This movie is essential viewing for all voting citizens. Schedule 30 minutes to be educated about the looming debt crisis. This is a bipartisan movie which was created largely in response to the Bush years.
The graphical demonstration of historical debt and the social security time bomb is very illuminating. One bone I have to pick is the simplistic description of the 80's as " unprecedented" in peace time spending. The fact is, it is okay to go in debt if you get a return on investment. WWII: great return on investment. Winning the cold war and creating 20 years of prosperity? Great return on investment. So President Bush, to me, is at fault for wasting the Reagan dividend. He gave us TSA, earmarks, and Medicare part D. I agreed with Operation Iraq Freedom, but we should have been making harder choices at home.
The other bone to pick with this movie is the lack of dynamic tax modeling. The 2003 Bush tax cuts are largely misunderstood. Those tax cuts created more revenue for the government. It turns out that when you reduce penalties to wealth generation, more of it gets generated. Kind of like how McDonalds makes more selling Big Macs for 2.99 as opposed to 4.99. So I say "yea!" for the tax cuts, but why squander this excellent tax lesson on expanding government?
My RX for the national debt is simple: the FairTax along with a balanced budget amendment. Raising taxes on the rich is the wrong answer. If anything we need a flatter tax with less deductions and credits and one which includes all voting citizens not just the top 50% of tax payers.
Monday, April 12, 2010
Thursday, April 1, 2010
Gun-point analogy doesn't hold water
(This is my rebuttal to BadTux's explanation of why health costs defy free market forces. There it is argued that inelastic demand allows health providers to hold patients hostage for any amount they want to charge)
BadTux, at least your honest that Obamacare IS the takeover of the insurance industry that Obama refuses to admit. He got this through by hook and by crook. IF we wanted to make the insurance companies into a public utility, it should have been sold to the American people that way, not as a trojan horse. BTW, I agree with you that single payer is more efficient than Obamacare as it now stands.
I flatly reject your points numbered 2 and 3. I have two points to make about your argument #2 (I'll label mine using letters) A. Your point about inelasticity of demand could be applied to food. Why don't farmers hold us all at sickle-point for all our money because we'd die if we didn't eat? Because supply is not inelastic (at steady state and when natural resources are not a limiter). The more people are willing to pay, the more supply springs into existence until an equilibrium is reached where prices cannot rise further. (The price is where the supply and demand curves intersect.) And there are ways to create the conditions for a steeper supply curve. Like in France where they subsidize medical training.
But you're gonna say supply is inelastic when it comes to highly trained doctors who can perform transplants or rare treatments. Nope. It is only temporarily inelastic as doctors cannot be trained overnight. The only way the gun-point scenario can exist is if doctors operate as a cartel. And I agree the do! So what do labor cartels do to inflate wages? This is classic Adam Smith BTW: they raise barriers to entry! Yes, American doctors raise barriers to entry into their profession. Obamacare does nothing to help with this. The way to ensure that the cartel cannot hold people at gun point is to break the cartel. This means creating more paraprofessionals that require fewer years of training, it means relaxing accreditation rules to allow more medical schools. It means allowing pharmacists to prescribe drugs, optometrists to perform laser eye surgery, etc. etc. It means allowing tradeoffs wherein inexperienced doctors are allowed to perform heart surgery if the patient is willing to accept the risk (and benefits in terms of cost). There are so many ways to solve the inelasticity of supply and Obamacare does none of it. Badtux, have you read my post Freedom-based Vision of Health Care?
Okay point B) to your point 2. The heart surgery example is not what I was speaking of when I said we should eliminate all middlemen. That is an example where insurance is well suited. We do have middlemen for high stakes items. But we don't need middlemen for routine maintenance. You maintain your automobile without insurance don't you? You only see the insurance company for an accident. As pointed out recently by David Goldhill in the Atlantic, there is no reason whatsoever why people shouldn't be able to budget for and pay directly for 90% of the healthcare they will need during their life. Especially things like pregnancies, vaccinations, eye exams, etc. Why in the name of Pete do we need to buy insurance for anything but a catastrophe? How much do you think food would cost if we had a food insurance system with a bureaucracy to pay for it? Even if your inelasticity argument carried weight for heart surgery, it wouldn't for 90% of the reasons why we see a doctor. Obamacare takes over the 90% that is non-catastrophic. In fact he abhors the concept of catastrophic only insurance (insurance was invented for catastrophes)
Now point C) to your point 3. Do you mean to say that the writers of the constitution meant that the tax code should be used to influence (socially engineer) individual behavior? Please! How much have you studied the constitution? I've read the Federalist papers and Chernow's biography of Alexander Hamilton, the original protagonist of both taxation and the welfare clause. The power of taxation was to fund the federal government not to manipulate people! The revenue was to enable the government to perform its enumerated powers, which for Hamilton and Madison meant mostly national defense. Manipulating people was not the primary motivation. (that the Whiskey tax might reduce liquor consumption as a side benefit was completely adjunct to raising revenue) And for the record, I don't support the home interest deduction either. I've always been consistently against using the tax code to micromanage people. In fact, the only good solution is the FairTax.
In a followup, you said the fact that uninsured who have no middleman and who get charged exorbitantly are proof the we need middlemen to fix prices. This again harks back to my catastrophic versus routine care point. We do need middlemen for catastrophes. But we'll all benefit when we eliminate middlemen for 90% of non-catastrophic care especially the uninsured who benefit from lower prices more than any of us. The exorbitant fees (which are usually negotiated down even for the uninsured as pointed out in the article) are a reflection of a bureaucratic 2-middleman system that discourages price transparency. They have all the incentive in the world to hide the true price of care because demand is not checked by price but by bureaucratic wrangling. Obamacare just enshrines this system into place while trying to cover the uninsured in a way that will ensure that the true price of medicine is never found and thus, capital will never flow to where a free people would want it to go.
BadTux, at least your honest that Obamacare IS the takeover of the insurance industry that Obama refuses to admit. He got this through by hook and by crook. IF we wanted to make the insurance companies into a public utility, it should have been sold to the American people that way, not as a trojan horse. BTW, I agree with you that single payer is more efficient than Obamacare as it now stands.
I flatly reject your points numbered 2 and 3. I have two points to make about your argument #2 (I'll label mine using letters) A. Your point about inelasticity of demand could be applied to food. Why don't farmers hold us all at sickle-point for all our money because we'd die if we didn't eat? Because supply is not inelastic (at steady state and when natural resources are not a limiter). The more people are willing to pay, the more supply springs into existence until an equilibrium is reached where prices cannot rise further. (The price is where the supply and demand curves intersect.) And there are ways to create the conditions for a steeper supply curve. Like in France where they subsidize medical training.
But you're gonna say supply is inelastic when it comes to highly trained doctors who can perform transplants or rare treatments. Nope. It is only temporarily inelastic as doctors cannot be trained overnight. The only way the gun-point scenario can exist is if doctors operate as a cartel. And I agree the do! So what do labor cartels do to inflate wages? This is classic Adam Smith BTW: they raise barriers to entry! Yes, American doctors raise barriers to entry into their profession. Obamacare does nothing to help with this. The way to ensure that the cartel cannot hold people at gun point is to break the cartel. This means creating more paraprofessionals that require fewer years of training, it means relaxing accreditation rules to allow more medical schools. It means allowing pharmacists to prescribe drugs, optometrists to perform laser eye surgery, etc. etc. It means allowing tradeoffs wherein inexperienced doctors are allowed to perform heart surgery if the patient is willing to accept the risk (and benefits in terms of cost). There are so many ways to solve the inelasticity of supply and Obamacare does none of it. Badtux, have you read my post Freedom-based Vision of Health Care?
Okay point B) to your point 2. The heart surgery example is not what I was speaking of when I said we should eliminate all middlemen. That is an example where insurance is well suited. We do have middlemen for high stakes items. But we don't need middlemen for routine maintenance. You maintain your automobile without insurance don't you? You only see the insurance company for an accident. As pointed out recently by David Goldhill in the Atlantic, there is no reason whatsoever why people shouldn't be able to budget for and pay directly for 90% of the healthcare they will need during their life. Especially things like pregnancies, vaccinations, eye exams, etc. Why in the name of Pete do we need to buy insurance for anything but a catastrophe? How much do you think food would cost if we had a food insurance system with a bureaucracy to pay for it? Even if your inelasticity argument carried weight for heart surgery, it wouldn't for 90% of the reasons why we see a doctor. Obamacare takes over the 90% that is non-catastrophic. In fact he abhors the concept of catastrophic only insurance (insurance was invented for catastrophes)
Now point C) to your point 3. Do you mean to say that the writers of the constitution meant that the tax code should be used to influence (socially engineer) individual behavior? Please! How much have you studied the constitution? I've read the Federalist papers and Chernow's biography of Alexander Hamilton, the original protagonist of both taxation and the welfare clause. The power of taxation was to fund the federal government not to manipulate people! The revenue was to enable the government to perform its enumerated powers, which for Hamilton and Madison meant mostly national defense. Manipulating people was not the primary motivation. (that the Whiskey tax might reduce liquor consumption as a side benefit was completely adjunct to raising revenue) And for the record, I don't support the home interest deduction either. I've always been consistently against using the tax code to micromanage people. In fact, the only good solution is the FairTax.
In a followup, you said the fact that uninsured who have no middleman and who get charged exorbitantly are proof the we need middlemen to fix prices. This again harks back to my catastrophic versus routine care point. We do need middlemen for catastrophes. But we'll all benefit when we eliminate middlemen for 90% of non-catastrophic care especially the uninsured who benefit from lower prices more than any of us. The exorbitant fees (which are usually negotiated down even for the uninsured as pointed out in the article) are a reflection of a bureaucratic 2-middleman system that discourages price transparency. They have all the incentive in the world to hide the true price of care because demand is not checked by price but by bureaucratic wrangling. Obamacare just enshrines this system into place while trying to cover the uninsured in a way that will ensure that the true price of medicine is never found and thus, capital will never flow to where a free people would want it to go.
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