Category: Political Science
Health care and revenue competition in Britain
Elite NHS foundation trusts are gearing up to lure private patients from home and abroad as health budgets are squeezed – a decision made possible after health secretary Andrew Lansley said he would abolish the cap limiting the proportion of total income hospitals can earn from the paying sick…
With a £20bn black hole opening up in NHS budgets, a group of top performing trusts are seeking to profit from paying patients and use the money to fund public healthcare in Britain.
Previously,
Labour's cap had meant most hospitals were unable to generate more than 2% from private income.
Here is more, although full details are not yet clear, it seems doctors will be much more in charge, in a decentralized manner. Here's one opinion:
"What's to stop US healthcare companies coming over here to poach patients. Or GPs sending patients to India for cheap operations? Or English hospitals raiding Scotland for sick people?" said Alan Maynard, professor of health economics at the University of York. "It could be a real mess."
How long will it be before the entire NHS, as it was known, goes down as a collapsed model? What exactly caused the collapse? (I was surprised to read that Labour had tripled the budget since 1997.) Will "the line" be that evil ideologues are dismantling a working system? How will greater competition for patients alter our assessments of various national health care systems? Is empowering doctors going to cut costs? How much loyalty will patients, and voters, show to the old NHS model?
Blunt opinions, supported elsewhere but not here
I'd like to get a few opinions on record or simply recap some previous points.
The current downturn is a mix of AD and real shocks, in uncertain proportions, and in a manner which is hard to separate empirically. It is now obvious there is a lot of structural unemployment and there is a quick and probably unjustified rush to define it all as AD-influenced unemployment turned sour. The structural theories have their problems, but they can better explain why corporate profits are high and can better explain the distribution of unemployment across income and educational classes. The regional distribution of unemployment is persisting because of labor immobility, which involves both AD and structural issues. The sectoral shift view is more about shifting out of optimism-linked activities, within any particular sector, rather than about shifting out of construction and finance per se.
The mix of structural and AD factors does not, in any case, support liquidationist policies. It supports AD-stabilizing policies, though it suggests that in absolute terms those policies will do less well than expected. The failure of the fiscal stimulus is consistent with a number of different views, not just the claim that it should have been bigger. We've yet to see a good theory of how stimulus scales up to produce a bigger and better multiplier at higher levels.
I don't trust stimulus analyses which fail to assign a central role to confidence and confidence is hard to model.
Current experience is also consistent with (but not unambiguously favoring) an Austrian-like view that the stimulus boosts some activity and then shortly thereafter pulls away the rug, leaving us more or less back where we started, albeit with some smoothing gains in the short run and some adjustment costs in the longer run. The persistence and scale-up from the initial fiscal boost is hardly guaranteed. The empirical papers on multipliers are not to be trusted and the results are in any case hard to generalize from one period to another.
Harald Uhlig's paper is one statement of the case against stimulus. There is nothing measured by the Alan Blinder study which rules out the central result of this paper, namely transitory gains in the short run and high costs in the longer run.
Macroeconomics is rarely simple.
Elizabeth Warren is unlikely to prove an effective agency head, and the two sides to this debate ought to switch positions. Yet…politics very often isn't about policy.
On the AD front, Scott Sumner has been vindicated more than any other writer. His best critic is Arnold Kling, especially with regard to whether there are only two kinds of inflation regimes, low or high and variable. A related question is what a looser monetary policy would have done to financing the long-run debt burden and the use of the interest rate spread to recapitalize banks.
We still don't know what we are doing.
*Neoconservatism: An Obituary for an Idea*
The author is C. Bradley Thompson and this new book is in broad terms an Objectivist ("Randian") critique of neoconservatism and Leo Strauss. Here is one summary bit:
Inevitably, the neocons are epistemological relativists (though of an anti-egalitarian nature), which is the source, as we shall see momentarily, of their moral relativism. Because the political good in their world is mutable and always changing, the neoconservatives do not want fixed principles to which they are hbeholden, nor do they strive to be morally or politically consistent. Their power and authority is generated and sustained by the illusion that the world is in a state of constant change and that it is governed by what Machiavelli called fortuna. The truth or falsity of an idea is, according to the neocons, determined by its usefulness in a particular situation and for particular people. What is true today, they argue, may not be true tomorrow if an idea or an action fails to work in new and different situations. In such a world, there can be no certainty, no absolutes, no fixed moral principles.
The author writes — correctly – "hoi polloi," instead of the redundant "the hoi polloi."
Thompson argues that Leo Strauss showed sympathies for the Italian fascism of Mussolini, at least relative to liberalism and religion.
At times the book sounds like Bryan Caplan criticizing me, though I take such ripostes to say more about Bryan than about me.
When I was young, I very much enjoyed reading John Robbins's Calvinist answer to Ayn Rand (revised here), even though I did not agree with much of it. I often learn more when ideas clash in relatively stark forms.
In my view, principles and politics don't always mix but the problem is neither epistemological nor moral. Ill-informed voters, especially in diverse societies, can only swallow so much in the form of principle. If one is committed to intellectual discourse, but within the range of the politically feasible, a lot of intellectual principle is difficult to sustain. I do believe in principles, but I don't see that any point of view has overcome this quite general problem. In that sense I do not blame neoconservatism per se. But am I a neoconservative? No, and Brad's book gives some of the reasons why not.
*Ernest Gellner: An Intellectual Biography*
Gellner's general view of the world of advanced liberal capitalism is by now familiar: it is a relatively open world in which science prospers, bringing both affluence and diminished moral certainty — with Danegeld doing a good deal to secure social cohesion.
This splendid intellectual biography, by John A. Hall, should be read by all those interested in Hayek, Popper, Berlin, Oakeshott, and the foundations of a free society. You can order it here. I spent $33 on the book and it paid back every penny and then some. Here is Henry on the book.
Privatizing local government
Calling state mandates "entangling intrusions" in an open letter posted on the borough website in December, Mayor Paul Anzano proposed an apparently unprecedented solution: Dissolve the community's municipal charter and establish the borough as a nonprofit entity.
That's from Hopewell, New Jersey, and the odds are against that happening or even receiving serious deliberation. For the pointer I thank Igor Pleskov.
The geopolitics of Greece
I found this short essay worth a read. Excerpt:
The lack of capital generation is therefore the most serious implication of Greek geography. Situated as far from global flows of capital as any European country that considers itself part of the West, Greece finds itself surrounded by sheltered ports, most of which are protected by mountains and cliffs that drop off into the sea. This affords Greece little room for population growth, and contributes to its inability to produce much domestic capital. This, combined with the regionalized approach to political authority encouraged by mountainous geography, has made Greece a country that has been inefficiently distributing what little capital it has had for millennia.
Countries that have low capital growth and considerable infrastructural costs usually tend to develop a very uneven distribution of wealth. The reason is simple: Those who have access to capital get to build and control vital infrastructure and thereby make the decisions both in public and working life. In countries that have to import capital, this becomes even more pronounced, since those who control industries and businesses that bring in foreign cash have more control than those who control fixed infrastructure, which can always be nationalized (industries and businesses can move elsewhere if threatened with nationalization). When such uneven distribution of wealth is entrenched in a society, a serious labor-capital (or, in the European context, a left-right) split emerges. This is why Greece is politically similar to Latin American countries, which face the same infrastructural and capital problems, right down to periods of military rule and an ongoing and vicious labor-capital split.
Despite the limitations on its capital generation, Greece has no alternative but to create an expensive defensive capability that allows it to control the Aegean Sea. Put simply, the core of Greece is neither the breadbaskets of Thessaly and Greek Macedonia, nor the Athens-Piraeus metropolitan area, where around half of the population lives. The core of Greece is the Aegean Sea – the actual water, not the coastland – which allows these three critical areas of Greece to be connected for trade, defense and communication. Control of the Aegean also gives Greece the additional benefit of influencing trade between the Black Sea and the Mediterranean. Without control of the Aegean, there simply is no Greece.
The essay is interesting throughout. I thank a loyal MR reader for the pointer, sadly I misplaced your name in the move back from Germany.
*Vietnam: Rising Dragon*
It might seem strange, given the system's surveillance and security networks, but the Communist Party is wary of high-profile law enforcement campaigns. Failure would be worse than embarrassing for a party which is supposed to represent the people's will. Such campaigns are only ever risked at times and in ways which demonstrate the Party's continuing hold on power.
That is from Bill Hayton's new book — Vietnam: Rising Dragon — which I found informative and insightful on virtually every page. Recommended.
New political economy blog from The Washington Post
You'll find it here. So far Neil Irwin is the major contributor but it is a group blog.
Greece fact of the day
Greece, with a population of just 11 million, is the largest importer of conventional weapons in Europe–and ranks fifth in the world behind China, India, the United Arab Emirates and South Korea. Its military spending is the highest in the European Union as a percentage of gross domestic product.
Can you guess where much of the equipment comes from?
The full story is here and I thank the ever-excellent The Browser for the pointer.
Who’s preposterous?
I don't usually pull out media quotes to mock them, but this one caught my eye. There is a new book out — Lucy — and it is the (fictional) story of a woman who is part human, part bonobo chimpanzee, but who looks quite human. Michiko Kakutani wrote this criticism about the story:
It seems preposterous that the United States government or its agents would throw this teenage girl into a cage on an Air Force base.
Huh? If the point is that they would sooner use a Navy base, that can be granted. More generally, don't we live in a world where the U.S. government tries to assassinate some of its citizens, arbitrarily detains and holds many people — even innocent people –, and until recently tortured many people, and how about the still-legal Judge Rotenberg Center? As an aside, how do we treat full-blooded chimpanzees?
Kakutani's sentence made me want to buy the book.
Turkey sentence to ponder
Turkey is closer to fulfilling the criteria for adopting the euro than most of the troubled economies already in the euro zone.
There is much more here.
Polls of German economists
A very interesting poll from the German FT is here (in German). In addition to answering other questions, German economists speak to who are the important economists for the 21st century. I'll add together the first two categories ("very important" and "somewhat important") for a total percentage measure for reported importance. (Correction: there were 1158 respondents.) The standings look like this:
1. Keynes: 92.4 percent
2. Paul Samuelson: 87.8 percent
3. Joseph Stiglitz: 86.0 percent
4. Milton Friedman: 84.6 percent
5. George Akerlof: 83.9 percent
6. Robert Solow: 82.5 percent
7. Joseph Schumpeter: 82.2 percent
8. Paul Krugman: 81.8 percent
9. Friedrich von Hayek: 74.6 percent
10. Amartya Sen: 71.4 percent
11. Gary Becker: 70.1 percent
12. Daniel Kahneman: 58.1 percent
13. Walter Eucken: 53.0 percent
14. Robert Shiller: 53.0 percent
15. Hyman Minsky: 34.2 percent
16. Ludwig Erhard: 30.3 percent
Based on my observation, I believe the supporters of Hayek, Eucken (a classical liberal), and Erhard are relatively old and that this strand of thought is losing ground in German academia.
The party membership of these same economists is striking for its relative rejection of the two largest parties:
SPD (the second major party and somewhat to the left of CDU/CSU)
FDP (the market-oriented party)
No preference
I take this to reflect that German economists are more intellectual, and more philosophical, than their American peers and thus more likely to adhere to a consistent philosophy of some kind or another. They are less likely to affiliate with mainstream political thought.
You will find more questions and answers here. By a 2.5 to 1 margin (roughly), German economists think that the U.S. taxation system should be more progressive. By almost 2 to 1 they think economics has become too formal. There are very mixed answers on whether Germany needs to overhaul its export-oriented growth model, but few German economists favor a total overhaul.
Here are their answers on what makes for a good economist, again all in German. These I did not find so startling.
For the pointers to this treasure trove of data, I thank Mathias Burger.
Thwarted markets in everything?
In a too-good-to-check item, the Daily Mirror reports that rapper Snoop Dogg recently attempted to rent the entire nation of Liechtenstein for a music video…
Since it's too good to check, I won't check it. Caveat emptor.
For the pointer I thank David Brinh and also Milena Thomas.
Laissez-Faire Genetic Engineering
Every few minutes, every one of the microbes in your body (and the ocean, and the soil, and the air) is defying precaution and the sacred, playing God, performing an act illegal in Europe — swapping genes around in the endless search for competition or collaborative advantage.
Another good sentence from Steward Brand's Whole Earth Discipline: An Ecopragmatist Manifesto.
Secession
In advance of July 4, Patri Friedman and co-bloggers are discussing secession (remember, we call it the American revolution they call it secession) at Let a Thousand Nations Bloom. Here is Patri on secession as a startup:
America did not merely secede and copy the governing documents or style of the United Kingdom. Rather, it innovated, creating a system based on the English Common Law, yet different, one with explicit checks and balances to restrain government, and with no place for a monarch. It was an experiment with a more radical form of democracy than existed anywhere in the 18th-century world.
And it was an incredibly successful experiment, as the combination of that innovative rule-set and the empty frontier resulted in America growing rapidly in population, wealth, and influence. During the open immigration periods of the 19th century, some years saw over a million new immigrants arrive “yearning to breathe free”. As a result, the new American state had influence far beyond its shores.
This influence occured in two major ways. First, America served as a test of the brand-new American Constitution, and the Founding Fathers’ philosophy about the role of government. By showing that it worked well in practice, political philosophers, politicians, voters, and revolutionaries around the world were (slowly) convinced that this was the best government technology to be had. Second, America dramatically outcompeted existing states, based on the simple metric of net migration. Those million+ people a year who went to America can be thought of as customers of government services voting with their feet, which means that other countries were losing market share.
You may not be used to thinking of government in this sort of economic and business framework, but it is a core part of our philosophy here at Let A Thousand Nations Bloom, and we find it provides a unique and refreshing angle on government. In this case, it shows us the invisible, long-term effects of the American Revolution.
They are covering a lot of other related material such as the optimal size and number of nations this week as well. Here is a guide. On a related point, I argued earlier for The Great State of Northern Virginia.
Finally, don’t forget: If at first you don’t secede, try, try again.