Category: Political Science

Reversal of fortune markets in everything

Cote, a 56-year-old drywall finisher from Ogunquit, Maine, has found that with a little dye on his eyebrows and in his hair, he looks a lot like the Republican presidential candidate.

Cote starred as Romney in the “Rombo” ad paid for by the Rick Santorum campaign, and played him in a yet-to-be-aired reality TV show in which presidential impersonators live in a house together. (Fake Sarah Palin created drama by mistaking sleeping pills for allergy medication.)

Now, with the general election campaign just ahead, Cote is hoping to land gigs at corporate events, commercial shoots and TV shows that have meant big paydays for a lucky few candidate impersonators. He said he had already booked some “top secret” photo shoots that will have him on magazine covers and California billboards this summer.

It’s a strange place to be for Cote, who didn’t go to college, doesn’t have a savings account and is divorced — all traits that distinguish him from the erudite, wealthy and long-married 65-year-old Romney.

And yet there is competition:

Cote’s voice is higher than Romney’s, and he has a heavy New England accent. Then there’s the competition: With the race heating up, more wannabe Romneys are popping up, many with professional training in acting.

“This is going to be a challenge,” said Dustin Gold, Cote’s manager. “We’re taking a drywaller, trying to turn him into a country club guy.”

I wonder if it works the other way around.  The article is interesting throughout, including the photo and video, and for the pointer I thank Daniel Lippman.

Aaron Carroll on Medicaid Wars

Enough people have linked to this piece that I thought I should write a response, which you will find under the fold…

To start with a general remark.  Often defenders of ACA request some kind of conservative engagement with the policy, rather than voting for the 34th (?) time for outright repeal with no coherent story of replacement.  I’ve laid out a coherent scenario of how ACA could evolve into something which I consider better, and actually with only modest changes to the law itself.  The mandate gets narrowed, the system as a whole evolves into means-tested vouchers (which proponents such as Zeke Emanuel favor), and possibly HSAs are given a larger role again.  I say states will try to limit Medicaid growth, not that they should but that probably they can over the longer run.  Defenders of the current ACA don’t have to favor my analysis, but in fact what I get back is sheer annoyance from Carroll, repetition of Carroll from various others, and an attack from Krugman, with no substantive engagement on the policy proposal at all.

Carroll writes five times that he is annoyed by my piece, but in hardly any of those cases is he disagreeing with any position I took.  Let’s go through them one-by-one:

I get a bit annoyed when people claim that we can’t “afford” more government intervention or, god-forbid, single-payer. That kind of statement willfully ignores the fact that every country that has MORE government intervention spends LESS.

I most definitely did not say this and in fact I mentioned that single payer systems lower cost.  Spending more on Medicaid, however, will not save the U.S. money (the Oregon study shows this), whether or not we can normatively “afford” it.

I get a bit annoyed by the claim that an expansion of government insurance leads to lines and waiting when lots of countries have universal access and less of a wait-time problem than we do.

A significant influx of people into Medicaid, under current institutions, will lead to more queuing.  That is true whether or not you think other countries with single-payer have big queueing problems.  What I wrote was this:

Unfortunately, Medicaid has some of the worst features of single-payer systems. Typically, a single-payer system will bargain down medical prices, thus adding to affordability, but at the risk of having long lines of patients waiting for care. As it stands now, though, the low reimbursement rates of Medicaid already lead to long lines, or an inability to find a good doctor altogether, while the higher reimbursement rates of Medicare and private insurance keep health care costs high.

It’s even carefully worded “…at the risk of having long lines of patients waiting for care.”  Supply elasticities are positive and so single-payer systems do run this risk.  Yet I am clear that in critical regards the systems of other countries get the better end of this deal compared to the United States.

Another bit:

I get a bit annoyed by blanket claims that doctors won’t accept Medicaid. Such statements often ignore the fact that the majority of Medicaid beneficiaries are children and pregnant women. We don’t need all types of doctors to accept Medicaid patients in equal numbers. They also ignore the fact that lots of doctors won’t accept new patients with Medicare or private insurance, either.

It is very difficult to find a good doctor in northern Virginia who takes Medicaid and I speak from personal experience (helping others).  Or try any number of basic websites, with common quotations such as “Finding a Medicaid doctor constitutes a challenge…”  Medicaid dentists are hard to find.  Try calling say the Washingtonian “best doctors” list and see how many of them take Medicaid.  Large numbers of doctors do take Medicaid but overall they tend to be much worse and there are also problems with queuing.  Think about it: why would the lower payers end up first in line?

There is more annoyance:

I get a bit annoyed when people just claim government programs are “unpopular”. Like Medicare? I don’t think so. Is there any evidence that Medicaid is unpopular? I’d like to see it. Personally, I think that the fact that (a) all 50 states have bought in over time and (b) the Supreme Court just ruled that threatening to take it away is “coercive” speaks to the opposite. Additionally, polling shows the opposite of what Tyler (and lots of others) suggest.

I am sorry but this is a total “read fail.”  I am saying Medicaid (not “government programs” or “Medicare”) will become increasingly unpopular.  (In fact I am known for arguing that big government as a whole is quite popular.)  Every day in the newspaper there is handwringing by governors, not all Republican ones, about wishing to limit or escape Medicaid obligations.  A lot of them would prefer to get block grants and spend the money elsewhere (a simple question for Carroll: if Medicaid is so popular with voters, there is no reason to fear block grants to the states, right?  Voters surely will insist that Medicaid spending be kept at current levels or perhaps even increased.)  Daily Kos serves up plenty of evidence for the lukewarm support for Medicaid, as does Ezra Klein: “But, for a host of reasons, Democrats worry that Medicaid is more endangered than people realize.”  Also note how skimpy Medicaid coverage is in many states.  A lot of states don’t really try to cover poor adults, without children, at all.  Frankly this is standard fare, especially on the left, but somehow if I write it he gets annoyed.

If you poll people and ask them whether they favor health care for the poor, of course they will say yes.  The bottom line is this: right now we are borrowing about forty cents of every dollar spent.  As we move toward fiscal balance, which are among the most vulnerable programs?  Defense spending may be cut somewhat, but Medicaid is far more vulnerable than either Social Security or Medicare.  I didn’t know that was under dispute and in fact it really isn’t.

Some more annoyance from Carroll:

I get a bit annoyed at the blanket acceptance of the awesomeness of the free market in health care, when there is no phenomenal evidence of its success. And again, those countries with less free market are cheaper, universal, and often just as good. So why are we always trying to run away from them?

That is another “read fail.”  What did I call for in the column?

We would then have government-subsidized and mandated catastrophic insurance, and a freer market for other health care expenditures. We might even return to a health savings account approach on the noncatastrophic side.

I also note in the column that is not my first best, but we Americans probably cannot get easily to a first best system (for me a Singapore-style system, with single payer on the catastrophic side rather than mandates for private insurance purchase).  My accompanying blog post even noted that the HSAs could be supplemented with government funds, if it was so desired.

The real argument of the column is that ACA will fall apart for political reasons because it creates too many different groups with different treatment.  The “mood affiliation” of the column is something other than celebration of ACA, and so Carroll pulls out all of the old chestnuts and attacks them, rather than responding to the actual argument.  Basically he should go back and reread the piece itself.

*The Great Persuasion*

That is the new book by Angus Burgin and the subtitle is Reinventing Free Markets since the Depression.  As I had suspected, it is interesting.  Here is the core thesis:

To Hayek and the other founders of the Mont Pelerin Society, Friedman’s ascent within its orbit reflected the collapse of its attempt to integrate a restrained defense of free markets into a traditionalist worldview.  In the broader social environment Friedman’s rise portended, and precipitated, the triumphant return of laissez-faire.

One thing which strikes me reading this book, as it does when I reread Friedman’s 1962 Capitalism and Freedom, is how much market-oriented writers of that era were not focused on the problems of old people, even though today those problems take up a huge chunk of the budget of the federal government.

I found this excerpt interesting:

In stark contrast to the early post-war years, Friedman would conclude near the end of his career that “there are too many damn think tanks now,” adding that they simply “don’t have the talent for it.”

The new tug of war over Medicaid

My New York Times column is here, it has two parts, a prediction and a proposal.  The prediction:

Medicaid has never been especially popular, and when its expanded role becomes more widely understood, it is likely to become less popular still.

I am not expecting that governors will turn away nearly-free federal dollars outright.  (Though probably some will, here is an update on how the governors are reacting, which as I see it involves lots of bargaining.)  I am predicting that the extreme subsidies for states to hop on to the expansion will at some point weaken or go away.

Change might come soon. If Mitt Romney wins the presidential election, and if Republicans control both houses of Congress, they could turn Medicaid into a block grant program, where states can spend the money as they wish.

Even if President Obama is re-elected, some state governments will work hard to reduce the number of people covered by Medicaid. State officials know that limiting Medicaid will place more individuals in the new, subsidized health care exchanges, and that those bills will be paid by the federal government. The basic dynamic is that state and federal governments have opposite incentives as to how many people should be kept in Medicaid.

The proposal?  Here is my best take on how Obamacare might evolve into something more practical:

1. Many of the states slip out of expanded Medicaid obligations and many employers slip out of expanded mandate obligations to cover their employees (waivers, willingness to pay fines, lobby to have the law altered).  The system evolves toward a form of means-tested vouchers, sold on the exchanges.

2. The subsidies for the private exchanges become so expensive that the individual mandate is limited in scope.  Eventually the mandate applies to catastrophic coverage only.

3. For catastrophic coverage, we move toward a mandate and subsidized exchanges, and for non-catastrophic coverage there is no mandate and health savings accounts, the latter supplemented by public contributions if needed or if you wish.

I am not predicting that, nor is it my first or even preferred second-best solution.  It is however the best solution I can see evolving out of ACA in its current form.

Medicaid Wars, Episode IV

While the resistance of Republican governors has dominated the debate over the health-care law in the wake of last month’s Supreme Court decision to uphold it, a number of Democratic governors are also quietly voicing concerns about a key provision to expand coverage.

At least seven Democratic governors have been noncommittal about their willingness to go along with expanding their Medicaid programs, the chief means by which the law would extend coverage to millions of Americans with incomes below or near the poverty line.

Here is more.

The De Benoist conservative (?) critique of Hayek

Here is the concluding bit:

Hayek’s efforts differ from classical liberalism because of his attempt to re-ground the doctrine at the highest possible level without recourse to the fiction of the social contract and by attempting to avoid the critiques usually made of rationalism, utilitarianism, the postulate of a general equilibrium or of pure and perfect competition founded on the transparency of information. In order to do this, Hayek is forced to raise the stakes and to turn the market into a global concept necessary because of its totalizing character. The result is a new utopia, predicated on as many paralogisms and contradictions. Actually, as Caille put it, were it not for “the welfare state’s failure to achieve social peace, the market order would have been swept away a long time ago.” A society based on Hayek’s principles would explode in a short time. Furthermore, its institution can only be the product of a pure “constructivism” and would undoubtedly require a dictatorial state. As Albert O. Hirschman writes, “this allegedly idyllic privatized citizenship, which only pays attention to its economic interests and indirectly serves the public interest without ever playing a direct role — all of this can only be achieved within nightmarish political conditions.”[56] That today “national thought” is being reinvigorated by this type of theory says a lot about the collapse of this thought.

The full essay is here, and for the pointer I thank Bill.

Just yesterday on my doorstep I received the book The Great Persuasion: Reinventing Free Markets since the Depression, by Angus Burgin, which offers a lengthy contrast between Hayek and Friedman, among other matters.  It looks interesting: “Postwar conservative thought was more dynamic and cosmopolitan than has previously been understood.”

What do John Roberts and Ben Bernanke have in common?

Their “simps” think they should have done better.  In their own, unconstrained models of the world, they each wish they could be doing better.  They each have refused to “do better” out of an understanding of limited institutional and moral capital.  They each are given relatively little epistemic deference by their critics on this point of omission.

They are each very smart men who were appointed by Republican Presidents.

There are some who understand Roberts but damn Bernanke for not “doing his job.”  I see fewer who understand Bernanke but damn Roberts for not “doing his job.”  You may think Bernanke has committed a worse sin of omission, or you may believe that BernankeApologetik is somehow a higher and more difficult art to master.

Solve for the equilibrium

Scott Sumner on the eurozone, wise throughout:

The eurozone excludes Norway, Iceland, Sweden, Denmark, Britain and Switzerland. That’s a fairly affluent group of countries.  The eurozone is shaped roughly like a pyramid, with Finland on top, and a wide base stretching from Portugal to Cyprus on the bottom.  Most of the weight if a pyramid lies in the bottom half, which in the case of the eurozone is mostly lower income countries like Italy, Spain, Greece, Portugal, Cyprus, and Malta…

The pyramid structure I referred to earlier is likely to get much worse as the eurozone grows over time.  And it seems to me that here you have a massive adverse selection problem.  Because of Abraham Lincoln, affluent states like Massachusetts can’t suddenly decide they want no part of our fiscal union, and would rather just reap the benefits of our large single market.  But Switzerland, Norway can and did make that choice.  Britain almost certainly would, and both Sweden  and Denmark might as well.  In contrast, Bulgaria, Romania and Croatia would like nothing more than to join such a union.  And all the likely future expansion of the EU is into areas further east, and much poorer than even Greece and Portugal.  Places like Armenia, Georgia, Ukraine (a country nearly the size of France) Belarus, Serbia, Macedonia, Bosnia, Moldova (the saddest place on Earth—even the name is depressing.)  And did I mention Turkey?  Indeed why not Russia at some distant point in the future?

China and Russia billionaire facts of the day

…two men who in the last decade held the title of richest man in China are now in jail on corruption charges of one kind or another.  That is not to say that the charges were baseless, only that in China’s freewheeling business culture, the authorities seem to pay particularly close attention when the deal-making generates fortunes approaching $10 billion. Deng Xiaoping declared that “it’s glorious to be rich,” but the message now is, not too rich. The government appears intent on generating competitive churn at the top, in part to contain social resentments.

Now look at Russia, where one hundred billionaires control fortunes worth an astonishing 20 percent of national GDP. Russia has nearly as many billionaires as China but they control twice as much total wealth in an economy one-fourth the size. Just as striking, Russia is missing not only a middle class but also a millionaire class; according to Boston Consulting Group, China ranks third in the world for number of millionaires, while Russia is not even in the top 15 for millionaires.

The growing business influence of the state is reflected in the fact that 69 of those billionaires live in Moscow, the largest concentration for any city in the world. Protected by their patrons, the richest face little competition. Eight of the top 10 are holdovers from 2006. More than 80 percent of the wealth of Russian billionaires comes from non-productive industries like real estate, construction and especially commodities, namely oil and gas, in which political ties can sustain fortunes indefinitely. In no other developing nation is this share greater than 35 percent. Even in Brazil, a commodity economy at the same income level as Russia, the non-productive share of billionaires’ wealth is just 12 percent.

The entire post, by Ruchir Sharma, is fascinating, and with some superb visuals, do read it.

Privatization in Sandy Springs, Georgia

Cities have dabbled for years with privatization, but few have taken the idea as far as Sandy Springs. Since the day it incorporated, Dec. 1, 2005, it has handed off to private enterprise just about every service that can be evaluated through metrics and inked into a contract.

To grasp how unusual this is, consider what Sandy Springs does not have. It does not have a fleet of vehicles for road repair, or a yard where the fleet is parked. It does not have long-term debt. It has no pension obligations. It does not have a city hall, for that matter, if your idea of a city hall is a building owned by the city. Sandy Springs rents.

The town does have a conventional police force and fire department, in part because the insurance premiums for a private company providing those services were deemed prohibitively high. But its 911 dispatch center is operated by a private company, iXP, with headquarters in Cranbury, N.J.

And:

Applying for a business license? Speak to a woman with Severn Trent, a multinational company based in Coventry, England. Want to build a new deck on your house? Chat with an employee of Collaborative Consulting, based in Burlington, Mass. Need a word with people who oversee trash collection? That would be the URS Corporation, based in San Francisco.

Even the city’s court, which is in session on this May afternoon, next to the revenue division, is handled by a private company, the Jacobs Engineering Group of Pasadena, Calif. The company’s staff is in charge of all administrative work, though the judge, Lawrence Young, is essentially a legal temp, paid a flat rate of $100 an hour.

The full story is here.  The article has many interesting points, such as this:

Town leaders say race had nothing to do with it. Mayor Galambos said, “A 94 percent vote in favor of incorporation speaks to the broad community support for self-government and a desire to have local dollars remain local.”

And this:

To dissuade companies from raising prices or reducing the quality of service, the town awarded contracts to a couple of losing bidders for every winner it hired. The contracts do not come with any pay or any work — unless the winning bidder that prevailed fails to deliver. It’s a bit like the Miss America pageant anointing the runner-up as the one who will fulfill the winner’s duties if, for some reason, Miss America cannot.

In a stand-alone sense, the town seems to be working quite well.

*The Twilight of the Elites: America After Meritocracy*

That is the new book by Christopher Hayes, here is one marvelously good review.  I was myself very impressed by the level of execution in this book.

In terms of pushback, I would offer two points.

1. The best critiques of meritocracy usually come from those with extreme merit.

2. I wish the book had been more Hegelian.  One could well have written a book called *The Twilight of the Non-Elites*, for instance:

“Can’t you’all have some better schools?  It’s not mainly about money, rather a school is a collection of parents and children.”

“Get married.  And stay married.”

“You didn’t have to falsify your income on that mortgage application; isn’t that a felony?”

“It’s your fault you ended up in jail, don’t blame the elites.”

And so on.  What’s interesting about today’s scene is that both “Twilights” seem correct.

*The Great Divide: Nature and Human Nature in the Old World and the New*

That is the new book by the very active and very smart Peter Watson, due out soon but I bought a copy in the UK.

Why has the New World been so different from the Old World?  What a splendid seventeenth and eighteenth century question.  Imagine Jared Diamond — and with comparable scope — yet with shamans, peyote, and El Niño playing a role in the argument.  I recommend it to everyone who can keep in mind how speculative the argument will be.

If we had to sum up what has gone before and describe in a few words the main features shaping early life in the Old World, those words would be: the weakening monsoon, cereals (grain), domesticated mammals and pastoralism, the plough and the traction complex, riding, megaliths, milk, alcohol.  One way to highlight the differences between the two worlds is to perform the same summing-up exercise for the Americas…For the New World the crucial and equivalent words would be: El Niño, volcanoes, earthquakes, maize (corn), the potato, hallucinogens, tobacco, chocolate, rubber, the jaguar, and the bison.

Unlike Diamond, this book assigns ideology a central role in the story.  Europe and the Middle East generate the ideas of the shepherd, the New World the ideas of the shaman, some of which may have been picked up or carried from the Chukchi of Siberia.  Perhaps my favorite point in the book is the observation that the Old World had a greater diversity of ideologies.

Watson touches on many Hansonian themes about the differences between gatherers and foragers.  Here is a Guardian review.  Here is an Independent review.  Here is a Matthew Price review.

This is an easy book to criticize, see the reviews or for instance take this passage:

…artwork was not developed [in the early stages of the New World] because there was no need to establish either dedicated territories or tribal identities.  And/or food was in such plentiful supply that they had no need to keep records that assisted their memory of animal habits.

One really does have to take this book as a scenario, not as science.  It is nonetheless interesting if used with care.