“Markets” in everything

by on July 11, 2009 at 1:59 am in Political Science | Permalink

The deal with doctors could come at a steep price: a $250 billion
fix to a 12-year-old provision in federal law intended to limit the
growth of Medicare reimbursements. The American Medical Association
and other doctors’ groups have sought to change or repeal the
provision, and they are likely to try to extract that as their price
for boarding the Obama train, people tracking the negotiations said.

Wal-Mart, the nation’s largest private-sector employer, agreed recently
to support requiring all big companies to insure their workers. In
exchange, Wal-Mart said it wanted a guarantee that the bill would not
“create barriers to hiring entry-level employees” – in effect, code
words to insist that lawmakers abandon the idea of requiring employers
to pay part of the cost for workers covered by Medicaid, the government
insurance plan for the poor.

“It’s kind of a give-and-take, quid pro quo kind of environment,” said Tom Daschle, President Obama‘s
first choice for health secretary, who remains in touch with the White
House on health care issues. “I think that the stakeholders wouldn’t do
this if they didn’t think there was something in it for them.”

…Over the past year, Mr. Baucus, Democrat of Montana, has
strong-armed industry groups, warning them not to publicly criticize
the process if they want to stay in negotiations.

Mr. Baucus, in
turn, has said little about his talks with industry players. On
Tuesday, he said only that he was “heartened” by how many groups were
supporting the health care overhaul.

That's the NYT reporting, not The Weekly Standard.  Here is much more

How should I feel if Obama, or maybe Congress, threatened to re-zone my neighborhood — unfavorably — unless I support an active Afghanistan plan on my blog?  (Should it matter if I've incorporated the blog as a business?  As an association?  Even if there is no corporate right to freedom of speech, should there be "forced speech"?)  Should it help much if the intimidation against freedom of speech is for a benevolent end?  If Republican Presidents had done something similar?

Might it be correct to call this "evil"?  I have seen "evil" defined as "morally bad or wrong." 

Of course these deals are not unrelated to why health care reform — if we get it — won't in fact solve most of the major problems the sector faces.

Tomasz Wegrzanowski July 11, 2009 at 6:26 am

I never understood how freedom of speech implied shilled industry lobbying.

Corporations don’t have any “freedoms”. Lobbyists are paid to say particular things, so their speech is not free anyway.

Lonely Libertarian July 11, 2009 at 8:35 am

And yes Tyler it is “Evil” – with a capital E – another is calling what they are trying to do “Health Care Reform” – the reforms being talked about are not going make us healthier or better cared for in any meaningful way – one might make a strong argument for the result being just the opposite.

I have heard very little [no] discussion of the “moral hazard” aspect of universal coverage – how different will the uninsured behave when they are insured – and what are the costs [or benefits] of such behavioral changes.

E. Barandiaran July 11, 2009 at 9:50 am

Talking about Evil, there is a lot in NYT and WP. Another NYT story about health reform starts with this sentence “House Democrats will ask the wealthiest Americans to help pay for overhauling the health care system with a $550 billion income tax increase, the chairman of the tax-writing Ways and Means Committee said Friday.” (see http://www.nytimes.com/2009/07/11/health/policy/11health.html?_r=1&hp) They will ASK. I understand it is not the first time they use the word “ask” for a proposed tax increase.
Regarding the WP, today we can read this letter from the Ombudsman about the idea of having market salons to exchange information: http://www.washingtonpost.com/wp-dyn/content/article/2009/07/11/AR2009071100290.html?hpid=opinionsbox1
Tyler, I hope you start to address regularly the increasing corruption of US politics and media.

Geoffrey July 11, 2009 at 10:13 am

Your analogy seems misleading in several ways.

First, unlike in your analogy, all the elements of the pressure from the Obama camp are in a single area, health care.

Second, Wal-Mart, like many corporations, is actively “negotiating” the health care issue, presumably with tens of millions of dollars of little-publicized lobbying efforts. I assume that if Wal-Mart doesn’t like what gets negotiated, it will use financial incentives to persuade congressmen to vote against it.

In other words, Wal-Mart is a very active agent in all of this, attempting to negotiate the best deal it can. As an active party, it puts pressure on other parties, and is in turn subject to pressure from them. It’s not clear to me how, once Wal-Mart entered the scrum, it would be possible, or even desirable, to keep it from being pushed this way or that.

E. Barandiaran July 11, 2009 at 10:57 am

You’re right. And the worst is when big media unite with government, although NYT and WP may not be as big as they think they are.

DanC July 11, 2009 at 11:23 am

No Geoffrey

Obama is putting pressure on health care, finance, transportation, and energy. He is trying to direct key elements of close to half the private economy.

Forcing firms to hire lobbyists to protect themselves from government control is a form of taxation. Criminal gangs call it a street tax or protection money.

Negotiation is not costless. It is a burden on society.

Government holding a gun to a firm’s head is hardly simple, open, or fair negotiations.

Vehical Driver July 11, 2009 at 11:46 am

I never understood how freedom of speech implied shilled industry lobbying.

Because shilled industry lobbying is speech, therefore is covered under freedom of speech.

If individuals choose to form interest groups, corporations, labor unions, organized religions, or other sorts of organizations to speak on their behalf collectively, it is still a natural extension to their individual free speech.

What makes this different from any other business negotiation? “I’ll make a deal with you, but if you publicly bash my company, I’m not going to do business with you.” That’s essentially what the Obama camp is saying.

Because Obama is an elected official who supposedly is working for all Americans (including those Americans who oppose his policies), and not a CEO of a private corporation working to maximize profit for its shareholders. This isn’t a business negotiation, it is a supposedly democratic state institution using the implicit threat of violence to squash criticism.

But yes, I understand… Everyone supports freedom of speech, except for the speech they don’t approve of. No one actually comes out and admits they want to censor their political opponents, they instead make extremely convoluted arguments about how censoring their opponents isn’t really censorship.

It isn’t so much that people are pro-censorship that is so annoying… strict censorship has been pretty much thought to be good throughout human history, except for a small pocket of time when liberalism was in fashion. What is so annoying is the capability of self-delusion among the people posting here. They can endorse extremely egregious suppression of free speech, acts that they would find outrageous is done by their political opponents to suppress their own opinions, and yet they still probably think of themselves as fairly liberal pro-free-speech guys. Just admit that you guys support despotism as long as your guy is in charge, OK?

mulp July 11, 2009 at 12:02 pm

Lonely Libertarian wrote: I get a bit riled when I hear the words mandated coverage. I was wondering if Tyler had any thoughts on when mandated coverage moves insurance from being just insurance to becoming a tax.

We are in our early 60s and a couple of years away from medicare – I/we do not “need” insurance coverage

So, let me get this straight, you don’t want a mandated tax funded health care program for the next couple of years because you will soon be covered by mandated tax funded government run single payer health care?

What I don’t understand is why you haven’t gone out and bought that $5000 deductible policy for yourself; I have, and at 61 it now costs me $9400 a year from the free market profit maximizing competitive insurance market; you might be able to cover yourself and your wife for $15,000 a year, and still pay all your doctor bills, assuming you have any money left over.

Of course, insurers assume that anyone who is willing to pay such high premiums must not be that healthy or else they are rich and looking to protect their assets. If you don’t have much, then what are they going to do – euthanize you and sell your body parts? No, you will get free government health care, or stiff some doctors and hospitals for the bills.

Tim July 11, 2009 at 1:10 pm

No, this is not like any other business deal. A business deal involves two parties seeking to exchange values for more valued alternatives. And it is always voluntary.

This is not voluntary. This is Mr. Baucus and Obama saying “Look, if you don’t want us to regulate you to hell, you’re gonna work with us so we don’t have to work as hard at robbing you.” That is not voluntary at all, for one very simple reason: Only Mr. Baucus and Obama have the power of guns to force the deal.

stanfo July 11, 2009 at 1:24 pm

Ah, the aristocracy of pull.

J July 11, 2009 at 1:42 pm

Hmmm… I find it interesting that everyone seems to feel like it’s the AMA or WalMart that’s being “pushed around.”

Though in most ways I don’t consider myself a “libertarian” (at least insofar as many of the GMU economics profs are libertarians), I’m wholly against corporate liberalism or government/business horse-trading over laws and regulations, etc. — a point on which all libertarians seem to agree.

However, I’m worried more about the effect of the AMA, WalMart, pharma, etc. on the government’s drafting of the legislation, and less so on the legislation’s effect on the above. After all, without government protection, etc., groups like the AMA and its members would never have the power, influence, etc. that they have today, and the same goes for the drug companies and on and on.

To put a Polanyian spin on things, in the way American capitalism works today, there’s no such thing as an entity or market independent of government protection, regulation, etc.

If the government and the AMA were having real negotiations, the Obama administration could just as easily say “We’re creating a single-payer system, we’re going to pay you whatever we want for procedures, and you’re either going to take it or we’ll completely deregulate medicine, or at the very least start allowing more immigration of doctors from lower wage countries.”

mulp July 11, 2009 at 1:57 pm

Lonely Libertarian write: But how does that matter – we have several years to navigate and I would prefer to have much more control over my choices and decisions than I am likely to have if we enact health care reform.

If you or your wife developed cancer, clearly it would be wrong for an insurer to cover you, because after all:
a person in good health in their twenties – they will “be asked” to subsidize … us.

Of course, if a twenty year old has an accident that breaks his neck, then they will be asking everyone else to subsidize them for decades to come.

Unless we apply the economic principle of creative destruction: euthanasia and sale of his body parts, helping to maximize the productive people in society who are clearly productive because they have the wealth to pay for body parts.

You do think it would be wrong for you to be expected to pay for the care of a twenty year old paraplegic who may or may not ever be productive, don’t you?

And what of a child born with Downs or cleft palate or ….

Health care becomes very simple if we treat people like we treat machines. Is it more profitable to repair it, or should we scape it and sell it for scape?

DanC July 11, 2009 at 2:35 pm

OK mulp. Markets are unfair, profits are bad, government control and regulation are the path to prosperity. At least you must be very happy with President Obama. Heck, some Russians miss Stalin, so you never can tell how many freedoms some people will give away for a few poorly run social programs.

And mulp the next time you seek medical care tell those providing services that they make a living from the misery of others, exploiting the ill, for profit. Tell them they need to take a pay cut because you don’t think you are getting enough services given what you pay.

And J, your comments make no sense. You think the government should just stop the pretense of negotiation and implement whatever they want. That is real negotiation?

And Steve, read Tyler’s link, read this WSJ piece http://online.wsj.com/article/SB124718217595120225.html. Congress is using carrots and sticks. The carrots are increased taxes (in various forms) that they will distribute to their “friends”. The sticks are higher taxes and increased regulation (which are really just different types of monetary punishment) for those who are not helpful.

steve July 11, 2009 at 6:43 pm

DanC-Thanks for the link. Again, hearsay and innuendo. No way to verify. In 2006 they were told they need to play ball? I would assume both sides are spinning here. I would think, as I said above, they just want to avoid decisions being made by emotional appeals on TV.


Lonely Libertarian July 11, 2009 at 7:58 pm

Over on Carpe Diem I ran across this great quote from Thomas Sowell.

The context was the housing mess – but it would seem to apply equally to healthcare…

“Few things blind human beings to the actual consequences of what they are doing like a heady feeling of self-righteousness during a crusade to smite the wicked and rescue the downtrodden.”

Ricardo July 12, 2009 at 6:13 am

Something about your overall tone suggests to me that you would not want national healthcare to cover illnesses that smokers, drinkers, or the morbidly obese get because of their personal choices… yet what gives the government the prerogative to declare healthcare “a right” or at the very least something under its dominion…

Under the status quo, if a smoker, drinker or one who is morbidly obese walks into an emergency room with a serious medical problem, that person is treated even if he doesn’t have a penny to his name. A minor exception is that chronic drinkers do not get liver transplants but that is due to the scarcity of donor organs rather than to cost concerns. Otherwise, we don’t currently deny health care to people who make poor life choices and cannot afford their own care. Government spending is already almost 50% of all health spending yet the scenario you envisage doesn’t seem on the horizon.

it gives me a perspective of what it’s like to be uninsured, and it’s not as horrible as you might imagine

Sure, driving without a seat belt isn’t all that horrible either. Unless you are unlucky enough to be flung face first through your windshield at 35 mph. At that point, you will have wished you took precautions. The other way that not having health insurance isn’t that horrible is if you manage to stiff the hospital on the bill so that they have to make up for the loss by overcharging some uninsured sap with money in the bank.

KK slider July 13, 2009 at 11:04 am

Tyler, what do you think about the movie Sicko, and also the Bill Moyer’s interview recently with the healthcare industry exec?

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