Keeping the government out of medicare.

There is a really silly phrase going around now among opponents of ObamaCare to incite fear of the--in my opinion-disastrous health care proposal: "keep the government out of medicare." By its nature the saying is paradoxical and illogical; Medicare is a government program; therefore, it is impossible to keep the government out. But this quote does bring up an interesting idea and one that people should fear. When government provides a service, it is the job of the politicians to decide how much or how little of a service to provide. Whether you are okay with this or not--I'm not--it is undeniably rationing. The problem is that when government is faced with the inevitable rising costs inherent in a ponzi-scheme like medicare, government has three options: raise taxes on the relatively young and poor to give to the relatively older and wealthier, increase the size of the debt, or limit services provided. All three of these options are unappealing, but what is really terrifying is the fact that millions of elderly Americans rely on the government--and hence, on other taxpayers--to support them. I argue that through Medicare we overspend on health care for the elderly, but it is terrifying that politicians in Washington are in charge of deciding the right amount of benefits elderly Americans should receive. What is even more terrifying is that this type of system might be expanded to include every American. I don't want Barney Frank and Chris Dodd in all of their brilliance to be in charge of how much health care and what type of health care will be provided to people in my age, socioeconomic, or politically-affiliated category.

Ted Kennedy

Well, Ted Kennedy recently lost his battle with brain cancer. I want to take a moment to discuss Ted Kennedy's legacy. To me, his legacy will be one of expanding the role of the federal government and in the process diminishing the freedom of all Americans. He did do some important and greatly beneficial things as Senator. He was instrumental in deregulating the airline and trucking industry. Born in the 1990's, it is hard for me to imagine what a nightmare dealing with an extremely over-regulated airline industry would have been. With this deregulation, Kennedy helped improve the lives of millions. But the Liberal Lion of the Senate will be remembered for his big government programs and his advocacy. These programs have been ineffective at best or destructive and costly at worst.
As far as his replacement goes, I find it blatant hypocrisy on the late Senator's part to request legislation that would allow the governor to pick a replacement senator considering that the law was changed from this arrangement due to Kennedy's desire when Kerry was running for President and Romney was governor. Hopefully the law is not changed, so America is not stuck with another liberal lion in the Senate.

Bernanke?

Federal Reserve Chairman, Ben Bernanke, has been often criticized for his role as Fed Chairman in the current crisis and in the handling of the "Recovery Plan." Others credit him for helping America avoid a severe depression. I am tremendously skeptical of the Federal Reserve's role in the "recovery." Actually, I think that the recession/depression will be longer due to the Federal Reserve and the stimulus plan. Unemployment today--with the stimulus plan--is higher than the predicted unemployment rate made before the stimulus package for a stimulus-less scenario. This same prediction was used to justify the plan and to create a sense of urgency. This should tell us a few things: economic forecasting is hard if not impossible; we should be aware of incentives at play when an administration comes out with an economic forecast--in other words, politicians are concerned with passing their agenda not with the truth. This is not only true for Obama, but for Bush and most other politicians, as well.
But I digress. Obama plans to nominate Bernanke as Fed chairman. Bernanke has changed the role of the Federal Reserve Bank from a secretive central banking agency that controls and inflates the American currency to a central planning agency that controls and hyperinflates the American currency AND bails out mismanaged corporations. Even if Bernanke is responsible for the stabilization of the stock market, why should this be celebrated? If we all gave our money to corporations we would expect corporations to be wealthier and in better conditions. But the stock market does not measure the health of the economy; it is one market that shows the anticipated profitability of corporations. It is wrong to conflate the two.
The Federal Reserve must be audited and destroyed. The Federal Reserve is destroying the value of our currency, and it allows politicians to partake in huge deficit spending. Inflation is essentially a secret tax, and the existence of the Federal Reserve Bank allows politicians to make promises for new spending while never focusing on the tax side of the issue. This permits deficit spending and politicians almost never have to face their constituents with a potential tax increase.
I am not even a sound money advocate. I actually think that Fiat currency could arise in a world with free banking. I believe and advocate for a free banking system, or, maybe more pragmatically? as Milton Friedman suggested before his death , a fixed money supply growth system where the money supply increases by a certain amount each year. If there is one thing that this current recession/depression should teach us, it is that the Federal Reserve bank cannot be trusted with fine tuning our economy through the control of the money supply.

Young Americans for Liberty

I recently joined Case Western's chapter of Young Americans for Liberty. I would encourage anybody who might be interested to join. Ask around at your college campus for more information. It is an important time in American history and getting involved on your college campus can have a tremendous impact. If you go to Case Western Reserve University and you are interested in joining just talk to me. It is a libertarian/limited government advocacy group.

Health Insurance vs. Health Care

This is a great explanation on the differences between the two. Professor Roberts explains the difference in a way that is concise, easy to understand, and intellectually stimulating. What do you think?

Does aggregate spending address a lack of regulations?

I have always considered recessions to be a time when resources are reallocated to more efficient uses. The causes are often difficult to identify. I think it is probably true that Federal Reserve policy has much to do with this recession. I also think past bailouts and the existence of the FDIC had created a severe moral hazard problem. Although I do not think that regulation would have been helpful or beneficial, I think it is certainly possible that America's relatively free and open economy allowed for the spread of financial instruments that turned out to be full of hidden risks. Read Nassim Nicholas Taleb's The Black Swan.
The market is and had been self-regulating against these types of financial devices but governmental and other types of intervention have slowed down this problem. There is no free lunch.
However, for argument's sake, let's assume that lax regulations were responsible for the recession. Why would an increase in aggregate spending be an appropriate solution? It does nothing to address the underlying problems of this scenario. It seems that fiscal stimulus merely attempts to address the symptoms of the disease: a drop in consumer spending. But, in reality, this drop in consumer spending isn't some mysterious vacuous change with no other causes. Fiscal stimulus is (unsuccessfully) attempting to cure the disease by ignoring it. It is a political strategy.
I am not saying that a more regulated economy would be a healthier economy, I am just pointing out logical fallacies working within the paradigm of the left.

Cash for clunkers

Presumably, there are two rationales for this type of economic stimulus. First there is an economic rationale and secondly there is an environmental rationale. Both rationales are nonsense and just an attempt to cover up the real reasons to implement this program. Let's explore:

• The economic rationale is severely flawed. The theory relies on traditional Keynesian thought. Increasing aggregate spending will help increase employment. The problem is that you can't improve the economic conditions by destroying useful resources. Why not apply this economic principle to everything else? Let's burn down our houses and destroy everything we own, so we can rebuild everything. This is Bastiat's broken window fallacy. Resources are wasted to destroy the used cars. Resources are used to build the new cars. This is taking resources away from other uses that would be more productive. The claim is that since resources are underemployed in this economy, resources are not being taken from other sources. However, by employing these resources in an inefficient manner, cash for clunkers slows down the reallocation of resources to their most efficient use, thus prolonging the recession. This reallocation of resources is inevitable and vital to a healthy economy. Another problem with increasing aggregate spending is that it attempts to ignore the reality that Americans have had a negative savings rate for years. This is unsustainable. Economists like Paul Krugman acknowledge this reality, but then claim that we do not have to deal with it. Increasing savings is necessary even if it causes some pain in the short run. It cannot be avoided. How does one reach the long run without going through the short run first?
• Real environmentalists are not in favor of cash for clunkers. The problem is that cash for clunkers only focuses on fuel efficiency while ignoring the total amount of resources used. It takes tremendous amounts of fossil fuels to build cars and to destroy cars. Also improvements in miles per gallon become marginally less meaningful as miles per gallons increases. Consider: Going from 10 mpg to 20 mpg is more meaningful than going from 20 mpg to 100 mpg. How? Well, a 10 mpg car uses .1 gallons per mile or 10 gallons per hundred miles. A 20 mpg car uses .05 gallons per mile or 5 gallons per hundred miles. This is an improvement of 5 gallons per hundred miles. Using the same mathematics, a 100 mpg car uses 1 gallon per hundred miles. So going from 20 mpg to 100 mpg saves only 4 gallons per hundred miles. When you take into account the fuel used to build and destroy the original car, it is probably a net negative to switch from a 25 mpg car to a 50 mpg Prius. These old cars still have utility and should be recycled if conserving resources is an important goal. The reason that it is expensive to implement this program is precisely why it is bad for the environment: tremendous amounts of resources and fossil fuels are used. Also if more fuel efficient cars are being used, drivers may be able to afford to drive more offsetting any possible gains in fuel efficiency.

• Here is what one environmentalist had to say.

Preventative Care?

Does preventative care work? A PLoS study attempted to determine the effects of smoking and obesity on health care expenditures and on life expectancy. The statistical study led to the conclusion that obesity decreased life expectancy, but contrary to popular belief actually increased lifetime health expenditures.

"In this study we have shown that, although obese people induce high medical costs during their lives, their lifetime health-care costs are lower than those of healthy-living people but higher than those of smokers. Obesity increases the risk of diseases such as diabetes and coronary heart disease, thereby increasing health-care utilization but decreasing life expectancy. Successful prevention of obesity, in turn, increases life expectancy. Unfortunately, these life-years gained are not lived in full health and come at a price: people suffer from other diseases, which increases health-care costs. Obesity prevention, just like smoking prevention, will not stem the tide of increasing health-care expenditures. The underlying mechanism is that there is a substitution of inexpensive, lethal diseases toward less lethal, and therefore more costly, diseases [9]. As smoking is in particular related to lethal (and relatively inexpensive) diseases, the ratio of cost savings from a reduced incidence of risk factor–related diseases to the medical costs in life-years gained is more favorable for obesity prevention than for smoking prevention."

Like all statistical studies, the results may be flawed, but this is really besides the point. What if some forms of preventative care actually increase health care consumption? They may be good for public health, but they might be costly. What is the ultimate goal of a public health system. Is it to control costs or to increase public health? It is possible to imagine that these goals can be mutually exclusive in certain instances. How will cost effectiveness be determined? Is cost-effectiveness defined as what is "best" for society or what is "cheapest" for society.

We get into issues of nanny-state activity on the part of government as well. Let's say that prevention of smoking will reduce health care costs. Is it anybody else's business if I smoke (assuming I don't effect their health)? A government run system gives an excuse for further intrusion into the lives of the people in the name of reducing costs. I feel that part of what makes America great is the freedom to make our own choices. Skydiving is unsafe, but we allow it becuase people should have the freedom to choose how to behave. If I am paying for everyone else's health care I want to pay as little as possible. When done through the government, one can imagine restrictions on certain types of behavior in an attempt to reduce people's "burden" on the health care system and on "society." From an individualist's perspective, this is troubling.

Two things are needed:

• Stake in the game: If I am going to participate in unhealthy or possibly expensive activities, I need to anticipate dealing with the consequences of my decision. Assume treating the health problems associated with smoking is expensive, one must be responsible for dealing with these expenses.
• Freedom to choose: What makes life truly fulfilling is the ability to make choices and deal with the consequences of these choices. Restrictions on certain types of behavior in the name of public health or public costs are troubling. Different people have different value systems and make different choices. This is up to them, and I feel that it is somewhat paternalistic for the federal government to disallow certain behaviors. We must resist the urge to try to minimize people's burden on the system. I expect we'd be unhappy with the results.

I am open to preventative medicine, especially if it is cost effective and would help public health. But I wonder, if it really is cost-effective why is it not being done today? Is it because people do not have enough skin in the game or is the profit-motive for insurance companies broken?

More Than A Tax Number

I am often dismayed by tax-first reasoning. It seems that many of the arguments that people make for a particular piece of legislation or reform rely on net tax burden. For example, a common argument for legalizing immigrants is that they will help increase tax revenue to pay for things like the stimulus biil or Obama-care or the Iraq War. This is pretty silly. Increased tax revenue does not mean better economic conditions. The reasons to support amnesty for illegal immigrants are two-fold. The economic case for free-movement of labor is as rock solid as the case for free trade. In fact, trade is not free without the ability for labor to move unrestricted. The second, and most important reason, is that it is the right thing to do. Why should anyone person have the right to tell anybody else where they can or cannot live? Immigrants' lives depend on it, and no one has the right to tell any other person that they cannot move to improve their standard of living merely due to the location of their birth.

The same is true for legalizing marijuana. Yes the War on Drugs has been a miserable failure and a complete waste of money, but weed should be legalized because its health effects are negligible and because legal adults should be able to make their own decisions without Big Brother's restrictions, not because weed could be taxed and increase federal tax revenue. This is a tertiary benefit. When you hear discussion of a piece of reform listen for this. I always ask myself, "is it good or bad?," not "how does it affect net tax revenue?"

What about inequality?

If you remember all the way back to 2007, the talk of the town was about inequality. There were many complaints, most flawed. There was the view that supply-side tax policy was to blame for ever-growing economic policy. Bush's across the board tax-cuts, disproportionately benefited the rich. This allowed the rich to benefit at the expense of the poor. There are other arguments; some are better than others. I will contend that meaningful inequality has actually decreased, but more importantly I will contend that inequality is unimportant. If a Haitian immigrant comes to the U.S. and makes $7 an hour working at a low-skill job and a CEO makes billions employing immigrants and low-skilled natives has unemployment increased or decreased? Both the Haitian immigrant and the CEO are in a better economic condition, yet statistical inequality has risen dramatically. As long as everyone is equal under the rules of the game, equity of results is not very important.

Lets assume that inequality had increased up until 2007, why are we not hearing about inequality these days. We are actually seeing a shrinking amount of "inequality," yet nobody is better off. Would we rather have a more "equal" society where everyone is worse off, or a more "unequal" society where those who work are better off?

Will illegal immigrants be covered?

I am opposed to Obama-care, but not for all the same reasons as your typical right-wing nut. I am opposed to Obama-care because I think that it will neither lower costs or improve quality of care. I am also extremely skeptical of government and oppose this massive centralization of power by the Federal government. I will discuss my opposition and skepticism of this bill in later posts. For this post, I want to focus on the coverage of illegal immigrants. I have a solution; legalize every single one of these immigrants. I am disturbed by the anti-immigrant rhetoric coming from the right. Once again what is needed is immigration reform. There are issues that government should be dealing with: immigration reform, tort reform, removing restrictions on foreign nurses and doctors, loosening licensing requirements, education, and free trade, etc. These are the issues when the economy is good and when it is bad. I saw a letter to Newsday from a registered nurse who was saying that it would be terrible to bring in foreign nurses and that we need more American workers. Don't want those high skilled, productive workers ruining our economy by lowering the price of health care. Then the government would have no excuse to accumulate this massive amount of power. There can be no real conservative(limited government) movement if this bill passes because people will be dependent on government. Seniors will not vote against medicare and a dependent population will not vote against Obama-care once it is in place. This fear of foreign workers on both the distribution and consumption sides of health care is terribly unhelpful.

Why blog?

Friends and family know that I attempt to stay well-informed on the current political and economics happenings in the world, but I am dismayed by the lack of intellectual honesty and skepticism coming from the main stream media. Issues are conflated and important questions are never asked. My opinions are radical and my suggestions pragmatic. My goal is to start an intellectual community, through my blog, where people are unafraid to ask important questions even if they are politically incorrect. I will also comment on anything else that interests me. This is a critical time in world and American history, and I believe that I have some interesting thoughts to share. Comments are extremely welcome. Enjoy.