Nice. If true.

President Obama Says He’d Back ‘Obamacare’ Repeal if GOP Has Better Plan.

Sounds good. But, this looks like a common ploy to make it look like you are being the better guy, when you have no intention of supporting anything they come up with.

Here’s how it usually plays out.

  1. He won’t consider any plan the GOP proposes to be better. Of course, no one will know until it’s actually tried. All he will have to rely on is various folks’ guesses at what might happen if the new plan were put in place.
  2. He will use an overly restrictive set of criteria to evaluate any new plan.
  3. This also positions the GOP into having to have a plan. What if a better ‘plan’ isn’t a plan, but fixing the things that distorted the insurance market to begin with, like the unequal tax treatment of health insurance costs for businesses and individuals? Not having a plan will be unacceptable!

Simple trade off model

During stints in engineering and finance, I learned the following simple model from seasoned veterans to illustrate trade-offs of their work output.

Fast, Accurate, Cheap: Pick two, because it’s impossible to have all three.

By picking two of the three, you get the following combinations.

Fast & accurate, but not cheap. Why not cheap? Because to do things quickly and accurately you need top-notch systems, top-notch people and enough people to do the work.

Fast & cheap, but not accurate. Why not accurate? Because to get the work on the cheap, the department is understaffed, not staffed with top-notch people and systems are slow and cumbersome and usually not designed to support the work desired. Deadlines are so fast, there isn’t enough time built in to do proper quality checks, so lots of mistakes will make it through to the finished product.

Accurate & cheap, but not fast. Why not fast? To overcome the handicaps of non-top-notch people and systems takes extra time to double check work and find the inevitable errors.

Every field has this trade-off model. The art is finding it.

For example, the simple trade-off model for health insurance might be:

High access to care, Cheap, High quality: Pick two.

High access to care and cheap, but not high quality. Why not high quality? You won’t find the best people to provide care for everyone if you don’t pay them enough. So, anything that is cheap, you need to either ration access or quality, or some of both.

Cheap & high quality, but not high access. Why not high access? Same reason as above. You can’t attract enough people to provide care on the cheap if they have other options. So access is rationed with wait times, as it is in many countries that provide cheaper health care.

High access and high quality, but not cheap. Why not cheap? To attract enough high quality medical care professionals, they need to be paid better than their other options.

It’s helpful to keep this simple trade-off model in mind. It comes in handy to understand your personal situations and political topics.

Obviously, trade-offs are usually more complex than three, but considering three is better than considering none, which is what most people want to do when they want to have their cake and eat it, too.

It’s also useful when discussing these issues to get people — who typically aren’t thinking in terms of trade-offs — to more carefully consider their positions.



Sounds Good Principle

Sort of a Part II of my previous post

Any policy or program, public or private, can be shown to be a success or failure. That’s because every program has benefits, direct costs, opportunity costs and 2nd, 3rd+ order costs and benefits.


Since there’s always some benefit, there’s always success stories to point to. Those stories typically receive get balcony seats at State of the Union addresses.

Want to focus on the failings of the program? That’s easy, too. Just focus on the costs.

That is what much political policy debate comes down to. Supporters of a policy focus on its benefits (“Fewer people are uninsured because of Obamacare!”) and critics focus on costs (“Medical care costs are rising faster and innovation is slowing!”).

I used to like the TV show Good Morning, Miami.

Its producers would not have succeeded in keeping it on the air by pointing me out to network execs: See, this guy likes our show, so you should keep it.

If they did, the network would lose ad revenue and shareholders would replace them.

So, network execs face strong incentives to cancel dogs, rather than be “pig-headedly insensitive” to the signs that show isn’t doing well.

In fact, they do what we all do with every purchase we make. We evaluate was it worth it?

Yet, politicians often succeed with the same tactic that wouldn’t work for Good Morning, Miami producers when they highlight a success story of their program in the State of the Union address or campaign speech.

Why? Because nobody owns the full cost-benefit of the program.

Taxpayers foot the costs, yet don’t have incentive to care whether a program is worth it because they operate on the “Sounds Good” principle.

Whether that program exists or not, they will pay about the same in taxes. So, their criteria for any government program is if it “Sounds Good” or not.

Politicians and their consultants have discovered that when you can put a face to the benefit of a program with an anecdote, that Sounds Real Good.

“Failure is not an option”

A good column from Matt Ridley, A Century of Marxism-Leninism.

Key paragraph:

The first communists meant well. Their crime was to bet the farm on an untried idea and then, when it failed (as Lenin’s half-hearted New Economic Policy conceded), to be pig-headedly insensitive to the negative empirical data coming back from the experiment.

Being ‘pig-headedly insensitive to the negative empirical data coming back from the experiment‘ isn’t unique to communists. It is also standard among politicians of any party, political parties and leadership of many organizations — public and private.

Why? Incentives.

Saying, it looks like we got that wrong and we need to adjust and adapt to improve, loses the confidence of those who empowered these folks.

They believed in “The One With The Answers.”

If it turns out that this leader doesn’t have The Answers, then someone else must and those people must be put in power.

A good way to stay in power is to pig-headedly claim that your answers are still valid.

So, the problem isn’t the pig-heads in power. It’s their subjects. Specifically, it’s their belief in The One.

As long as they believe in The One, they will continue to put people in power who claim to have The Answers and those people will cling to that power until the subjects change their mind.

Can you imagine voting for someone who says the following?

I don’t have all the answers. But, I think we should take a cautious try-and-see approach. We’ll start small and see if works. We’ll try to learn what we can from failures, as they burn themselves out, and let successes spread on their own merit.


But, that’s exactly who we should vote for.

What about us?

This is from this Wall Street Journal editorial (emphasis mine):

Mr. Pence told Republicans that repeal and replace is the Trump Administration’s “first order of business,” while Mr. Obama ordered Democrats not to “rescue” the GOP by helping to pass a “TrumpCare replacement.”

If I were one of the Democrats ordered to do that, I’d ask President Obama, what if they offer changes that will make things better? 

Getting over the hump of failure

In the book,  The Up Side of Down: Why Failing Well is the Key to Success, McArdle writes about how cold-call selling companies help get new people over the hump of facing lots of rejection and failure:

Set specific goals for input, not output.

Record your effort.

Use a script.

Surround yourself with other people who are going through the same thing.

These are good steps to keep in mind for learning anything.

As a youth soccer coach, I’ve found that this works well to get kids who are mildly interested in soccer to practice more.

Extremely interested kids don’t need help getting over the failure hump. They don’t care how long it takes to learn some new skill or to become a better player, because they enjoy the process so much that their failures don’t seem like failures to them. These kids are every coach’s dream.

Kids who are mildly interested, however, live with a worldview of instant gratification and leveraging steps like McArdle outlines can help them over the hump.

Let’s focus on one soccer skill as an example: juggling. Learning to juggle a soccer ball takes lots of practice. There are no shortcuts or tricks.

Juggling isn’t a game skill. But, it develops ball reaction, 1st touch, anticipation and foot-eye coordination and most good soccer players are, at least, fair at juggling the ball.

Set specific goals for input, not output

I’ve tried a few ways to get kids juggling. One way is to set a ‘high score’ goal. For example, be able to juggle 30 times by X date.

That works for the players who are extremely interested in soccer. They don’t need that goal because they are already doing the work, but the goal is just a concrete measure that gives them something extra to strive toward.

But, that type of goal doesn’t work for the mildly interested who see every attempt that falls short as a heartbreaking failure and will quickly fall back on activities they are more interested in or provide more instant gratification (like video games).

To get mildly interested kids to do the work, I’ve found it’s better to frame the goals in terms of inputs, rather than outputs.

One way is to set a goal for number of juggles. Get 100 juggles on each foot and alternating every day. Now they aren’t focused on the failure of each attempt, but rather getting to the total number of juggles and they make quick progress.

I’ve also found adding in a time goal helps. How long does it take you get to 100 juggles? That adds a dimension of the goal that focuses on quality because you shorten your time by dropping the ball less and keeping the ball low on your juggles, which takes a fine touch.

Record your effort

It also helps to record your effort. In the book, McArdle says it’s good to be able to see what you’ve done. I think it’s also good to be able to see the progress you’ve made.

With juggling, progress tends to be slow and it’s easy to forget that two weeks ago you could only get 7 and now you are getting 9. Recording your effort helps you remember that.

It also reminds you of the work you put in to get there, which hopefully keeps you motivated to keep going.

Use a script

In the case of juggling, the script is ‘get 100 juggles each foot plus 100 alternating every day’.

I’ve seen lot of kids make scant progress with random kicking of the ball. They tell me they practice, but when I ask them what they do, their practice had no purpose. Following the script gives them purpose.

Surround yourself with other people going through the same thing

This is where the team comes in. They’re all going through the learning process and it helps them to know that their buddies have the same trials and tribulations.

Why prices in only three parts of the economy grow faster than inflation

There’s only three parts of the economy where prices have consistently outpaced inflation: education, health care (including prescription drugs) and real estate (in some areas) over long periods of time.

I often try to explain why to friends, but have not articulated it well. Arnold Kling says why succinctly:

…these are all sectors in which public policy subsidizes demand and restricts supply.