Straight talk with Seth

We have bullies in schools because we don’t punish them.

Next question, why don’t we punish them?

Many reasons.

Teachers and administrators are scared of the bullies too. Some have guns and can find  where you live.

Teachers and administrators don’t want to hassle with it.

Some teachers and administrators are bullies too.

Administrators don’t want to expel bullies because they will lose some funding (though, they’d find out they wouldn’t need to expel many bullies, because many would come into line and they would find more people would want to send their kids to that school).

Administrators don’t want to expel bullies because of threats of lawsuits, the mere hassle of which can cost resources and time.

Administrators don’t want to expel bullies because they believe everyone is entitled to an education, no matter how bad they act.  And they believe they can talk it out, rather than enforcing real consequences.

Cost Benefit Analyses Suck

Rick Santorum wrote in the Wall Street Journal this past weekend about his Economic Freedom Agenda.  Most of it sounds good.  This part bugged me though:

I’ll review all regulations, making sure they use sound science and cost benefit analysis.

One reason it bugs me is that Candidate Obama made a similar promise four years ago. The Obama/Biden campaign promised to go through the budget and “keep the stuff that works and stop the stuff that doesn’t.”

Sounds good, but it didn’t happen.  And there’s a good reason it didn’t happen.  That brings us to the second reason Santorum’s comment bugged me: It’s impossible.

Believing it is possible is a true marker of naiveté or willing deceit.

Cost benefit analyses sounds good to a lot of people. They teach you cost benefit analysis in college, after all, no?

But cost benefit analyses have a major weakness — they’re usually wrong.  They’re wrong for a couple of reasons.

First, cost benefit analyses can be made to say what you want them to say, so they are subject to the same political wills as if the cost benefit analysis didn’t exist. The cost benefit analysis serves one purpose: to fool those who don’t understand this about cost benefit analysis.

Publicly funded stadium, museum and public transit projects are notorious for such analysis.

Even when a cost benefit analysis is conducted with the best of intentions by supposedly competent folks, it is usually wrong. As I mentioned here, Richard Feynman said:

The first principle is that you must not fool yourself…and you are the easiest person to fool.

He said this because he specialized in finding where experimental physicists had fooled themselves while conducting their experiments.

Unfortunately, the only true cost benefit crucible is the real world — and even that can be misinterpreted, and often is.  Economists still debate whether FDR’s actions in the Great Depression helped or hurt.

The truth is that government programs face incentives different from the free market. There’s always plenty of reasons to keep a government program around, even when it clearly does not have desirable outcomes (e.g. minimum wage).

But, the main reason to keep a program in the free market is if its doing its job.  If its not doing the job, the market (or “us”) finds ways to use those resources better.

The restaurant where I had my first W2 job went out of business long ago. It was bulldozed and replaced with a convenience store that does brisk business and has for years.

Had it been a government program, the old restaurant would still be open, supported by your always forgiving tax dollars.  It wouldn’t have many customers, but that’s okay. Politicians will claim they are keeping folks employed. Voters can feel good about voting for them for that reason and the cooks in the restaurant feel great about getting paid to not work that hard.

Ask folks then if they’d like to keep the restaurant, they might be inclined to say yes, you know, to keep the workers employed.  Ask them if they eat at the restaurant, they would tell the truth. No.

Nobody would be able to see the true opportunity cost of all that. They would never have guessed that had the restaurant been allowed to go out of business, it would have been replaced by a convenience store that produces much more value for the community and more jobs. And higher paying jobs.

Ask folks in the community now if they’d like to put the restaurant back in place of the convenience store and most would laugh at you.

Markets vs. Committee

Box office receipts tell us which movies the public, in general, preferred.  The Oscars tells us which movies a small group of people preferred.

As people who follow the Oscar’s each year should know, these two sets of preferences don’t often line up.

When we hand over large swaths of our markets to committees, we may satisfy the preferences of the committees, but not the everyone else.

Imagine a world where only the Oscar-worthy movies were made.  Consider which of your favorite movies wouldn’t exist.

“Why I Support Obama”: Points 2 & 3

The second point made by the Facebook Obama Supporter (from this post) was:

He ended the war in Iraq and is drawing the war in Afghanistan to a close.  Like he said he would.

In my original post, I mentioned that only one point was really related to the President’s job.  This is it.  The President is the Commander-in-Chief of the military and responsible for our country’s security and foreign policy.

I think the Obama supporter makes a good point here. But, Obama’s other foreign policy and security measures leave a bit to be desired.  Stepping over the Congressional balance of power to get involved in Libya, along with his domestic actions, tells me that the President doesn’t hold the Constitution or his oath to defend it in high regard.

The third point made by the Obama supporter was:

He thinks women should have access to free preventative health care.  Why is that an issue?

This is a free country and even the President can think what he wants.  However, actually providing this as President is not in his job description.  Forcing other to provide this makes this country less free.

For me, this is like saying that according to my Homeowner’s Association covenants, it’s my neighbor’s job to stock my fridge with free bottled war.  My supporting argument is very similar to the supporting argument for free birth control: Without it I might die of thirst and if I’m dying of thirst, that will cause many social costs, like I might steal water from others.  Or, society will lose my production.

But, most people will instantly see problems with my argument.

One problem is that there is no such thing as free bottled water. Someone would need to pay for it. So, had the Obama supporter said “third-party paid preventative care” instead of “free preventative” care this would be more accurate.

A key problem is that HOA does not have the power to force my neighbor to provide me with bottled water. It’s not in the HOA covenants and if someone tried to amend our covenants to add this, the other homeowners would have a good laugh.  What’s not funny is how many people think it’s okay for our Supreme HOA to do things that aren’t in its covenants, for no better reason than thinking, ‘that’s the way things ought to be.’

Finally, the most devastating blow to my argument is that I will not die of thirst if my neighbor doesn’t provide me with bottle water.  Potable water, while essential to my life, is cheap and clean enough from the tap or bottle that very few people in our country go without it.

Also, I’m guessing that the average cost of water, even from the tap, is about the same or more than the average cost of women’s preventative care on a monthly basis.  Yet, amazingly we don’t have arguments about having the government force third parties to provide everyone with water.

And, if there are a few people who have trouble paying their water bill, we take a more targeted approach than changing the entire water delivery system for everyone.  We help them out voluntarily.

Just sayin…

One thing should be becoming abundantly clear.  There is no appeasing the easily offended.

Online Dividend Reinvestment Plan Investing?

Here’s an idea:  Sharebuilder.com + Dividend Reinvestment Plans (DRPs)

There are some online accounts for DRPs, but what I’ve seen so far are clunky.  It seems like there’s potential to retail the idea.

If anyone knows of anything that I’m missing, please let me know.

Think Before You Vote

“Get Out and Vote” campaigns annoy me because they encourage folks to wield their political power recklessly.

To help offset the “Get Out and Vote” campaigns for the upcoming presidential election, I propose a “Think Before You Vote” campaign.

The key messages of the campaign would be:

1.  We encourage you to think more if the reason you plan to vote for your candidate is anything like these:

• I’d like to go have a beer with him (or her).
• He (or she) is so good-looking!
• I just think he’ll (or she’ll) be really good for our country!
• I just think he (or she) is what this country needs!
• The dude on MTV told me to.
• That’s who all my friends are voting for.
• Because I’d never vote for the other guy.

We recommend not deciding who to vote for until you can complete these reasons:

• While in these previous positions…  …he (she) accomplished…
• He (she) supports this position because…
• He (she) believes the Constitution means…
• He (she) believes the role of the Federal government is…

2.  If any of the reasons that you want to vote for your candidate is because you want to force your fellow citizens to do something because you think it’s a good idea, then I think you owe it to your fellow citizens to explain why you think it’s a good idea and what makes you so sure (like, is there real world evidence to support your claim?).

3.  Can you clearly articulate both sides of the key issues that are important to you and why you believe your side is correct?  You should be able to answer yes.

4. Can you carry on productive political discussions with those who disagree with you?  You should be able to truthfully answer yes before you vote.

Do you and your fellow citizens a favor.  Think before you vote!

Incentives Matter & Emergency Care Innovation

It amazes me that it has taken so long to come up with this simple innovation to the Federal emergency care mandate.

The article explains:

When someone comes into the Medical Center Hospital ER, they’re assessed to determine the severity of their ailments.

“They’ll all be seen by an ER physician,” Divisional Director for Emergency Services Dena Mikkonen said.

If the injury or illness is determined to be minor, they’ll be directed to a local clinic rather than be treated in the ER.

But if that person chooses to remain in the ER and have their minor ailment treated there, they will have to pay a $250 deposit, MCH Business Office Director J.R. Edmiston said.

This sounds reasonable.  This helps keep the ER capacity freed up to handle true emergencies and encourages people who do not have dire emergencies to use care that is more appropriate for their condition.

Of course, there was the predictable criticism (also from the article):

Federal law requires ER physicians to look at everyone who comes to the ER and treat those who have life-threatening illnesses or injuries, but depending on the initial ER examination for a referral is problematic, said Andrew Fenton, president elect of the California chapter of the American College of Physicians.

Based on the examination a doctor has to decide whether or not the person’s injury or illness requires a stay in the ER.

“Asking a physician to make such a determination is challenging in a short period of time,” Fenton said.

While I think this criticism is overblown, Fenton ignores that the patient can decide to stay by making the $250 deposit.

With everything there are trade-offs.  There are no perfect solutions.  A lot of things are justified by cherry-picking the trade-offs that suit our view.  

At some point a physician will make a bad call (humans are fallible), misdiagnose and send a patient off that needed emergency treatment.  Folks like Fenton will grab on to those stories and say this is bad policy and it’s worth treating everyone in emergency rooms “if we could just save one life”.

And they won’t give due consideration to all the trade-offs.

First, misdiagnosis and mistreatment occurs within the emergency room now.  We’ve all heard these stories. It’s not immediately clear how this new approach would increase misdiagnosis of life-threatening symptoms.

In fact, this approach may improve diagnosis and treatments of minor ailments. Sending the patient to another doctor could be better because second opinions from other doctors may catch things the first doctor missed.

That’s one positive trade-off Fenton would miss.

Also, he will not likely consider how many additional lives were saved by focusing ER resources on true emergencies.

He won’t understand that the opportunity cost for saving that “one life” may be two or three lives, because cramming the ER with patients with other minor ailments to save that one life-threatening misdiagnosis in a thousand (or more) may take ER capacity away from folks with true emergencies.

Fenton offers one trade-off to support his side.  The urgent care facilities may not have the facilities to do all the tests they need.  But, I think that’s a big maybe.  Again, with the second doctor checking, they may have a better chance of getting a good diagnosis than had the person stayed at the emergency room.

Fenton might say to me, You wouldn’t want to be the one person with the misdiagnosis.

To which I would respond, No. But you haven’t convinced me this will actually cause anymore misdiagnosis than occurs now.  Further, I also don’t want to be one of the two or three people with true emergencies that don’t get treated because the emergency room capacity is used by people with minor ailments.  At that point, the emergency room has ceased being an emergency room.  Much like how health insurance has ceased being insurance.

Incentives matter

Sowell does it again this week:

During a recent Fox News Channel debate about the Obama administration’s tax policies, Democrat Bob Beckel raised the issue of “fairness.”

He pointed out that a child born to a poor woman in the Bronx enters the world with far worse prospects than a child born to an affluent couple in Connecticut.

No one can deny that. The relevant question, however, is: How does allowing politicians to take more money in taxes from successful people, to squander in ways that will improve their own reelection prospects, make anything more “fair” for others?

Even if additional tax revenue all went to poor single mothers — which it will not — the multiple problems of children raised by poor single mothers would not be cured by throwing money at them. Indeed, the skyrocketing of unwed motherhood began when government welfare programs began throwing money at teenage girls who got pregnant.

The great fiction has expanded, greatly

Bastiat told us what government use to be:

Government is the great fiction through which everybody endeavors to live at the expense of everybody else.

I’m not sure this is entirely accurate any longer. Over the years we stopped trying to live at the expense of everybody else alive at the time and expanded the fiction to include those in the future as well.

With debt to fund government during peace times, government became the way to avoid tough choices, leaving those for future generations to deal with.

Lately it seems the role of government has expanded even more.  Now it seems to be the way to avoid making any choice that might be politically unpopular or slightly uncomfortable, not just tough ones, and passing those on to future generations.