Friday, August 18, 2017

State capitalism, anarcho-communism and the appeal of incrementalism

A few weeks ago I had the rare opportunity to try North Korean beer.  To my great surprise, it was excellent, and certainly far better than any South Korean beer I’ve ever had.  This paradox amused me enough that I made a lighthearted Facebook post pretending my tasting experience had shaken my capitalist convictions to their core.  The post received dozens of likes, approving comments and “Haha” reactions, thus validating my quick wit and clever commentary on global affairs and making me very pleased with myself.

It also received a comment from a friend of mine who describes himself as anarcho-communist.  This friend reassured me (playfully) that I needn’t question my beliefs after all, because North Korea was in fact a “state capitalist” regime.  When a second, staunchly capitalist friend took issue with this, the first friend distinguished between “real” communism in which ““the public truly shares in common the means of production and directs their use through direct democracy” and what he calls state capitalism, in which the state “maintains (and exacerbates) the existence of an exploiting class and an exploited class.”  He continued:

“A communist society is based on federalized, directly democratic control of economic and social decisions. There is no exploiting or exploited class, no vertical authority or stratification…

I also don't believe any state will *ever* dissolve itself. That's where Bakunin and Marx, Makhno and Lenin, the CNT-FAI and the USSR, etc differed in their analysis. The anarchists argued (correctly, history would show) that a revolution must be prefigurative because no state would dissolve itself, as states inherently amass power and entrench themselves. Coupling the state so closely to the economy just exacerbates the issue and, in turn, exploitation.”

My response is reproduced below.

“Just got time to chime in here – sincere thanks for the clarification, [communist friend].  I have two follow-up questions, if you’re interested: one abstract and one pragmatic.

First, what happens in a stateless, federalized direct democracy when some people inevitably refuse to abide by the vote of the local majority?  Are the decisions of the majority enforced on them against their will?  If not, how is it a democracy?  If so, isn’t that a state?  Are you assuming universal consent among the governed, such that enforcement won’t be necessary?  If so, for how many generations do you expect that to last?  And for so long as there is universal consent, isn’t that fully compatible with libertarian-style anarcho-capitalism?

Second, pragmatically speaking, what does it say about the wisdom of attempting communism that it is necessarily an all-or-nothing proposition?  If
“revolution is prefigurative” and “you can’t have communism with a state,” then the only way to get to communism is to BOTH overthrow the existing state AND prevent any other state (either internal or external to the revolutionaries) from replacing it.  By your own confession, nobody has ever successfully done this for long.

Furthermore, the consequences of falling short of this “real” communism have repeatedly proven tragic: famine, Gulag, killing fields, etc.  So now we have a high risk of failure + severely negative consequences for that failure.  In order for attempting communist revolution to be rational, the potential marginal improvement in quality of life for humankind must be so large as to outweigh a cataclysmically high risk of dystopia; literally “give me the complete dissolution of class inequality, or give me millions of deaths.” Is that a noble gamble?

From my view, libertarians (and most other enemies of the existing political order, for that matter) can offer a much more appealing sales pitch, because our ideology is compatible with incrementalism.  I’m anarchist too, in a sense – but for the time being, I’ll settle for ending the drug war and isolated deregulation of some economic sectors.  Liberty exists on a spectrum, and we can make things better in our lifetime by gradually nudging in that direction.  If our kids and grandkids can keep doing that, great: the final transition to anarchy will go almost unnoticed.  But if they fall short somewhere along the line, and the state proves too stubborn to dissolve entirely, we’ll at least have made things better for the effort.  We can erode and contain the state by stages without resorting to bloody revolution; and, if we erode it far enough, there’s nothing stopping *truly voluntary* communist societies from forming anyway.  Isn’t that a more promising model for enacting social change?

Sunday, July 9, 2017

Minimum wage alternatives for helping low-wage earners

In a recent conversation about the minimum wage (revolving around this groundbreaking new study) an acquaintance who agreed with me that the minimum wage is ineffective and undesirable asked "what [do] you think would be better economic policy to help low-wage earners?"  I'm glad she asked!

The line between what counts as “economic” policy and what counts as some other sort of policy is sort of blurry, because obviously all policy reforms have economic implications. Personally, I think the best way to help the economic condition of low-wage earners is to focus on removing the structural barriers which have impeded them from achieving high-wage employment first. This starts with market-oriented education reform, which starts with K-12 school choice. It continues with choice in higher education, achieved first by undoing the cost death-spiral created by federal aid, and then by scaling back the Department of Education’s role in accreditation so as to allow radically customizable and specialized degrees (likely with a heavy dosage of online classes).

Next up is comprehensive criminal justice reform. This starts with ending the war on drugs. Legalize pot and regulate it the same as alcohol. Decriminalize all other drugs, focusing on treatment instead of punishment. While you’re at it, legalize all other victimless crimes too – gambling, loitering, firearm possession, public drunkenness, prostitution, vaping, etc. – with the effect of reducing police interaction with civilians altogether (and thereby reducing police violence and incarceration rates). For those things which remain crimes, radically reform the criminal justice system, to include the repeal of all mandatory minimum sentencing laws.

At the state and local/city government level, we need to end eminent domain abuse (which, from my view, is really any use of eminent domain at all). We also need to the reduce local property taxes, which are contributing to gentrification and the rising cost of living in big cities across the country. We need to remove occupational licensure requirements for as many professions as possible, starting with taxi driving, cosmetology, hair and nail artistry, fashion advisory(!), funerary services and midwifery. An amazing 1 in 3 professions currently require some form of expensive/time-intensive state license for permission to legally operate, which falls hardest on the poor and low-wage earners.

Finally, once all these impediments (and any I forgot) are removed – once the state is well and truly “out of the way” – we should consolidate all current entitlement programs (welfare, food stamps, Social Security, Medicare, Medicaid, Obamacare and other federal subsidies, etc.) into one lump-sum cash payment with no strings attached. Call it a negative income tax, call it a guaranteed minimum income, whatever you want but the basic premise is “trust people to manage their own budgets and lives to their own maximum benefit” without micromanaging what those funds must be spent towards. Those programs combined currently amount to so many trillions of dollars that the take-home sum of our poorest Americans would likely dwarf whatever hotly-debated marginal increase in income the minimum wage was supposed to provide them. And, importantly, it would provide that income to all Americans, *whether or not they happen to be employed*, which is philosophically more consistent with BOTH the liberal values of universal empathy for the poor AND the conservative realization that your employers should have no larger a responsibility to guarantee your quality of life than anyone else in society.

TL;DR – The minimum wage doesn’t help poor people – but even if it did, there are dozens of much better ways to help poor people.

Sunday, June 11, 2017

Debate with a Utilitarian, revived again!

Sean:  Disclaimer - this was written at 3am, so coherency is not guaranteed.
Well, then, we've reached an impasse.  I hold morality to be constructed, not discovered, and only useful when applied as a strict system.  You seem to believe it to be something external to the human which our systems attempt to describe.

To which I ask again: show me an atom of justice; a molecule of mercy. 

There is no moral fabric to the universe.  This "fundamental, deeply embedded sense of right and wrong which for most people serves as the litmus test for resolving ethical questions" you describe is biochemistry.  It's emotions by another name. Human intuition evolved to help us survive in small hunter-gatherer groups in Africa, not pierce some hidden ethical truth of the universe.  Under your belief "this is wrong" and "this feels bad" are the same statement.

Debate with your system is reduced mere emotional manipulation.  Fragments of logic and cherry-picked empirical evidence are used to justify a pre-established emotion-fueled position.  This is why study after study shows people rarely change their minds when presented with new facts - facts were never the key driver in the first place.  To convince you of a position I must make you feel good about it. 

Ethical systems are frames which shape our understanding of the world.  They help sort information and direct our efforts towards a clear goal.  They allow us to escape the prison of emotional bias.

The scientific equivalent is the frame "The universe is governed by cause and effect, and all phenomena can be explained as arising from consistent laws".  All scientific theories are subservient to this system and must be consistent with its implications.  Competing systems like, say, divine intervention, are incompatible and cannot be used simultaneously to frame our thought.  I cannot believe in a causal universe but also believe Poseidon's wrath sank my boat.  Can one create an internally consistent system in which the God(s) cause all phenomena?  Of course: the enlightenment philosophy of Occasionalism holds God is the source of all causal relationships - that when I strike a billiard ball, God intervenes to impart motion to the ball.  It is absurd, however, to say "well, some events are caused by God, and some are caused by physical laws, and humans have a deep intuitive understanding of which is which."  The frames are incompatible.  There can be disagreements within a frame (quantum physics and general relativity), but those disagreements must adhere to the axioms of the frame.  And, debate between theories of two different systems is impossible - what empirical evidence can I provide to disprove Poseidon's wrath?

Or, to get more abstract, picking and choosing which parts of each ethical system is like picking and choosing bits of Euclidean and non-Euclidean geometry to solve single problem.  The two systems are fundamentally incompatible - they rely on different axioms.

Look, without a consistent ethical frame all we're doing is talking about our feelings.  I feel good about X, you feel bad about X, and we discuss emotions until we both have the same feelings about X.  And in a different context I'm all for that.  But it's not a debate - it's mutual emotional manipulation.  It's storytelling, and the winner is the one with the most emotionally compelling narrative.

After all, how can two umpires decide if the runner is safe if they're not using the same rulebook?  Give inspiring speeches to the crowd?  Logos, ethos, and pathos them for 10 minutes apiece?  No.  Pick a consistent rulebook and operate within its bounds.  The rulebook itself doesn't reveal any deeper meaning, and combing elements of baseball, soccer, basketball, and football doesn't produce some superior sport.  The rules do is help us define and interpret what is happening on the field.  Anything else is a variation on "Well, who do you feel should win?"

Unless you can demonstrate how morality/ethics are real.  That they are something other than a human invention to organize information in a coherent manner.

 Me:  The BLUF of my response here is “yes, all morality originates with how human beings feel – including strictly applied utilitarianism.”
You write: “I hold morality to be constructed, not discovered, and only useful when applied as a strict system.  You seem to believe it to be something external to the human which our systems attempt to describe.”

Not quite; I think it’s both internal to the human AND something our systems attempt to describe.  We agree that morality has no material existence outside the human body, but that doesn’t mean it is solely a construction of the rational brain that can be modified on a whim.   “It comes from our biochemistry” is more or less true, but this suggests a degree of permanence which our rational brains cannot really construct, and might well need to “discover” about ourselves.
I like your analogy about sports rules, so let’s continue it.  In baseball, it is against the rules to rub tar on the baseball before it’s pitched.  In wrestling, it is illegal to gouge the eyes.  These rules were constructed rationally, and may be applied strictly and objectively: either the tar was applied, or it was not.  Cameras can confirm this and no passionate speeches to the crowd are required.  BUT, the reason these rules must exist in the first place is not objective at all!  They were created based on feelings: because they reflect some innate sense of fair play and sportsmanship shared by almost everyone who plays these two sports.  And if we were to create a new sport, and set about the task of devising a set of rules that would guarantee fair play, we would again have to consult these inner feelings to determine which rules were and were not fair.
So it is with morality.  You say morality is “constructed,” not “discovered,” but the above analogy shows it’s a little of both.  The term I’d use is “logically expressed.”  Morality is articulated.  It is biochemical convictions, translated into rational rules.

You ask, “After all, how can two umpires decide if the runner is safe if they're not using the same rulebook?  Give inspiring speeches to the crowd?  Logos, ethos, and pathos them for 10 minutes apiece?  No.  Pick a consistent rulebook and operate within its bounds.”

But we have not yet arrived at the business of calling the runner safe or out; we are still at the business of writing the rule book.  Once we settle on a consistent rulebook (which we won’t agree on, but supposing we did) I’d be happy to rigidly operate within its bounds.  But there are no bounds yet, and until there are, we might well settle the matter of what the rules of our sport *ought* to be via inspiring speeches to a crowd!  How different combinations of rules would make us FEEL as human beings, and how they would jive with such amorphous human emotions as fairness and sportsmanship, would be highly germane to that discussion.
Inversely, there is no way to scientifically prove what the rules of a sport SHOULD be.  If Roger Goodell is deciding which endzone celebrations are or are not appropriate, science has no place in that discussion – irrespective of its ability to technically describe the mechanics which cause spiked footballs to bounce.  Yes, those mechanics are objectively true; and yes, no opinion on what endzone celebrations are/are not acceptable can claim such demonstrable truth.  But it doesn’t matter.  Physics still misses the bigger picture entirely.
You lament that “under your belief ‘this is wrong’ and ‘this feels bad’ are the same statement.” This is true to an extent, but only for the most fundamental moral precepts, which are then the building blocks from which we can rationally construct more complex philosophical systems.  Like the rules of baseball, morality is rooted in shared feelings, but not adjudicated by emotion. Emotions are complex, and we often mischaracterize just what it is exactly that makes us feel a certain way.  Consequently, our moral feelings warrant rational scrutiny, especially when it comes to testy subjects.
For example, sweatshops make people feel badly: we can tell something immoral is going on when we see people trapped in them.  But in my opinion, when you ask enough questions, and drill it down to the core thing which people find so offensive about them, what we’re really objecting to is poverty, suffering, hardship, etc.  We are outraged not by the offer of strenuous employment itself, but by the circumstances which make it possible: that anyone on earth can live in such squalor as to deem those dismal working conditions their best option.  Rectifying that moral outrage can only be achieved by improving the quality of life for those poor workers, not by banning sweatshop labor outright.  Our feelings about how to apply moral codes in practice are more fickle and alterable than the universal intuitions I’m relying on to build the foundation.
That said, I grant that universal human feelings are foundational to my moral system.  They are also, most assuredly and without question, foundational to your system. That’s what morality is.  You’re fooling yourself to think otherwise.
You challenged me to show you an atom of justice; I can’t.  My challenge to you is this: show me an objective moral starting point.  Show me an ethical frame which is not, at its root belief, dependent on a feeling.
Which moral fact is empirically demonstrable in the same way gravity or friction are demonstrable?  “Utility is good?” “Death is bad?” “Happiness is good?” “We ought to minimize suffering?” “We ought to maximize human flourishing?” Pick your poison, and I will just keep asking “why?” until eventually you resort to emotional appeal.  The mass extinction of the human species would bring the universe no tears.  It would violate no scientific laws. It’s only bad because you feel it’s bad.
Maybe there’s a provable moral truth out there I haven’t considered, and if so I’d be fascinated to hear it.  But if you cannot think of one either, how can you pontificate that YOUR sort ethical systems “allow us to escape the prison of emotional bias?”  No they don’t!  They may well “organize human action towards a clear goal,” but that goal is chosen based on how it makes somebody feel.  You are no less driven by emotion than I am.
The sentence “this is right” and “this is wrong” are inherently subjective.  They defy empiricism by definition.  We can debate morality logically within the context of a given prompt, but only after certain shared starting points or tenets are established (each of which are necessarily based on value judgments).
This does not make philosophy base.  It does not reduce it to a lower, less dignified source of knowledge than science or math.  It does not reduce all philosophical dispute to “emotional manipulation” or “storytelling,” nor render it impossible for us to change our minds about moral questions.  You patronize all of biochemsitry as “emotions by another name.”  Emotions are certainly biochemistry – but so is logic!  So is the sum of all human thought. Everything we’ve written here is the product of human brain cells doing their thing.  Embrace it!

Your moral starting points are no less rooted in feeling/emotion than mine, so let’s get on with the necessary task of devising systems of rules for human conduct that best represent those core feelings we share.  I’ve laid out the rules I prefer: my three criteria for when actions which fundamentally strike most people as wrong in the abstract may be justified by circumstance.  They are internally consistent.  To be sure, they are open for different interpretations in application; but, so are yours, and so are the rules of many sports for that matter.  I am still proposing “a consistent ethical frame” and I’ve spelled it out quite clearly, it’s just not one of the two options you’ve pidgeon-holed me into.

Or, if you’re tired of going in circles on this, I’ll become consequentialist for a week and we can move on with the discussion.

The importance of an educated electorate is a bad argument for pressuring higher education

People on the political left often argue that society has an obligation to advance universal or nearly universal college education (in other words, that it’s important to pressure everyone to go to college) because we live in a democracy, so the more educated people are, the better decisions they will make in elections and the better policy outcomes we will be left with as a nation.

There have always been problems with this theory, starting with the fact that even graduates from elite universities who majored in political science (like me!) can’t possibly have enough expertise to form qualified opinions on a great many policy issues, and are no less likely to fervently disagree with their equally educated peers. Another problem is that the political system is not nearly so democratic as your middle school civics teacher may have led you to imagine, due particularly to the two-party system and the primary process (wherein a very small group of people narrow down the list of options most Americans get to choose between, such that no matter how educated the people are, they might still be stuck choosing between Trump and Clinton).

But Ilya Somin’s recent book “Democracy and Political Ignorance: Why Smaller Government is Smarter” presents another reason: political ignorance has not diminished over time, despite the fact that Americans are more educated than ever.

We are all ignorant, only on different subjects. Which subjects people choose to educate themselves in (even when pressured to seek more education than they otherwise would have) has a lot to do with which fields of knowledge they expect to be most useful to them later in life. This leads to an important realization: political knowledge is not all that useful if you didn’t already derive utility from possessing it.

In other words, people are not ignorant of politics because they’re uneducated. They’re ignorant of politics because they have no rational reason to take interest in them, because they have no real power to change political outcomes. Each person’s vote is such an insignificant drop in the bucket that voting is a total waste of time EVEN if you’re already educated on the issues (not to mention the far larger time investment required to read up on what each candidate stands for and understand their positions from an economic, philosophical, and sociological standpoint). 

This is part of why our constitution creates a republic instead of a democracy: learning all the details required to govern effectively was never supposed to be the citizens’ job. Any democracy so large, and making decisions so numerous and complex, as to require a highly educated AND highly invested electorate in order to succeed is doomed to failure.  The larger democratic government becomes, the more social decisions are going to be made by ignorant and disinterested people – no matter how educated those people happen to be about other things.
Inversely, the smaller democratic government is shrunk, the fewer decisions must be made by an ignorant majority, and the more decisions can be decentralized to the accidental aggregation off millions of individuals pursuing something they really do know all about: their own self-interest.  Smaller government is just smarter.

There is no scientific consensus on climate change policy

One of the symptoms of statism – the often implicit belief that the state is the center of human society – is our tendency to conflate opinions on a subject, with opinions on how to govern that subject.

For example, lots of people agree it’s wrong to frequent prostitutes, spank your kids, or do hard drugs. There’s nothing wrong with those beliefs per se, and I often share them.  But statism is that epidemic disease of the mind which causes people, without really thinking about it, to assume from this that such activities ought to be illegal as well.  This does not follow, and very often it proves tragically unwise.

What the statist fails to see, in such cases, is that the law is not an authoritative signpost of right and wrong, so much as a tool designed to achieve a certain goal.  This tool is violence, which makes it powerful, clumsy and morally problematic in equal measure.  It also makes the field of political science distinct from the field of philosophy.  Determining the best policies involves not only forming your moral opinions, but also analyzing the likeliest consequences of various courses of action, and then evaluating those consequences according to your moral framework.

With that in mind, perhaps you have heard there is a “scientific consensus” on climate change.  This is arguably true; that is, some high percentage of climate scientists agree that the climate is changing (specifically, that it’s getting gradually warmer, and on track to reach at least 2 or 3 degrees C warmer than pre-industrial levels by 2100) and that human activity is contributing to that change (specifically, through the emission of greenhouse gases).

But that’s not the same as a scientific consensus on climate change POLICY.  Before you consider your climate policy preferences “on the side of the scientific consensus,” you need to be able to answer all of the following questions *objectively* (that is, you must answer them NOT with one climatologist’s quotes and opinions, but with objective sources that *essentially all of the experts* agree on):

1.     What are the likeliest consequences of manmade global warming if it is left unchecked? By when will those consequences occur, and how likely are they relative to different sets of possible consequences (for better or worse)?

2.     What course(s) of action would be required to prevent or mitigate those adverse consequences with a high degree of certainty?

3.     What are the tradeoffs of taking those courses of action in all relevant fields (economics, sociology, politics, philosophy, etc?)

4.     For which courses of action do the likeliest benefits outweigh the likeliest costs?

I am no expert on climatology, but so far as I know, there is nothing remotely approaching 97% “consensus” on any of these five questions – and certainly not on question four.  Perhaps I’m wrong!  If you’ve actually studied the data on those questions yourself, and fancy you can answer them objectively, please show me that data.  I’m also troubled by the possibility of climate catastrophe, and I’d sincerely love to see any data which narrows the range of uncertain outcomes.

But if you haven’t, and you’ve just heard somebody on Facebook (or
Twitter…) shouting about how “97% of scientists agree climate change is real!” and taken it on face value that this means environmentalist policymakers should get a blank check, you are no more serious a student of climate science than any of the people you deride as “deniers.” And furthermore, if you repeat that claim yourself without knowing where it came from, and then make that same aforementioned “rookie mistake” of statists everywhere by using it to agitate for ever-greener policies without any quantifiable assessment of what specifically they will accomplish and at what cost, you blowing more hot air than the climate will ever have.

Not everyone on the left is guilty of this, mind you. And, even those who are may well be exaggerating in service of a good cause.  Just because there’s no consensus behind a policy proposal doesn’t mean it’s a bad idea.  The alarmism may prove prudent.

But much of what I do on this blog is umpire the public discourse, and unfortunately, it seems to me most of the people currently parading themselves as the champions of measured, objective scientific analysis are no better versed in the hard data of it all than those they lampoon as scientific ignoramuses.  They do not scrutinize exactly what the scientific “consensus” says are the likeliest consequences of global warming, nor what it would take to prevent those consequences with a high degree of certainty, nor what the tradeoffs are to taking that course of preventative action. They do not do the legwork required to quantify what’s at stake first, and then make value judgements accordingly.  Rather, they make their value judgment first, seek out a narrative which flatters those value judgments, and then and excitedly regurgitate any empirical tidbit they encounter which supports that narrative.

If I’m right about this, it makes most environmentalists just the same as their conservative opponents.  A friend of mine recently made light of this similarity, writing:

“Environmentalism is an anti-science religious movement. If you believe that the Earth was once a Garden of Eden before we corrupted it with sinful exploitation of resources, and that we're going to be punished with environmental collapse on judgement day, fine. But lots of us don't believe that. So let's keep church and state separate.”  

Maybe that was too broad a brushstroke, but the similarities remain.  Just as the story of Christ is something people believe without proof, many environmentalists are driven by faith in a narrative they haven’t much investigated themselves, but find compatible with their cognitive biases against global capitalism and therefore easy to accept.  Just like the church, a group of trusted authority figures make a living refuting the skeptics, assuring the masses that this is true, and warning them of the fire and brimstone to come if our sinful society doesn’t change its ways.

In other words, there may be a consensus on climate change – it is just not what left-wing activists keep saying it is.  They have rhetorically hijacked the consensus which actually exists, and portrayed it as the consensus they WANT to exist; to say “97% of climatologists agree climate change is real, manmade and ongoing” is not the same as saying “97% of climatologists agree drastic carbon reduction is urgently needed now to stave off irreversible environmental catastrophe.”  The 97% figure became so pervasive not because it has any implications for policy on its own, but because it’s a NUMBER; because it disguises the almost spiritual origin of Greenpeace policy preferences as a rigid analysis of temperature spreadsheets; because it provides the Marxist distrust of worker “alienation” in favor of local, organic, small-scale production of everything with the empirically-backed moral imperative it has always lacked. 

If you are an Apologetic of the Faith, perhaps you will counter with a sort of Pascal’s Wager: the idea that in the presence of uncertainty, the only responsible course of action is to avoid [environmental] catastrophe.  This might be reasonable, IF catastrophe were only possible in one direction.  Unfortunately, that is not the case.

I am no expert on economics either, but I have studied it enough to know that the price of energy directly impacts the price of literally everything else on the market.  As such, it is directly associated with the standard of living for billions of people on this planet.  For some of these people, the price of energy is quite literally a matter of life and death.  The exact economic consequences of an immediate, large-scale shift away from fossil fuels are as hotly disputed as the environmental ones are; there is no consensus on either question.  But there is ample concern that prohibiting fossil fuels now – AFTER the West has gotten rich off them, but before the developing world has had time to follow suit, and before the reliable/cost-viable alternatives are ready – might very well plunge the poorest people on earth into an untold level of further suffering.  It might undo the decades of progress humanity has made in the fight against extreme poverty and bring wealth inequality to unprecedented levels.  And crucially, it might not even prevent many of the environmental calamities that some have warned against.

So which is the catastrophe we ought to wager against? Are you so certain economic disaster won’t happen, and so certain climate change disaster will happen, that handing global governments massive control over our everyday purchasing decisions immediately is really “the only responsible course of action”?  Unless you yourself have studied the latest science AND the latest economic forecasts in detail, it seems to me you shouldn’t be.

When the stakes are so incredibly high in BOTH directions, there is no such thing as erring on the side of caution. Any course of action not backed by rigid cost-benefit analysis is reckless superstition.  I am not qualified to crunch all the probabilities required to make that sound cost-benefit analysis.  Chances are, you aren’t either.  Every one of us is entitled to an opinion on the matter, but nobody’s entitled to lie about which debates “science” has settled, and which it has not.

Two quick thoughts on Trump’s decision to leave the Paris Climate Accords

1.     Leaving the agreement was foolish and a worse “deal” for the United States than staying in.

Sometimes symbolic gestures are worthwhile.  The global community is rightfully concerned about climate change, and rightly or wrongly the hold the United States accountable as a chief culprit. Accordingly, even the optics of international cooperation on the issue are a valuable first step, and one which helped the United States’ image much more than the agreement’s wholly optional stipulations would have hurt our economy.  This is why even conservatives like Secretary of State Rex Tillerson were advising Trump to stay in the deal.  It would have bought him some good will from the international community and a better willingness to compromise elsewhere. 

For what it’s worth, I personally would have stayed in the deal, and pushed for a revenue neutral carbon tax (as part of a comprehensive tax reform plan that lowered income tax rates and closed deductions to make our tax code simpler and fairer) in order to meet the US’s carbon reductions target.  It’s still not too late to do this.

2. Nevertheless, it will have no measurable impact on the climate and people should stop freaking out over it.

Even if the United States had remained in the deal, and even if all of its signatory nations met their current (voluntary) emissions reduction agreements, the resulting temperature impact 100 years from now was STILL highly uncertain.  The entire deal was primarily a symbolic gesture to begin with.

What’s more, “the United States” never technically agreed to the Paris Accords in the first place.  President Obama said we would in December of 2015, but the agreement was never ratified by the US Senate (as would be required under our constitution to make it legally binding).  This means Obama's "pledge" was never more than empty promises, and Trump sending the wrong message on this is no more consequentially impactful than all the other things he sends the wrong message on every single day.  The next President could just as easily reverse course yet again, and the law still wouldn’t have changed.

Regrettably, the climate was not saved 18 months ago when a single man unilaterally signed a tepid resolution which no American voter, worker nor congressman ever approved.  Fortunately, that also means it isn't doomed just because another man unilaterally unsigned it.  Our brief participation in the Paris Climate Accords was purely ceremonial, and all public fanfare about our exit is straight virtue signaling.  There’s no greater need to catastrophize today than there was a month ago.  Whichever strategy you favor for solving global warming can still be achieved – although, admittedly, the clock is ticking.

Saturday, May 13, 2017

Uber's Greyball program did nothing wrong.

I recently posted the below opinion on Reddit's "Change My View" subreddit, which is a place for people to debate controversial opinions they have.  It got over 100 responses, so you can read the ensuing conversation here.  I don't have time to copy and paste all of them, so for now I'll just post my opening argument:

The front page of reddit is telling me Uber faces criminal scrutiny and public backlash for it's Greyball program. So far as I understand it, the program was designed to circumvent regulations aimed at restricting or banning Uber in some locations, by detecting undercover law enforcement trying to entrap Uber and thwarting their efforts to hail a cab with phantom car icons, etc.

In my opinion, though, all of the regulations and restrictions local governments were attempting to emplace on Uber were bullshit. The government has no business banning or regulating any peaceful and voluntary agreements between drivers and passengers, and most of the regulations were corrupt protectionism for entrenched industry interests and massive cab companies in bed with the local government. Offering people cheap and convenient cab rides in defiance of law is the very definition of a victimless crime.

Accordingly, my view is that if private individuals and organizations are engaged in victimless crimes that aren't violating anybody else's rights, they are perfectly justified in attempting to fool, avoid, ignore, outsmart, conceal from, or otherwise circumvent those enforcing the laws which render their conduct criminal. This applies to smoking or sellng pot, it applies to jaywalking when there are no cars around, it appies to smuggling Kinder chocolate eggs into the United States from Germany - and it applies to Uber's Greyball program.

You can change my view by convinving me one of two things:

a) the regulations Uber was evading were legitimate and important protections of people's rights (aka, that Uber was engaged in something more sinister than victimless crimes), or

b) that even when the law strikes us as dumb and corrupt, we have an obligation to follow it and/or to at least not decieve those attempting to enforce it.

Tuesday, May 2, 2017

Jesus thinks Nicholas Kristof is full of crap

The esteemed New York Times newspaper has an esteemed Op-Ed columnist named Nicholas Kristof, with whom I’ve occasionally agreed.  In the wake of the latest healthcare battle, he wrote a satirical article imagining a conversation between Paul Ryan and Jesus Christ, which you can read here.  It is, in a sentence, among the most mind-numbing drivel I have ever had the displeasure to read.  It has since gone viral, however, and several otherwise intelligent friends have shared it on my timeline, so I suppose it now warrants addressing with more than just a sentence.

It is precious little exaggeration to say that Kristof’s 900 words encapsulate literally everything wrong with the modern political left.  Sanctimonious virtue-signaling?  Check.  Refusing to sincerely engage with the other side, in favor of snide insider condescension?  Check.  Stubborn, head-in-the-sand economic illiteracy?  Check.  And of course, a shocking ignorance of just what it is the other side actually believes or why, resulting in the most textbook of straw-man logical fallacies? Yeah, that especially.

I also oppose the American Healthcare Act, and don’t agree with a lot of things Paul Ryan believes.  The trouble is, none of the things Paul Ryan believes were discussed in this article, because everything Ryan was made to say in his hypothetical dialogue with Jesus was a deliberately inaccurate representation of his viewpoints.  Nor would it fairly represent the views of even the least intelligent conservatives I know.

Once more, for the people in the back: nobody in Congress believes that healing sick poor people teaches dependency.  Nobody believes that poor people don’t need healthcare access because they can just pray for a cure.  Nobody opposes Good Samaritans helping the downtrodden, and nobody thinks that’s what socialism is (at least, nobody on the political right).  Nobody thinks talented doctors should only serve the rich, nor that they should only serve to get rich themselves.  And exactly zero people in recorded human history have ever said anything remotely akin to the sentence “the best way to help the needy is to give public money to the rich.”  Every line in Kristof’s article is an absurd caricature of what the left likes to imagine their opponents believe, a comfortingly evil boogeyman that’s so much easier to grapple with than our actual arguments.

Articles like these bring into sharp relief the intensity of the left’s delusions about how much nobler they are than conservatives.  I hope (and, dare I say, pray) there remain a handful of fair-minded, very quiet liberals who read Kristof’s piece and silently thought to themselves that it was a bit of a low-blow.  Surely they’re out there somewhere.  Maybe a few of them even said something about it.  But if they did, they were completely inaudible beneath the millions of people who read that article expectantly, nodded along with every self-satisfied quip, and then raced to put it on Twitter and Facebook to prove what good people they are.  They really do think that’s what we think!

The brilliant gimmick of the progressive left has been to market their conception of charity with appeal our basest vanities.  From healthcare to welfare to the environment to gun control, they have created an entire industry around affirming people’s idealized conception of their own moral superiority.  They sell us excuses to showcase our selflessness; opportunities to humblebrag, which social media places in very high demand.  They employ people like Nicholas Kristof, whose sole job is to periodically remind the learned left that they are – quite literally in this case – holier than thou.  And it’s all performative.  It’s all egoism masquerading as empathy, guilt dressed up as the moral authority to wield violence on other people.

Unfortunately for me, this is a wildly successful tactic for manipulating human nature towards your political ends.  Unfortunately for them, it is no substitute for an actual argument. Libertarian entertainer Penn Jillette made an actual argument when he made clear the distinction between charity and state redistribution:

“It’s amazing to me how many people think that voting to have the government give poor people money is compassion.  Helping poor and suffering people yourself is compassion.  Voting for our government to use guns to give money to help poor and suffering people is immoral self-righteous bullying laziness.  People need to be fed, medicated, educated, clothed, and sheltered.  If we’re compassionate, we’ll help them – but you get no moral credit for forcing other people to do what you think is right.  There is great joy in helping people, but no joy in doing it at gunpoint.”

Voting to compel other people to help the downtrodden involves no selflessness, only animus towards people with different moral priorities than you.

I haven’t given any money to help sick Americans this year, but I have bought over 1000 mosquito nets for communities in Africa at risk for malaria (you can too, here).  I chose that particular charitable expenditure, among others, because I researched the hell out of it, and discovered that philanthropy experts believe malaria nets are among the most cost-effective strategies for saving lives in the developing world that would otherwise be claimed by disease.  The nets I funded could save dozens of lives, whereas the same money poured into a healthcare system as inefficient and overpriced as ours would only pay for a tiny fraction of a single elective surgery.  With that said, I did also pay for several low-cost, high-impact surgeries for desperately poor people in third-world countries, fixing things like cleft palates or cataract-caused-blindness that can drastically improve someone’s life for just a couple hundred dollars (you can too, here).

That’s not to say you’re obligated to follow in my footsteps.  Maybe you care more about funding disaster relief efforts, or the local homeless shelter or soup kitchen, or Animal Rights groups.  There are thousands of charities to choose from, and reasonable people can disagree about the most morally compelling ways to help our fellow man. 

All I’m saying is that if your preferred method is filtering that money through a bloated, corrupt federal bureaucracy, which shaves off some 30% to go bomb people in faraway countries, on the grounds that some of it will eventually trickle down to help people with pre-existing medical conditions, you sure as fuck don’t get the moral high ground to demand other people follow suit at gunpoint.

That’s certainly not how Jesus went about the business of helping the poor, so in the spirit of self-certain preachiness, it’s worth mentioning that God agrees with me.  See 2 Corinthians 9:7, which reads “each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.”  So there.  See how easy it is to selectively hyperlink Scripture? 

Another snippet that stuck with me from Big J.C.’s Book of Quotable Catchphrases™ was “love thine enemies” (Matthew 5:44).  Demonizing your enemies by deliberately arguing in bad faith so you can get pageviews and sell newspapers is not the Christian way to do that.  Another was “thou shalt not steal,” which from our viewpoint precludes taxation outright.  Another was “Thou shalt not take the name of the Lord thy God in vain,” which to be honest I personally don’t pay much attention to, but would nevertheless preclude you from substituting your contentious modern political opinions for the literal Word of God in a made-up conversation with Jesus.

I could go on, but you get the point.  There are hundreds of ways to interpret the Bible’s implications for governance.  Responsible stewards of the public discourse recognize this, and do their opponents the credit of engaging with those alternative interpretations instead of just bypassing them and pretending the Christian position were self-evident.  Kristof’s article was cheap and self-indulgent.  If you shared it, you should take it down.

Ten libertarian ideas to make healthcare affordable

How do we increase access to healthcare?  We make it more affordable.  How do we make it more affordable?  The short answer is, the same way you make anything cheaper: increase the supply, and decrease the demand.  Here’s the long answer…

How to increase the supply?

It’s often said that healthcare is so expensive because “sick people can’t say no,” so healthcare providers can extort them by charging exorbitant prices.  It’s understandable why people would think this, because healthcare providers really are getting away with charging basically whatever they want in the current healthcare system. 

But contrary to public mythology, this isn’t because sick people inherently lack alternatives.  First off, life-saving emergency care of the sort people “can’t say no” to comprises only a tiny fraction of overall healthcare costs.  And again, consider the markets for food, housing or clothing: surely, consumers also “can’t say no” to these products if they are to survive or function in modern society.  And yet, most people can afford those things, and producers in those markets cannot charge whatever they want if they expect to remain in business.  What makes healthcare different?

The main reason big pharmaceutical companies can get away with charging prices that so vastly exceed the per-unit cost of production is that unlike producers of food or clothing, it’s often illegal to compete with them: the government literally prevents anybody else from selling the same product at a lower price, creating artificial monopoly conditions.  The secret to increasing the supply of healthcare options from which the average sick person may choose lies in legalizing competition by undoing these interventions, in at least four ways:

1.      Let people buy insurance across state lines.  For some reason this is illegal currently.  I sincerely have no idea why, as there is literally no benefit to isolating those markets (apart from protecting certain favored companies, I suppose).  In any case, making it legal to purchase health insurance from a company located in another state is a no brainer reform that will drastically increase the number of insurance options available to the average consumer and motivate those insurers to compete with one another for a much larger swath of potential customers.  Lower prices will result.

2.      Patent reform.  The most textbook example of government granting an artificial monopoly comes through patent law.  Intellectual property is controversial both in and out of libertarian circles, and I do concede a certain period of exclusive rights is probably needed to incentivize innovation.  But there are other incentives for life-saving healthcare research besides pure profit, and at present these exclusive ownership periods last much longer than is necessary (at the expense of the most vulnerable sort of consumers).  Reforming patent law in other sectors has had bipartisan support for decades, and would inject much needed competition into the market for pharmaceuticals.  It’s no secret why the price of ibuprofen dropped so sharply after Advil’s patent expired, and the same would happen to hundreds of other drugs were generic brands made available to compete with the established ones.

3.      Invert the FDA’s standard of proof.  A classic case of the seen vs. unseen consequences of regulation, the FDA has become a sort of sacred cow on the left, often pointed to as the case-in-point poster-child for the necessity of federal regulation.  Associating its absence with poisoned, rat-infested food has always been rooted more in fear than facts, and there is a growing body of historical research challenging the mainstream story of how and why it was first created (hint hint: it was never intended to protect consumers).  But in any case, the core of what it does today is make it illegal to sell medicine, and there can be little doubt this is contributes to price inflation in healthcare.

I have made passionate arguments before on this blog that the FDA is a corrupt and captured agency far likelier to protect industry incumbents than protect the public.  I sincerely believe we’d be better off without it and don’t back away from any of that today.  Nevertheless, abolishing the FDA outright is highly unlikely to happen in the foreseeable future, so we need a more moderate intermediate stage: inverting it’s standard of proof.  At present, the FDA makes it illegal to sell any medical treatment it has not approved, and will not approve any medical treatment until the people who want to sell it can prove it is safe.  Proving it’s safe takes several years and millions of dollars from the wallet of the inventor.  This is ass-backwards.  A reformed FDA would err on the side of legality, banning only those drugs it has compelling reason to believe (from either it’s own research or that of a third-party watchdog) pose a danger to consumers so grave it exceeds any medical benefit the drug has been demonstrated to provide.  It also would let people try experimental drugs if they are informed of the risks.  Obviously, terminally-ill patients should have no restrictions on what they choose to put in their bodies what-so-fucking-ever.  And finally, it would also allow the reimportation of already-approved drugs manufactured in the United States but priced lower in other countries, enabling efficiency enhancing price discrimination without any uptick in patient risk.

An agency that prides itself on consumer protection should not be proud of the lack of options, inflated prices and dead patients that lie in it’s wake.  Reform here is essential no matter what sort of healthcare system we move towards.

4.      Medical licensing and accreditation reform.  The “supply” of healthcare refers not just to quantities of raw materials like drugs or hospitals or CAT scan machines.  It also refers to people: the thousands of doctors and nurses and surgeons and pharmacologists who assist, diagnose, treat and operate on sick or injured people.  A big portion of the price of healthcare goes towards compensating these people for their time and expertise – and boy oh boy, are they compensated!

Of course, doctors deserve to be paid well.  They put in long hours doing very important work that saves and improves thousands of lives each day.  Furthermore, theirs is work that relatively few other people in society have the intelligence, expertise or drive to do effectively.  Acquiring this expertise requires almost a decade of very expensive secondary education, which accrues massive student debt that must be retroactively paid for.  In conjunction, these factors yield a low supply of capable workers, plus a high demand for their services: the perfect recipe for high wages.

The trouble is, the supply of workers willing and able to be doctors is far larger than the number that are presently allowed to become doctors.  Why?  Because the people who get to decide how many are allowed to become doctors are other doctors.  More specifically, they are the American Medical Association (AMA), which may be the most unnoticed culprit for the high cost of healthcare in the country.

Shikha Dalmia of Forbes describes the AMA in no uncertain terms: “a doctors' cartel that has controlled the medical labor market in the U.S. like its personal fiefdom for a century.” The AMA is not a deliberately sinister organization, but it does carry immense sway with federal regulators, and it uses this sway to systematically shield its members from competition under the guise of patient protection.  It does this in the following ways:

1. It prevents the establishment of new medical schools.  Under current federal law, it is illegal to practice any sort of medicine without a license.  You cannot get a license until you have a medical degree from an accredited university.  The AMA gets to decide which universities are accredited, and hasn’t accredited any new ones in almost 40 years.  It also has a history of convincing lawmakers to shut down any medical schools it subjectively deems deficient, at one point resulting in a 30% decrease in the supply of new doctors over the course of 30 years.

2.  It indirectly restricts the number of students the existing medical schools are allowed to train, creating a de facto cap on the number of new doctors produced each year.  In order to receive a medical degree from an accredited university, you must complete a residency, and this residency must be funded. Congress caps the number of residencies it will fund at 100,000 a year, because the AMA told them this was the maximum the system could absorb without causing a “glut.”  As Dalmia writes, it’s difficult to understand what’s so bad about a “glut” of doctors, except that it would suppress the wages of AMA members.  And in fact, the AMA was proven wrong, as recent years have witnessed an acute shortage of doctors.

3. It prevents foreign doctors who’ve been practicing for years from practicing in the United States until they redo their residency and take several onerous exams, a protectionist policy plainly designed to prevent international competition from undercutting inflated American doctor salaries.

4. It prohibits qualified nurses or physician assistants from offering standard treatments for routine illnesses without physician supervision, due to vastly exaggerated worries about patient safety. 

This is important because in a free healthcare market, nationally syndicated libertarian commentator Ronald Bailey predicts, “a lot of routine care would be done through retail health centers located in shopping malls, drug store chains, and mega-stores. Such centers would not be staffed with physicians but with nurse practitioners or other qualified personnel. Consumers would generally pay for routine, everyday care directly out of their health savings accounts.”  Distinction between routine and more serious care is an important part of long-term healthcare affordability, but that cannot happen for so long as the AMA bans non-doctors from providing services on their own.

5. It goes to war against niche healthcare providers like midwifes, optometrists or chiropractors based on similarly unfounded allegations of patient danger.  The AMA has convinced dozens of states to prohibit midwifery despite the fact that studies have found it provides equally safe care at vastly lower prices than standard hospital births.  It used to prohibit doctors from making referrals to chiropractors until the Supreme Court ruled that illegal in 1987, and still vigorously polices chiropractors to ensure they don’t offer any services that licensure laws deem illegal.

The result of is that According to a 2007 study by McKinsey & Company…US doctors make twice as much as their OECD peers,” which “bumps up health care spending in America by $58 billion annually, on average.”  Removing these restrictions on supply would bring prices down sharply.

The counterargument is that these laws and regulations exist to protect consumers, but they usually do the opposite.  As Milton Friedman eloquently put it in his classic work Capitalism and Freedom:

“I myself am persuaded that licensure has reduced both the quantity and quality of medical practice; that it has reduced the opportunities available to people who would like to be physicians, forcing them to pursue occupations they regard as less attractive; that it has forced the public to pay more for less satisfactory medical service, and that it has retarded technological development both in medicine itself and in the organization of medical practice. I conclude that licensure should be eliminated as a requirement for the practice of medicine.

What truly protects patients is competition, just as it does in every other sector of the economy.  In a better world, healthcare quality/safety assurance would itself be it’s OWN industry of competing watchdog quality evaluators, much like Underwriter’s Laboratory does for household items, or CNET and dozens of other websites do for the latest phones and laptops, or TripAdvisor for vacations, etc. But in the interim, we can at least resist the AMA and it’s state-level affiliates’ overblown fearmongering about quackery, and end their chokehold over the supply of doctors in this country, to the benefit of patients everywhere.

5.      Legalize the sale of organs.  This is sort of under-the-radar issue, and really it could fall under the supply or demand side (providing a larger supply of kidneys to those currently on the waiting list decreases the demand for other costly long-term medical services like dialysis, for example, reducing drain on the healthcare system and cutting the price of those procedures as well).  But whether it’s on the mainstream’s radar yet or not, legalizing the sale of organs would save thousands of lives and millions of dollars each year.  My argument for it is too extensive to republish here, but you can read the whole thing here if you like.

How to decrease the demand? 

But increasing the supply is only half the battle.  Healthcare does not fall like manna from heaven; it is, and will forever remain, an amalgamation of scarce resources.  We cannot infinitely increase the supply of labor, land, raw materials, research, etc. devoted to healthcare without diverting these resources from other areas, which creates real tradeoffs in human wellbeing.  For healthcare as for any product, controlling demand is an essential part of the affordability equation.

This makes liberals antsy because many of them conceive of healthcare as a human right (or at least, as an unmitigated social good we should provide ever-more of to ever-more people; sound familiar?).  Without fail, exploring ways to reduce demand for healthcare prompts accusations that libertarians would heartlessly deprive sick poor people of the life-saving care they need.  So before I continue, it’s worth clarifying that this is not what reducing demand entails.

The United States currently spends $3-4 trillion on healthcare every year, and the vast majority of that is NOT spent on providing life-saving emergency care to people in desperate need of it.  The bleeding-heart tendency to dwell on that minute portion of the larger whole is “using the exceptional case to argue broad,” a disingenuous form of argument that conflates separate moral questions.  Furthermore, peer reviewed articles estimate that roughly a third – and at minimum 20 percent – of those healthcare expenditures are unnecessary or wasteful.  In other words, enormous portions of the healthcare industry consist of products and services that people really CAN say no to – and sometimes, they should.  We can reduce demand for these healthcare services without causing any additional death or suffering.

Healthcare reform alone cannot much change how often people get ill or injured, but it can change how flippantly they will spend money to treat those injuries and illnesses.  To illustrate, suppose you are at risk for heart disease.  Ask yourself: how much money would you spend per year for a medicine that would reduce your chance of suffering a heart attack at some point over the next 20 years from 5% to 3%?  Or, less dramatically, suppose you have a cold; how much money would you spend for medicine that would shorten the duration of your cold by 48 hours? Or, supposing you’re buying health insurance, and deciding between a plan with a $500 deductible and one with a $2000 deductible; or, between one that covers elective surgery, and one that does not.  How much more would you be willing to pay per month for the better plan over the worse one?

I can’t know how you would answer those questions.  Different people would surely answer them in different ways.  But I do know one thing for absolute certain: the amount you’d be willing to spend would be much, much higher were it someone else’s money you were spending!

This simple truth is the single biggest reason US healthcare costs are spiraling out of control: the people deciding how much healthcare or health insurance coverage to purchase or advise are almost NEVER the same people paying for it.  Seniors consume as much as they want on the government’s credit card, without themselves paying a dime; employees consume as much as they want on their employer’s plan, without paying a dime more than a deductible they didn’t choose; doctors prescribe as much as they can, to patients who usually don’t have to pay for it, because neither have any incentive to economize their consumption.  Most doctors don’t even know how much the treatments they order cost, and when costs are hidden, overconsumption is inevitable.
This state of affairs is completely unsustainable no matter which side of the ideological spectrum you fall on.  Conceptualizing healthcare as a human right does not magically render the law of diminishing returns inapplicable.  Even if your goal is universal healthcare, that can only be affordably achieved if we spend our healthcare resources more efficiently, which necessarily entails economizing consumption.  Getting serious about controlling healthcare costs means abandoning the fantasy that everyone can have as much of it as they want, whenever they want, on somebody else’s dime.

If the TL:DR for increasing supply was “remove barriers to competition,” the TL;DR for decreasing demand is “promote cost-consciousness.”  This can be accomplished through the following policy proposals:

6.      “Make insurance insurance again” by repealing Obamacare’s individual and corporate mandates.  The purpose of insuring anything, to include one’s health, is to safeguard against unlikely but potentially devastating calamities.  That peace of mind is only affordable for so long as the risks remain both small for any one individual, and unpredictable for any larger group, such that insurers can pool thousands of similarly low risks into similarly low-price brackets.  This model allows most people to afford car insurance, home insurance, and life insurance without any help from the government nor their employer.

By mandating (errr, “selectively taxing in order to guarantee”) an expansive minimum level of universal coverage, and then prohibiting “price discrimination” against those with pre-existing health conditions, the Affordable Care Act deliberately made this traditional insurance model illegal.  Controlling the price of both healthcare and health insurance begins with hurling these two rules into the trash bin of history with as much force as we can muster.

People will never economize their consumption of healthcare if all healthcare services included in Obamacare’s extensive list of minimum coverage requirements are free or sharply discounted (to them) at the moment they’re deciding whether to consume.  These minimum requirements include almost all healthcare procedures, from prescription drugs to mental health services to children’s dentistry, as well as elective medicine like preventive colonoscopies or mammograms, birth control, plastic surgery, and pregnancy/childbirth services (even for single men).  Prominent mainstream feminists are already pushing for it to include tampons, and from there, why not include other personal hygiene items?  Say, toothpaste, or floss, or shaving cream, or band-aids, or Chapstick?

Each of these are products which may improve my health, but they are very clearly not risks I need to be insured against.  They are optional and highly affordable luxuries which most individuals are perfectly capable of purchasing on their own.  Needing some sort of healthcare at some point in our lives is not a risk we have to insure against; it’s a certainty we have to save for.

To demand insurance cover nearly all healthcare-related expenditures, and then prohibit insurers from charging some people more than others, is exactly equivalent to demanding younger and healthier people pay the healthcare costs of older and sicklier people.  In other words, it is to transform those so-called “insurance” plans into something else entirely: either a guaranteed entitlement to other people’s money, or a mandatory obligation to give other people your money, depending on how healthy you happen to be at the moment.  Even if you break perfectly even from that transfer, it’s then merely a camouflaged prepayment for future consumption (and one which libertarian commentator Sheldon Richman observesincludes a hefty administrative overhead charge, which means the policy would be a bad deal if customers were paying the full price with eyes open.”) That is insurance in name only.

If you share Obama’s dream to guarantee universal coverage at no additional cost to those with existing health problems, have the integrity and confidence to advocate for that position plainly, without pretending “insurance” has anything to do with it.  And again, realize that even in the most socialist European examples, a broad and generous public healthcare safety net cannot happen without a degree of cost-consciousness, which means administering that guarantee through massive insurance company middlemen was a counterproductive strategy you should get on board with undoing.  Who do you think benefits most from cost-indifference?!

The people setting the price, that’s who.  Giant healthcare corporations are reaping massive rents off Obamacare’s minimum coverage requirements, which, when combined with the complete obfuscation of how much things cost and the typical separation between payer and consumer, allow companies to sell an ever-expanding list of things considered “healthcare” in ever greater quantities at ever higher prices without anyone having incentive to take their business elsewhere.  Abandoning the rhetorical pretense of an insurance-based model would have the added benefit of bypassing the corporate interests getting rich off the inefficiencies of the current system.

But until such time, and for so long as the question is “how do we make health insurance affordable?”, the clear answer is a return to the low-cost, high deductible plans so successful in other insurance markets, to include health insurance in Singapore.  These plans may not give everyone free birth control and Lipitor, but they do resolve the heart-wrenching cases of people bankrupted by tragedy that the left so often uses to agitate for single-payer.  And most importantly, they’re shown to be extremely effective at reducing aggregate healthcare costs – in part because contrary to popular belief, preventive medicine does not save the health care system money, and “there are literally hundreds of studies over the past 40 years” that show preventive medical services actually increase medical spending.

Of course, eliminating the individual mandate also makes it legal to have zero health insurance coverage whatsoever.  This is also okay.  Different people have different risk tolerances and in a free society they are allowed to live with the consequences of those tolerances, good or bad.  And remember that abandoning the individual mandate would not kick anybody off of the plans they already have, it would just give them the option to stop paying for it moving forward without having to pay a fine instead.  Worrying that some people would lose their coverage if we merely made it legal for them to not buy coverage is akin to worrying that millions of people will lose their military service if we do away with the draft.  Compulsory anything is no favor to the people being compelled.
It’s worth mentioning that fully “making insurance insurance again” would also require some state-level reforms, since many states had passed so-called “Patient Bill of Rights” bills with minimum coverage requirements even before Obamacare’s passage.  But in any case, motivating patients and doctors to eliminate unnecessary or inefficient expenditures will have to include making more healthcare services fee-for-service at the point of sale, instead of prepaid by someone else.  This leads right into the next proposal.

7.      End tax exemption for health insurance benefits.  Yes, you read that correctly: a libertarian is calling for a de facto tax increase.  Of course, I’d ideally want this offset by tax reductions elsewhere in a revenue neutral way, but those are details.  The point is that our lack of cost-consciousness is driven in large part by our uniquely horrible employer-based health insurance system, in which 85% of Americans are given health insurance as part of their salary thanks to decades of federal tax exemptions for healthcare benefits.

The employer-based system came about because post-war policymakers wanted to expand access to healthcare by means of encouraging employers to provide insurance to their employees.  To accomplish this, they essentially subsidized health insurance benefits in the form of tax breaks, exempting medical benefits as untaxable or less-taxable compensation just as they write off charitable donations.  This gave employers and employees a joint incentive to divert as high a portion of overall employee compensation through the healthcare system as possible – sometimes up to $15,000 a year – which, in turn, gave insurance companies an incentive to offer ever-more comprehensive insurance plans that functioned more as advance prepayment than traditional insurance.  Richman elaborates:

“What makes private medical insurance look like a good deal today is that employers seem to provide it for "free" (or at low cost) as noncash compensation, or a fringe benefit, which is treated more favorably by the tax system than cash compensation. If an employer pays workers in part with a $5,000 policy, they get a policy that costs $5,000. But if the employer pays workers $5,000 in cash, they’ll have something less than $5,000 with which to buy insurance (or anything else) after the government finishes with them. That gives employer-provided insurance an appeal it would never have in a free society, where taxation would not distort decision-making. Moreover, the system creates an incentive to extend "insurance" to include noninsurable events simply to take advantage of the tax preference for noncash compensation.”

Subsidizing anything creates more of that thing, and in this case tax breaks for health insurance benefits create an artificial stimulus of demand to insure against more and more health costs.  This helped the shortsighted politicians who simply wanted to decrease the magic number of uninsured Americans in the name of public empathy points, but it was horrible for the long-term goal of decreasing healthcare costs to a range everyone can afford, for at least two reasons. 

First, it strips consumers of the incentive and information needed to shop around for health insurance.  People don’t (and shouldn’t!) pick a career path based on which health insurance plan is right for them, so they wind up doing the opposite instead: picking health insurance plans randomly, based on which job comes along with it.  The result is that consumers have no any idea what their plan costs, nor any motive to reduce those costs, nor any feasible method to do so if they wanted – they’d literally have to quit their job and uproot their life to switch plans.  This is the exact opposite of how consumers behave in the places where health insurance is cheap (like Switzerland, where consumers are among the most discerning in the world).

Secondly, the employer-based system has the perverse quirk that losing your job means losing your health insurance too, at the precise moment one can least afford to foot one’s own healthcare bills.  This double-whammy is the literal opposite of the “safety net” system it’s progenitors hoped to achieve.  Applying such a system to any other sort of product shows just how inane it is.  Harvard University business professor Regina Herzlinger laments I wouldn't permit (the President of Harvard) to buy my house or my clothing or my food for me. Yet as my employer, he could take up to $15,000 of my sala­ry each year and buy my health insurance for me, without knowing anything about my preferences or needs. It's ridiculous."

Effective reform would re-empower consumers to shop around for the plan that’s right for them by dismantling the employer-based health insurance system and converting the money currently spent by employers for group insurance to additional employee income.  If government can afford to continue foregoing this tax revenue (and of course I think it can), it makes much more sense to reward taxpayers with lower-but-more-level marginal tax rates across the board than to keep the status quo intact.  And even if you think the government needs more revenue, it makes more sense to close this loophole first than it does to raise marginal tax rates overall, as many healthcare reformers also advocate.  Either way, since the portion of employee salaries paid as insurance benefits would go down, more money would transfer out of the bloated healthcare sector and into other areas of the economy, reducing the aggregate cost of healthcare in the country.

Perhaps the reader wonders whether the additional income returned to employees would be enough for them to afford equally comprehensive health insurance plans as their employer currently provides.  The answer is “maybe, but hopefully not.”  Of course, we do want people to be able to afford insurance against catastrophic healthcare risks beyond their control, and I explained above why they would very likely be able to.  But as I’ll explain below, reducing the role and prevalence of health insurance in our healthcare system should be seen as a feature, not a flaw.

8.      Allow and encourage healthcare providers to shift from an insurance-based payment model to a direct fee-for-service model, especially for routine care.  Proposals six and seven would pave the way for this shift to take place, but finalizing it will require cooperation from state government, insurance companies, and doctors at all levels.  It is linked up with the medical licensure reform I mentioned in the supply section, as well as the state-level “Patient Bill of Rights” acts I mentioned in question six.  Creating optional Health Savings Accounts for all Americans (like Singapore does except voluntary) might also help.  And to be perfectly honest, I’m not sure of exactly how to phrase the law to guarantee this happens.  It might be a gradual process and legislation might not be the best tool for bringing it about.

All I do know is that such a shift is crucial to effectively restraining healthcare costs.  To understand why, I’ll paraphrase famed economist Milton Friedman.  In his classic work Free to Choose, Friedman identified four different types of spending, ranked in accordance with how efficient they are:

1.      The first type of spending is when one spends one’s own money on something for oneself.  This is the most common and most efficient sort of spending, because the spender is very careful to both minimize the price and maximize the quality of the thing being purchased.

2.      The second type of spending is when one spends one’s own money on something for somebody else – like we do when we’re shopping for gifts, usually.  This is less efficient, because while the spender may be concerned with limiting cost, they are not as concerned with scrutinizing the quality of the thing being purchased (after all, it’s bad form for the recipient to “look a gift horse in the mouth”!).  Also, the spender usually doesn’t know enough about the other person’s unique preferences or indifference curves to maximize the utility which the other person might derive from the amount spent.

3.      The third type of spending is when one spends someone else’s money on something for oneself.  This is a very inefficient sort of spending because there is no incentive to limit costs, and every incentive to spend as extravagantly as possible on the highest quality items.

4.      The fourth and final type of spending is when one spends someone else’s money on something for someone else (either that same someone who’s money it is, or for another person still).  This is by far the least efficient form of spending because the spender has neither an incentive to limit costs nor an incentive to maximize quality. 

Friedman’s insight was that government spending almost always falls into this fourth category, whereas private spending almost always falls into the first category.  He argued this was a big part of the reason the private sector is so much more efficient than the public sector, and he’s very clearly right about this.

But observe that even in the private sector, most healthcare spending under our current “insurance model” of paying for care falls under category three.  When everything’s covered for everybody – the explicit goal of the political left for decades now – those weighing care options (both doctors and patients) are enticed to spend enormous amounts of someone else’s money (that of the government or their insurance company) on products and services they’ll consume themselves.  Remember earlier when I cited how doctors and patients don’t even know how much their healthcare costs?  This is why.  It’s literally irrelevant to their shopping decisions.
It should honestly go without saying that no matter what healthcare system we pursue, the cost can no longer continue to be irrelevant if our nation is to be fiscally solvent.  Bastiat was on to something when he mused, way back in the 1800’s, that “government is that great fiction by which everyone tries to live at the expense of everyone else.”  The modern American left uses insurance as a code-word for cost shifting, and Friedman reminds us there is no such thing as efficient cost-shifting.  That’s why shifting away from that sort of expansive insurance model towards direct primary care payment is so inescapably necessary: we need to minimize the number of healthcare payments made via delayed third-party reimbursement.

Sounds good in theory, sure, but does it work in practice?  Yes.

Reason provides dozens of real-world examples of how this “direct primary care” system makes healthcare prices drastically, severely lower (think 10% or less of what they are now) while also being best for a growing movement of “off the grid” physicians and specialists.  One of them is Dr. Neuhofel, based in Lawrence, Kansas:

“[Neuhofel] charges for his services according to an online price list that's as straightforward as a restaurant menu.  A drained abscess runs $30, a pap smear, $40, a 30-minute house call, $100. Strep cultures, glucose tolerance tests, and pregnancy tests are on the house. Neuhofel doesn't accept insurance. He even barters on occasion with cash-strapped locals. One patient pays with fresh eggs and another with homemade cheese and goat's milk.

"What people don't realize is that most doctors employ an army of people for coding, billing, and gathering payment," says Neuhofel. "That means you have to charge $200 to remove an ingrown toenail." Neuhofel charges $50.

CATO Doctor Jeffrey A. Tucker agrees that ditching insurance would enable massive savings:

“Many doctors—myself included— will gladly substantially discount their fees in return for up-front payments from people who pay directly for their health care. Hospitals, ambulatory surgical centers, and urgent care clinics do the same. Why shouldn’t they? They don’t have to pay an army of staff to fill reams of forms and wait weeks to months to collect payment from an insurance company that sometimes is lower than what they get from their direct-pay patients.

Yet most of these same providers have much higher “list prices”—the official prices they list publicly—which are used to negotiate compensation contracts with health insurance companies and other third party payers.”

What’s more, a direct-pay system enables innovation and flexibility in ways retroactive reimbursement would stifle.  The Reason article continues:

“[Neuhofel} consults with his patients over email and Skype in exchange for a monthly membership fee of $20-30. "I realized people would come in for visits with the simplest questions and I'd wonder, why can't they just email me?" says Neuhofel. Traditional doctors have no way to get paid when they consult with patients over the phone or by email because insurance companies only pay for office visits.”

The rest of the article is full of dozens of several similar stories, and the underlying morale of the story is the same throughout: make the person paying for the care and the person receiving the care the same person on the same day, and good things happen.  Let’s do that.

9.      Push back eligibility for Medicare.  So far I’ve focused on what remains of the allegedly “private” portion of the US healthcare system, but much of that system has been consumed by government in more obvious ways.  Fully one third of Americans are eligible for free government healthcare through either Medicare or Medicaid, not including those uninsured who have the government pick up the tab for their emergency room visits.  Addressing the demand side requires addressing these expenditures too.

Of course, in libertarian utopia we wouldn’t need Medicare at all, but as I mentioned in regard to the FDA, a libertarian utopia is a long way off.  For the time being, we still need to address the program’s several decades of unpayable liabilities.  The fairest way to do that is to push back it’s eligibility by several years in accordance with how much longer Americans are living.  Failing to adjust the Medicaid eligibility year in accordance with later life expectancies and retirement averages is akin to failing to adjust fiscal entitlements for inflation, and liberals are certainly insistent on doing that.
This also fits in perfectly with the aforementioned strategy of reducing the role of comprehensive, take-all-you-need style insurance plans.  Taxpayers don’t need to be buying unlimited prescription drugs for every sore throat or bunion suffered by every working 63 year-old in the country.  Narrowing and delaying eligibility for Medicare benefits is the only fiscally responsible course quite apart from it’s broader economic implications; that it would make healthcare cheaper for most by decreasing demand is just a nice perk.

10.  Reform medical malpractice laws to make it harder to sue doctors.  Another factor driving overconsumption of healthcare is over-prescribing and the drain of defensive medicine.  The exact extent to which this plays a role is hotly debated, and I actually sympathize more with the left-wing arguments in that case; victims do need recourse when they’re lives are destroyed by gross negligence.  But one reasonable compromise with this approach could be getting rid of so-called punitive damages in medical tort cases, in which “an individual person is turned into a scapegoat to be ‘taught a lesson’ on behalf of the entire class of victims of conduct like his or her own.  In other words, it amounts to punishing doctors not only for their own misconduct, but for damages caused by other doctors who also happened to make the same mistake.  This isn’t just unjust: it drives up the cost of healthcare by frightening doctors into practicing defensive medicine just to cover their ass.  Recall that 20-33% of all healthcare expenditures are unnecessary in this country, and investigating what leads medical experts to advise so many unnecessary treatments “just to be safe” seems like a no brainer.  If removing the risk of NOT prescribing it will help doctors make such decisions according to medical necessity instead of fear, we should do what we can to remove that risk.