort of failure of free markets.






The Aristocracy of Huckterism



I Have This Argument All The Time With The US Forest Service





It is also the "price" paid for innovation.

Rental Market in San Francisco

One of the problems with making predictions about bad public policy is that sometimes you have to wait 20-30 years until after the policy was passed to see all the negative consequences play out, by which time people have forgotten about the initial policy changes that caused all the disruption.

But I got to skip those 30 years in San Francisco.  I never really paid that much attention to the city until I read a book called "Season of the Witch" written by a progressive about life in San Francisco in the 60's and 70's.  As I wrote previously:




Since reading the book, I have paid attention to stories on the rental market in San Francisco.  In short, it is just as screwed up as would have expected 40 years ago when both density and rent caps were put in place.

As San Francisco's housing crisis continues to pit long-term residents against the recent influx of affluent tech employees, Airbnb and other short-term rentals have become a source of tension. Today San Francisco Mayor Ed Lee and Supervisor Mark Farrell hoped to ease some of that tension by introducing reforms to the city's short-term rental laws that put a 120 day yearly cap on all short-term rentals. The package of amendments also introduced the creation of a new Office of Short-Term Rental Administration and Enforcement for the city staff to "coordinate in the administration and aggressive enforcement of the law."

Airbnb and other short-term rental services have come under fire in San Francisco because they take rental units off an already limited housing market. The current law caps short-term rentals at 90 days when the host is not present. If the host is present -- for example a room rental in an occupied home -- there is no yearly cap. Today's amendment package sets caps for both types of rentals. Mayor Lee said in a statement, "this legislation will help keep our City more affordable for homesharers, preserve rental housing for San Franciscans, protect neighborhood character and streamline permitting and enforcement under a fair set of regulations."

This is from a tech site that has developed a reputation, at least with me, for being astoundingly ignorant of even basic economics, so one has to make some guesses at what is going on here.  For example, it seems odd to say that renting a space on a short term lease rather than long-term somehow takes rental units off the market.  They are still being rented, are they not?  How could one describe them as being taken off the market?

My guess at what is going on here is that short-term rentals are likely exempt from some of the most onerous portions of San Francisco tenant law.   Likely, renting short-term allows one to bypass rent controls and charge more.  It also likely gives one some relief from the city and the state's horrendous tenant protections that make it virtually impossible to evict a tenant.  You lease to someone in SF, and you are stuck with them for life like a shark with a remora on his back, even if that tenant refuses to pay rent for years or constantly trashes the apartment.

San Francisco has created a system where they are absolutely guaranteed to have a shortage of rental properties.  Rather than address those laws that create the problem, politicians put their whole effort -- creating brand new agencies, no less -- to stop entrepreneurs from circumventing the madness and trying to provide housing.

Postscript:  The war against wealthy tech workers in SF is in full swing.  What SF would really like to do, I think, is close its borders and institute immigration controls to keep these folks out.  I know there are many parts of the world, including unfortunately our country, that work to keep poor uneducated immigrants seeking opportunity out.  But has there ever been a time or place in history where a particular place worked so hard to keep out rich educated immigrants seeking only to spend their money?

Scenes from the Last Chapters of Atlas Shrugged

I have always read Atlas Shrugged not as a character story (and thus I don't get bent out of shape by the stiff black and white characters) but as a story about the world itself changing and crashing under socialism and cronyism.  As such, my favorite scene in the book is the hobo's tale of the socialist experiment on the 20th Century Motor Company.

Anyway, the final chapters of the book are full of more and more outrageous state interventions that build to a point that they are hard to believe anyone would actually ever try such things.   Unbelievable, until one looks at Venezuela

Venezuelans soon may need to have their fingerprints scanned before they can buy bread and other staples. This unprecedented step was proposed after Maduro had the brilliant idea of proposing mandatory grocery fingerprinting system to combat food shortages. He said then that "the program will stop people from buying too much of a single item", but did not say when it would take effect.

Privacy concerns aside (clearly Venezuelans have bigger, well, smaller fish to fry) there was hope that this plunge into insanity would be delayed indefinitely, as the last thing Venezuela's strained economy would be able to handle is smuggling of the most basic of necessities: something such a dramatic rationing step would surely lead to.

Unfortunately for the struggling Venezuelan population, the time has arrived and as AP reported over the weekend, Venezuela "will begin installing 20,000 fingerprint scanners at supermarkets nationwide in a bid to stamp out hoarding and panic buying" as of this moment.





What a mess.  An entirely predictable mess.

Yet Another Reason to Open our Relations to Cuba


Two DVD Reviews of Poorly Rated Movies That Had Some Redeeming Characteristics








OK, So We Greens Are Communists After All

This is pretty hilarious. Environmentalist and global warming advocate Chris Mooney writes

My latest DeSmogBlog post is about how climate skeptics basically seem to believe that their opponents are driven by socialism and communism. We aren’t, of course–duh–but it is fascinating to listen to how they explain this, in their own words.

After some participation years ago in this kind of finger-pointing over motivations in the climate debate, I have of late found such activity to be worthless at best and have tried to stay away from it.

But this became funny when Mooney's readers started commenting on the post.  In effect, they wrote "we are anti-growth socialists."  Mooney was forced to write, in comment #32:

yes. i guess my side loses this round, thanks to this thread. depressing

Thanks to Climate Depot for the tip.

Happy Lenin's Birthday




The Danger of Community Rating

From via a reader:



The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month. The previous year, the company's data show it had even more high-spending, short-term members. Over those two years, the figures suggest the price tag ran into the millions.


I would argue that these numbers for system gamers would be even higher save for a residual sense of honor in the population that resists such gaming, a sense of honor that will tend to be eroded over time by these incentives.  This is a theme I have discussed before, in answer to the question of why socialized nations seem to do well at first.  My answer to that question was that residual work ethic and values tend to mitigate, initially, against the horrible incentives inherent in socialism, but that these values erode when people see themselves effectively punished for their values and work ethic.

A Few More Thoughts on Citizen's United

A friend of mine from Princeton days writes:

... and you seem in favor of the Supreme Court decision in Citizens United vs the FEC, I was wondering how you feel about being a customer or supplier or competitor of large businesses who can spend far more than your business to influence the rules of the game.

From what I read, I am sure you have a compelling answer, but I would be scared to death. (Maybe that's why I work for a large corporation [Target] instead of attempting to run my own business.)

I thought this was a pretty good question, and I answered:

  1. I try hard not to make utilitarian arguments to Constitutional and rights issues.  As an example, I am sure we might have less crime if the police were empowered to incarcerate anyone they wanted without trial, but we don't do it that way.
  2. I worry most about corporate lobbying (e.g. by Immelt at GE) and this is unaffected by this ruling - it was legal before and after.   This decision allows corporate advertising, which is public and visible, which I can at least see and react to, as opposed to back room deal making.
  3. Libertarians certainly worry about your question, and why many of us fear that what we are creating in this country is a European-style corporate state, rather than socialism.  To a libertarian, the answer is not less speech, but less government power to pick winners and losers in commerce.

America Bought Me for 20 Tons of Wheat

A Russian immigrant  (escapee?) discusses how he got out of Russia as part of an ongoing series of videos pleading with Americans not to head down the path to socialism.

Copenhagen as Income Redistribution






The second is from Charles Krauthammer






