I Agree With Obama?

I’m sure friends and family will be surprised to read this, but I’m a fair guy.

I’ll give President Obama two points.

Point 1: I saw him on a news show this weekend correctly state that the discourse around health care isn’t about his skin color, rather about what people think the proper role of government is in society.

Point 2:  Today I read this quote from one of his TV appearances over the weekend:

“I think, that frankly, the media encourages some of the outliers in behavior, because, let’s face it – the easiest way to get on television right now is to be really rude,” Obama said on ABC’s Sept. 20 “This Week with George Stephanopoulos.” “If you’re just being sensible and giving people the benefit of the doubt and you’re making your arguments, you don’t, you don’t get time on the nightly news.

I agree with that too.  I find that goes for debates at the office and family living rooms around the country as well. We are TERRIBLE at constructive conflict.  We take things too personally. We call each other names.  We misrepresent our opponents’ viewpoints.  We get mad and frustrated.  We shut down when we hear something that might challenge the way we think.

In many debates, we have precious little time to make valid points and question our opponents position before the powder keg ignites.  We’re too caught up in winning, or at least making it appear that we are the victor, than bringing the best ideas forward and addressing the valid points, fair criticisms and trade-offs and getting others to think about the very things that successfully formed our mindsets.

That’s too bad.

Alternative Fix to Problem of Uninsured

Let’s say that people without health insurance is a major problem that needs fixing, as many believe it is.  One  estimate is that 46 million people, or 15% of the population, is not covered by health insurance.

Assuming Keith Hennessey has done his homework and this information is correct, he  says that of the 46 million,  10.1 million, or 3% of the population, may actually warrant some aid to obtain medical care.  Important to not, many of them receive health care now through other subsidized means.

If the goal is to cover this 3% of the population, why not use a program like food stamps that targets a low income demographic to give them the ability to put food on the table?  Why not provide medical stamps that can only be redeemed on medical care and health insurance?

People eligible to receive the stamps might use them in the same fashion as people on HSAs with high deductible health insurance.  They could buy high deductible health insurance with about 20% of the medical stamps and stockpile the other 80% in HSA (Health Savings Accounts)-like accounts to be used on day-to-day medical care until they reach the deductible amount.

Also, like an HSA, if they grow out of the eligibility for the stamp program because of rising income or other access to health insurance presents itself, they can keep the value they’ve accumulated in the HSA for future medical expenses.

I prefer this idea over other solutions because it allows people to control their own health care expenditures, replacing the bureaucracy of medical claims processing with a bureaucracy of distributing medical stamps.  A more efficient means of distribution may be through the tax code through an EIC-like credit.

It also may be self-funding, though I haven’t done no math on this.  In theory people managing their own medical care expenses will spend more carefully than receiving care funded by invisible donors.  For example, rather than spending $1,000 of medical stamps for emergency room visits for routine medical care, they might choose to conserve their dollars with a $60 visit to the CVS Pharmacy Minute Clinic.

What’s wrong with this idea?

Free to Choose

I’m reading Milton and Rose Friedman’s Free to Choose now.  Excellent so far.  They include a lot of real world examples and observations.  For example, it’s easy to make reference to a communist country, but it’s eye opening to read accounts of countries with varying experience and degrees of communism from people who visited and observed first hand.

For those not wanting to read the whole book, there’s a video series to watch.  Also, I highly recommend reading the Preface and Introduction.

I will post more about the book and video series as I get through it.

Fix Pre Existing Condition

President Obama proposes to fix the problem of health insurance companies not providing coverage to people with pre existing conditions by forcing insurance companies to cover these people.  Of course, this means that premiums increase for everyone else.  Someone has to pay.

This problem and solution exemplifies the rickety, Rube Goldberg device existing government involvement has made out of the medical and health insurance industries. Rather than continuing to make the device more complex, expensive and prone to collapse, why not fix the root cause of this problem?

What’s the root cause of this problem?

The tax advantage companies have in purchasing health insurance plans over individuals.  Without this tax advantage, the health insurance industry would look more like the auto and home insurance industries.  We’d buy policies directly from insurers instead of being covered by employers and stay with those companies much longer.

In the last fifteen years, I’ve changed my health insurance provider ten times, twice due to changing employment and the other times due to my company changing providers or me switching from one plan to another within the company.  Luckily I haven’t had a pre existing condition to worry about.

I use the same auto and home insurance company I used fifteen years ago, same agent too.  My choice to stay with this company has been wholly independent of my employer.

I wouldn’t need to worry about pre existing conditions much if I were able to stay with the same health insurance for that long.

Example of Column That Doesn't Change My Mind

In my last post about Camille Paglia I promised to post examples of columnists that do a poor job of spelling out the through process they used to arrive at their opinion.  I didn’t have to look far.  Russ Roberts of Cafe Hayek and George Mason University posted a link to this Thomas Friedman column, which contains this paragraph:

The fact is, on both the energy/climate legislation and health care legislation, only the Democrats are really playing. With a few notable exceptions, the Republican Party is standing, arms folded and saying “no.” Many of them just want President Obama to fail. Such a waste. Mr. Obama is not a socialist; he’s a centrist. But if he’s forced to depend entirely on his own party to pass legislation, he will be whipsawed by its different factions.

It was hard for me to get past “Republican Party is standing, arms folded and saying ‘no” because  it isn’t true.  Republican solutions call for shrinking government or reducing government involvement.

Democrats aren’t interested in listening to the merits of those ideas.   Whether Friedman is committing an intentional lie or  simply didn’t do his homework, at that point of the column I get an overwhelming feeling that there’s no need spend any more time on it.

Had I turned that column in as an assignment, my 10th grade Civics teacher would have stopped reading at that point, marked an F and “More Work To Do” on top of my paper and handed it back to me advising me that blatant misrepresentation of the opposing viewpoint is unacceptable for 10th grade work.

I pressed on with Friedman’s columns for the sake of this post.  Then I come to:

Look at the climate/energy bill that came out of the House. Its sponsors had to work twice as hard to produce this breakthrough cap-and-trade legislation. Why? Because with basically no G.O.P. representatives willing to vote for any price on carbon that would stimulate investments in clean energy and energy efficiency, the sponsors had to rely entirely on Democrats — and that meant paying off coal-state and agriculture Democrats with pork. Thank goodness, it is still a bill worth passing. But it could have been much better — and can be in the Senate. Just give me 8 to 10 Republicans ready to impose some price on carbon, and they can be leveraged against Democrats who want to water down the bill.

Why doesn’t Friedman try to understand why Republicans oppose the bill or assess the merits of their position?  Sloppy.

And, the fact that this type of column plays well with some is concerning.  I get turned off with conservatives write such things too.  I will look for examples from the conservative side in the future.

Camille Paglia

I was lucky enough to find Camille Paglia’s columns on Salon.com about a year and a half ago.  I had been looking for someone on the other side of the spectrum that I could read.  She’s interesting, she thinks critically and she’s capable of criticizing the people she supports.

In her latest column she articulates well why I have a hard time reading many liberal columnists and some conservative columnists (and many sports columnists and general, feel good columnists):

Throughout this fractious summer, I was dismayed not just at the self-defeating silence of Democrats at the gaping holes or evasions in the healthcare bills but also at the fogginess or insipidity of articles and Op-Eds about the controversy emanating from liberal mainstream media and Web sources. By a proportion of something like 10-to-1, negative articles by conservatives were vastly more detailed, specific and practical about the proposals than were supportive articles by Democrats, which often made gestures rather than arguments and brimmed with emotion and sneers. There was a glaring inability in most Democratic commentary to think ahead and forecast what would or could be the actual snarled consequences — in terms of delays, denial of services, errors, miscommunications and gross invasions of privacy — of a massive single-payer overhaul of the healthcare system in a nation as large and populous as ours. It was as if Democrats live in a utopian dream world, divorced from the daily demands and realities of organization and management.

Whether I agree or disagree with her, I appreciate how she lays out her thought process to arrive at her opinion.  That lets me know how she got there.  That can’t be said for many other columnists.  I will look for examples to share.

In this column she also pointed out a paradox I’ve recognized as well.  I find it strange that Hollywood appears to be so supportive of big government since many stars became successful by bucking authority, honing their craft and persevering with their own talents.  Camille helps me with that thought too, except she uses 60s liberals in place of Hollywood liberals:

Why has the Democratic Party become so arrogantly detached from ordinary Americans? Though they claim to speak for the poor and dispossessed, Democrats have increasingly become the party of an upper-middle-class professional elite, top-heavy with journalists, academics and lawyers (one reason for the hypocritical absence of tort reform in the healthcare bills). Weirdly, given their worship of highly individualistic, secularized self-actualization, such professionals are as a whole amazingly credulous these days about big-government solutions to every social problem. They see no danger in expanding government authority and intrusive, wasteful bureaucracy. This is, I submit, a stunning turn away from the anti-authority and anti-establishment principles of authentic 1960s leftism.

How has “liberty” become the inspirational code word of conservatives rather than liberals? (A prominent example is radio host Mark Levin’s book “Liberty and Tyranny: A Conservative Manifesto,” which was No. 1 on the New York Times bestseller list for nearly three months without receiving major reviews, including in the Times.) I always thought that the Democratic Party is the freedom party — but I must be living in the nostalgic past. Remember Bob Dylan’s 1964 song “Chimes of Freedom,” made famous by the Byrds? And here’s Richie Havens electrifying the audience at Woodstock with “Freedom! Freedom!” Even Linda Ronstadt, in the 1967 song “A Different Drum,” with the Stone Ponys, provided a soaring motto for that decade: “All I’m saying is I’m not ready/ For any person, place or thing/ To try and pull the reins in on me.”

I think there might be an explanation to this paradox though (wanting liberty/freedom and big government).  The liberty they seek is different than the liberty conservatives seek.  Thomas Sowell answered this in his book Conflict of Visions.  Conservative’s liberty is the freedom choose, freedom from coercion from others.

Liberal freedom is the freedom from consequences of actions.  Liberals see the rigors of participating in society as a form of coercion.  They view the obligation of going to work to earn their keep to pay the mortgage company and food companies as  form of coercion.  They believe that we should be able to achieve a basic standard of living (which is usually whatever is available to upper middle class of the time) while pursuing whatever we desire.

The hard reality that whatever we desire may not be something others value enough to pay for voluntarily, as it happens in capitalism, is the consequence liberals want to avoid and that’s where government comes in.

I also agree with what Camille has to say about Republicans:

Having said all that about the failures of my own party, I am not about to let Republicans off the hook. What a backbiting mess the GOP is! It lacks even one credible voice of traditional moral values on the national stage and is addicted to sonorous pieties of pharisaical emptiness. Republican politicians sermonize about the sanctity of marriage while racking up divorces and sexual escapades by the truckload.

After reading for awhile, I think Camille is a liberal, in the classical sense, as are true conservatives.  I believe the reason she hasn’t defected from Democrats is her stance on abortion.

Tragedy of the Commons

Good reading yesterday from Star Parker in her column, Our Tragedy of the Commons.

We all know the problem of tragedy of the commons well, even though we might not know it.  It’s the reason why shared refrigerators in work break rooms are disgusting.  We all need a little space in the fridge (benefit), but nobody wants to clean it out for everyone’s benefit (cost) even though a clean fridge is desired by everyone.

Star Parker’s point is that government is our tragedy of the commons with special interests using the government for personal gain with no good check in place against that.  Said another way, concentrated benefits, dispersed costs (see Uncle Sugar’s Auto Mall).

A few key paragraphs from Parker’s column:

President Obama has just submitted a 10-year federal government budget projecting our national debt burden to reach $17 trillion. This is greater than our entire GDP today.

Does anyone think Barack Obama manages his personal finances this way? Or if he were president of his own company that he would be running it this way?

Federal government spending is now twice what it was ten years ago. Can it surprise anyone that over the same period expenditures on lobbying more than doubled and the number of lobbyists in Washington increased 50 percent?

And, to put things into perspective:

A hundred years ago the “public sector” was less than ten percent of our economy. By the 1940’s it was almost one quarter. Soon it will be one half.

The Secret Sauce

My hometown hosts a festival on Labor Day weekend.  There are a few things about the festival that intrigue me.

First, the festival takes place on and around the town square that dates back to the early 1800s.  Go there any other day of the year and the square is D-E-A-D.  But, for four days in September it attracts over 100 thousand people for funnel cakes, turkey legs, hot dogs, kettle corn, carny rides and crippy crafts.

Festivals, like any other money-making ventures are prone to failure.  For every successful festival that draws a crowd and creates an economic profit for the parties involved, there are three to five festivals that were organized with high hopes, but just couldn’t generate the traffic needed to sustain themselves.  The fact that this festival has stuck and remained successful since 1973 is remarkable.  The fact that in draws so many people to a location that is barely alive for the rest of the year is even more remarkable.

A great question is why?

There are probably many answers.  It’s on a holiday weekend that ends summer.  There are a lot of people around with not much to do.  It brings a market of food, crafts, bands, games and rides to an area that doesn’t see much of those.  It’s become tradition for the last two generations of people that live in the town.  It’s a place to see some familiar faces and reconnect with old haunts.  It’s well organized and has a large variety of everything.  It has ample parking and easy enough access.  It has a good mix of organizations raising money for good causes and private organizations.

But, there have been other festivals that had many of these same attributes but didn’t succeed.

Second, some food booths do better than others.  Consider the kettle corn stand that has been there since I was child, staffed by people dressed in period clothes and with period looking equipment – copper kettles and a person stirring the popping corn with the sugar, salt and butter with an old boat paddle.  This stand usually has a line 10 – 20 deep even though there is at least one kettle corn stand a block away with 3 or 4 people in line.  Both stands have the same price and the end product tastes the same.

The only discernible differences between the two stands are location, what the staffers are wearing and the equipment.  There may be other intangible differences as well.  Like I mentioned before, the first one has been at the festival, at the same corner, for decades.  I’m not sure about the other one.

There are other stalwarts at the festival as well.  One church operates a funnel cake stand that has two lines, usually with both lines 10-15 deep.  Other funnel cake stands within a block of this one rarely have 2-3 people waiting.  In this case, the products are the same and the people staffing the booths are the same (no difference in dress).  Other than the different booth configuration, the only other difference is that the first one, like the kettle corn booth, has been on the same corner for decades.

I wonder why some of these booths have been able to generate long lines each year while others come in and try for a few years and quit because they can’t get the traffic.

I’m not sure there are good answers to why certain booths are successful and others aren’t.  Many factors come into play.

Location may be a strong factor.  For example, while the festival is a small area, people come from all sides and navigating can be tough when its busy.  Certain spots might be better suited for certain things.  For example, perhaps the funnel cake stand is successful because it’s well positioned between the hot dog stands and the carnival, so it catches a lot of the traffic heading to the carnival after eating dinner.  The kettle corn stand is on a corner by which a lot of people leave.  Maybe it catches the people leaving wanting to get that last big bag of kettle corn to take home and munch on for the next few days.

Longevity may be another factor.  Return festival-goers looking forward to going back to the same booth year after year may not want to veer from what’s served them well before.

The size of the organization running the booth may be factor.  For example, a large church will attract the church members and their large network of friends and family.

Another factor might be that new festival-goers see the long lines at some of the booths and interpret that as a signal that these are the good ones.

Maybe another factor is the institutional knowledge of “how it’s done” passed down from the experienced booth operators to the next group in line to run the booth might be another factor.

All these things probably matter some.  Many can be done to improve the chance of success, but none  guarantee it.

Much of the success of this festival, some of the booths at the festival and, in a broader scope, successful businesses and organizations are in the secret sauce.  It’s just that nobody has the exact recipe for the secret.

What Obamacare Tells Me About Government's Understanding of How Markets Work

In this post, where I questioned whether government controlled prices on medical procedures would help Obama’s worry of a doctor recommending an unnecessary tonsillectomy to make more money, I also mentioned that I don’t think that behavior is a problem in today’s medical care industry. 

Here’s why I think that.

First, I won’t pretend that the current medical care industry is a free market.  That’s an often repeated myth of supporters of government health care.  The medical care industry has been moving away from free market since the late ’60s and many of the problems with the industry are caused by exactly that.  Moving it further away will only make the problems worse.

That being said, there still is a lot of choice in the current market.  Under most medical plans, I can still choose among a variety of competing medical care providers and I can still obtain the much recommended second opinion in the case of a major diagnosis. 

Doctors who order higher cost procedures for the sole purpose of making more money would not be able to attract and retain business.  Good business owners learn that the best way to wealth is by treating customers well and building a good reputation.  Ordering unnecessary procedures doesn’t do that.

Now, will there be some unscrupulous doctors?  Yes.  Will some patients receive unneccesary procedures?  Yes.  But that will happen no matter how the market is organized (free, governed by third party insurers, government). 

The question is under which system will it happen the least?  The free market is the clear winner.