Sebelius

When I saw the alert that Kathleen Sebelius is going to resign her post as Secretary of Health and Human Services, the classic Warren Buffett quote came to mind:

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

The business of attempting to solve problems caused by government intervention with more government intervention is a business with bad economics.

Minimum wage doesn’t have much effect on those making less than minimum wage

Some economists believe increases in the minimum wage will have ‘little or no effect on employment.’

That’s possible. People who aren’t productive enough to make minimum wage will still be able to find sub-minimum wage work and those people won’t show up in unemployment statistics since they are not looking for a job.

Some sub-minimum wage jobs are legal. If you are self-employed, you don’t have to make minimum wage. A buddy of mine once owned a used car lot. While he was a staunch advocate of a minimum wage, his sales people were ‘self-employed’, so he wouldn’t have to pay them the minimum wage if they didn’t sell cars.

Also, unpaid internships and grad students often make less than minimum wage.

Some sub-minimum wage jobs aren’t legal. Many drugs are illegal, but somehow they are readily available everywhere.

So, in other words, while economists use the argument that a minimum wage hike will have ‘little or no effect on employment,’ they don’t come right out and that’s because those who ignore it already will continue to do so, as drugs will continue to be sold.

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Parasites, yep

From Charles Krauthammer’s column, Obamacare’s War on Jobs:

In the traditional opportunity society, government provides the tools — education, training and various incentives — to achieve the dignity of work and its promise of self-improvement and social mobility. In the new opportunity society, you are given the opportunity for idleness while living parasitically off everyone else.

Reagan had a similar radio address once. A vampire once demonstrated his wisdom by recognizing he was a parasite and it didn’t make much sense killing his host. And Lady Thatcher once pinpointed the problem with parasites that don’t realize they are parasites. They eventually kill the host and die (though she didn’t quite say it like that).

Unemployment ending?

Well, not quite. According to the news, 1.3 million will be losing unemployment checks as the extended unemployment benefits come to an end.

Note the extension was from 26 weeks (~6 months) to 99 weeks (~2 years) at one point and, if I’m reading the article correctly, 73 weeks (~1 year and 3 months). All of those periods seem long for something that is meant to be a temporary stop-gap.

One lady who will stop getting unemployment checks interviewed on one TV news spot that I watched said she was going to have to start spending more time looking for a job and less time on school. Isn’t looking for a job a condition of receiving unemployment? Don’t be to harsh, but unemployment isn’t meant to be a ‘take time off from work so you can go to school’ program.

Another news spot said that unemployment benefits help the economy because recipients spend the money. It didn’t say where that money came from. (Answer: A taxpayer, either now or in the future, who could have also used that money to ‘help the economy’).

Another lady who will stop receiving unemployment checks was asked what she thought about Congress going on break without extending ‘her’ benefits. She said something like (paraphrased from memory), My benefits shouldn’t be dependent on the whim of other people like that. Apparently, not realizing that her receiving the benefit was dependent on exactly that whim.

Of course, none of the folks who will not be receiving unemployment checks any longer took the time to thank their fellow taxpayers for helping them out. How rude.

More good stuff from Cochrane on health care

I recommend reading John Cochrane’s op-ed in today’s Wall Street Journal, What to do when Obamacare unravels. It’s a great follow-up to my health care reforms.

Here are a couple quotes from Cochrane’s piece that addresses some common concerns over non-government medicine.

What about the homeless guy who has a heart attack? Yes, there must be private and government-provided charity care for the very poor. What if people don’t get enough checkups? Send them vouchers. To solve these problems we do not need a federal takeover of health care and insurance for you, me, and every American.

And (emphasis mine)…

No other country has a free health market, you may object. The rest of the world is closer to single payer, and spends less.

Sure. We can have a single government-run airline too. We can ban FedEx and UPS, and have a single-payer post office. We can have government-run telephones and TV. Thirty years ago every other country had all of these, and worthies said that markets couldn’t work for travel, package delivery, the “natural monopoly” of telephones and TV. Until we tried it. That the rest of the world spends less just shows how dysfunctional our current system is, not how a free market would work.

“I promise a chicken in every pot (chicken not included)”

Tyler Cowen was ‘somewhat surprised‘ to find out that a higher percentage of the uninsured disapprove of Obamacare. I’m not sure whether his surprise was that the disapproval wasn’t higher or lower.

I wasn’t surprised that more disapprove.

As I wrote in my “Wait…What?” post in July of 2012, Obama won votes by promising to solve the problem of the uninsured. Those voters didn’t realize that his solution would be to penalize the uninsured for not buying insurance.

It’s like the old Doctor joke.

Patient: Doc, it hurts when I do this. Can you fix it?

Doc: Yes I can.

Patient: Really? Great! How?

Doc: Stop doing that.

In July 2013, I didn’t think many people had made that connection, yet. I predicted they might when they had to pay the fine. They haven’t paid the fine yet, but are discovering that Obama’s solution was the same as the Doc’s above. Stop not buying insurance.

I offered what I think is a better medical mandate in this post (edited slightly).

If you choose not to purchase insurance and you need medical care, you will be expected to pay for your medical care.

Mine isn’t that much different than Obama’s. But, it doesn’t require government intervention.

Update: James Taranto, at the Wall Street Journal, does a great job of making my first point:

In short, what ObamaCare means to the uninsured who were not uninsurable is higher prices for a product they already were disinclined to buy, along with a punitive tax on not buying it. That seems more like a mugging than a benefit.

“I like freedom…as long as everyone makes the right [my] choice”

From Walter Williams recent column:

Negative freedom or rights refers to the absence of constraint or coercion when people engage in peaceable, voluntary exchange. Some of these negative freedoms are enumerated in our Constitution’s Bill of Rights. More generally, at least in its standard historical usage, a right is something that exists simultaneously among people. As such, a right imposes no obligation on another.

Positive rights is a view that people should have certain material things — such as medical care, decent housing and food — whether they can pay for them or not. 

What the positive rights tyrants want but won’t articulate is the power to forcibly use one person to serve the purposes of another.

There is an important distinction to be made between “rights” that do and do not force obligations on others.

Recognizing this distinction was a critical step on my path away from neo-liberal. It sounded good to say things like, “Everybody has a right to food or medical care”, while never fully considering the invisible clause attached to that, “so that means that someone be forced to provide it.”

But, sometimes I did say it. In discussions some folks asked, “Can’t we handle that through charity?”

I made the invisible clause visible, “Charity isn’t good enough.” But, I still hadn’t made the connection that I was saying that others be forced to provide my priority. Government provides a shroud for that.

I heard an example of this on a radio talk show this week. The Host and a Caller were discussing the differences in their values. The Caller said he agreed with Obamacare, but claimed that his values were shared with the Host’s (who did not support Obamacare).

The Host said that the Caller’s values requires everyone do what the Caller says, whether they want to or not. The Host’s values do not. He was talking about positive and negative liberty.

It was obvious the Caller had not considered that before, because he immediately tried to change the subject.

I recall the feeling I had the first time I pulled back the shroud of government and realized that my support for positive rights meant trampling the freedom of others. It dawned on me, what right do I have to force everyone to do it my way?

Like many others, I viewed politics as the place to earn that right. It seemed like a sport where winning earned your team the right to force everyone to do it your way.

But several things made me consider differently.

1. Double standard. There are times when I disagreed with what others were forcing on me through government and I thought my reasons for disagreement were more than valid. These weren’t situations of necessarily being ‘right or wrong’, but just seeing things differently.

It seemed inconsistent for me to want to force my priorities on others who may see things differently than I did.

Perhaps it wouldn’t result in as many dollars for my priority, but I realized that persuading others to join forces could work and didn’t require the double standard of wanting to force things on others, while resisting that they force things on me.

2. Bad rationale. No matter how good the rationale to force sounds, it could be wrong, and often is. It could have unintended consequences that more than offset the intended benefits. It may never even come close to achieving the intended benefit.

3. Bad feedbacks of government. Markets are results-based. People reward things that actually produce value. Those that don’t go away.

Politics is more intention-based, rather than results-based.  Politicians are rewarded if their nice-sounding legislation gets signed into law. They are rarely punished when it fails or causes more damage. We hear people excuse the failure, “but, at least it was the right thought.” And, rather than getting rid of the failed legislation, other politicians try to fix it, with even more legislation and money.

When you combine 2 & 3, you get a recipe for growth disasters, while in markets you have a recipe for growth.

Avoiding reality sometimes works

Good blog post from Clay Shirky about the Obamacare website (Thanks to Russ Roberts @ Cafe Hayek). Here are a few excerpts.

Shirky demonstrates another lesson from The Croods, on why executive paid him to collect information from their own employees. Here he describes an instance where he is with a company’s programmer in the presence of its executives (emphasis mine):

…the programmer leaned forward and said “You know, we have all that information downstairs, but nobody’s ever asked us for it.”

I remember thinking “Oh, finally!” I figured the executives would be relieved this information was in-house, delighted that their own people were on it, maybe even mad at me for charging an exorbitant markup on local knowledge. Then I saw the look on their faces as they considered the programmer’s offer. The look wasn’t delight, or even relief, but contempt. The situation suddenly came clear: I was getting paid to save management from the distasteful act of listening to their own employees.

Humility is not common in the executive suite.

On bottoms up vs. top down (trial and error, specifically):

The idea that “failure is not an option” is a fantasy version of how non-engineers should motivate engineers. That sentiment was invented by a screenwriter, riffing on an after-the-fact observation about Apollo 13; no one said it at the time. (If you ever say it, wash your mouth out with soap. If anyone ever says it to you, run.) Even NASA’s vaunted moonshot, so often referred to as the best of government innovation, tested with dozens of unmanned missions first, several of which failed outright.

Failure is always an option. Engineers work as hard as they do because they understand the risk of failure. And for anything it might have meant in its screenplay version, here that sentiment means the opposite; the unnamed executives were saying “Addressing the possibility of failure is not an option.”

Unfortunately, every once in a while, avoiding reality sometimes works. Sometimes people get lucky when they exclaim that ‘failure is not an option’ and actually create something successful. Those people can be dangerous.