Posts tagged ‘socialism’

Transpartisan Plan #2: A Better Approach to Government Health Care: Focus the Government on the One Thing It Does Best

So this is my second in a series of transpartisan proposals, the unintended consequence of which is likely to have me ostracized not just by the two major parties but by the libertarian community as well.  My first such proposal, on climate, helped get me ostracized from the climate skeptic community.  Much of this article is based on a proposal I first made in 2015.

I want to say at the top that unlike my climate plan, this is not a plan so much as a concept for a plan.  As in climate, tribalism and muddled thinking about goals has made it hard to make forward progress on the role of government in health care.  The Democrats in 2008 and 2018 and the Republicans in 2010 arguably won a lot of Congressional seats stirring up fears about health care, so it is a vital issue with the public.  For those who want to just dig in their heals and wait until it all goes away, I don't think this will happen.  And I think the logic I outline is superior to the typical political process described by Megan McArdle as 

  1. Something must be done.
  2. This is something.
  3. Therefore, this must be done.

I think the key to creating a viable program for health care depends on being very clear on the goals that one is trying to achieve and matching those goals well with the capabilities of government.  Obamacare was a huge mess in this regard, weaving all over the place in terms of goals (increasing insurance coverage, lowering costs, improving care effectiveness) and assigning roles to the government that were laughably poorly matched to its skills.

Take increasing the percentage of Americans with health insurance, probably the number one goal of Obamacare and the metric most cited to evaluate its success.  Is the core need of Americans really to have health insurance, or it something else?  Is mandating that people buy insurance they don't value in order to improve this metric really improving individual well-being?  Does increased coverage really translate to increased health? (spoiler -- any causal link here is really tenuous in the data).  All these questions and more exist because increasing insurance coverage was the wrong goal.  So is anything having to do with "pre-existing conditions" as Democrats framed it (fairly successfully) in the recent election.

The #1 Consumer Need and Fear in Health Care

Here is my main assumption:  The real, core need of individuals is that a) when they or a family member get dreadfully sick, lack of money will not be a barrier to getting them the needed care and b) even if they can get the care, they would really prefer not to be bankrupted by it.  All these other things -- percent covered by insurance, mandates to accept pre-existing conditions, insurance mandates and subsidies -- are all imperfect proxies for this core need.

This is exactly the kind of need that we buy catastrophic insurance to cover.  I would be bankrupted and homeless if my house burned down and I was still responsible for the mortgage but relatively inexpensive fire insurance covers that.  Losses are not usually correlated (ie one loss does not make it more likely I have a second loss, except in flood insurance which is why there is no private flood insurance any more) so I don't worry about non-renewal even after a major fire.

But obviously health care is different.  Health problems this year greatly raise the probability of health problems in future years.  There is every incentive for an insurer to bail on you after one bad year.   This is the major fear that then follows the need - that catastrophic insurance will no longer be available after the first claim.  Had health insurance developed differently (e.g. with policies that covered more than just one year, more like term life) we might be in a different situation, but here we are.

Government is Good at Having Lots of Money on Call

And the good news is that the one thing the government is really, really good at is being an insurer of last resort -- they have the deep pockets and the fiat money power to do this better than anyone else -- that is why they are the insurer of last resort of bank deposits and for flood insurance (I am not saying that there are not moral hazards in these or unintended consequences, but the insurance works).  So there is the clear opportunity -- what people need most is catastrophic insurance even when the private market won't provide it and the government does really well is provide catastrophic insurance as a last resort.

Before we get into the plan itself, let's discuss a few things that the government does NOT do well:

Government is Bad at Cost control.

I feel like arguing that government is bad at cost control should be about as necessary as arguing that socialism always fails, but I guess it just needs to be repeated over and over.  A large part of the PPACA (Obamacare) was adding provisions meant to reap cost savings in health care.  None of it has worked.  The problem is that any real markets for health care have been disappearing for decades as more and more health care expenses get paid by third parties rather than individuals making price/value trade-offs (as they do with pretty much everything else -- the prosaic word for this is "shopping").

Now, Democrats are increasingly seeking "single payer" health care, arguing that aggregating all purchases in one entity will result in huge negotiating leverage.  But this never has been true.  It is impossible to have a real price negotiation without a market, and market price, to reference.   Look at another area of government spending where the government does 100% of the industry purchasing:  military hardware.  Do you really have the sense that the military is getting great pricing due to their purchasing power?  Supporters will site discounts that Medicare gets over other buyers for certain services and pharmaceuticals.  But note again that this is all in reference to a market price benchmark, that will disappear with single payer.  Further, many of the savings Medicare gets are not real savings, but cross subsidies where other customers end up paying more so Medicare can get something below cost.  When the government is buying everything, this cross-subsidy goes away.  And can you even imagine the lobbying and cronyism and opportunities for graft that will exist once government pricing is untethered from any market price?  Just think again about military procurement.

I suppose that the government could turn all health care suppliers into a huge regulated utility, for example paying pharmaceutical companies a utility-like cost plus a fixed return on drugs.  If this occurs, I hope you are satisfied with the range of treatments you have today because you won't get many others -- if you don't believe me, name the three most recent innovations that have come out of your local regulated utility.  Typically all they do is fight innovation (e.g. rooftop solar and co-generation).Finally, the government has a lot of regulations that Congress did not touch in the PPACA that restrict supply and greatly increase costs.  For example, many states and municipalities have certificate of need processes that prevent new entrants from adding hospitals or even new equipment without the permission of existing competitors.  The same is true in occupational licensing, which protects the most skilled (and expensive) health care workers from competition on simple procedures (e.g. why is someone required to go through a decade of medical training to put stitches in my kid's elbow?)

I will say that the PPACA has perhaps had an accidental effect on costs but not through any intended mechanism.  As deductibles in the gold/silver/bronze exchange plans have gone up to try to keep a lid on premiums, individuals previously used to first dollar health care now find themselves responsible for making spending choices.  This is a good thing, maybe the best part of the whole program.

Government is Bad at Service Effectiveness. 

The PPACA also sought to increase the effectiveness of health care providers.  The problem is that it is impossible for a small group of people in Washington to do this.  We are 300 million consumers who each make trade-offs in different ways and define effectiveness differently.  Take an example from another field:  Hair care.  In the state of AZ, hair cutters must go through 2000 hours of training to be licensed to cut hair -- they must demonstrate proficiency in all sorts of hair styles.  I personally don't give a cr*p about that -- I tend to choose the fastest, cheapest person who does a reasonable job.  But no one in government has anticipated that as a valid consumer need.

The PPACA was larded with expensive provisions that reflected the vision of a few elites about how they personally wanted health care performed.  A great example is the whole electronic medical records requirement, likely stuck in their based on a lot of intensive lobbying by makers of this software.  I have yet to meet a doctor who likes this software, or who feels that their patient service is improved by it, but everyone has to do it none-the-less.Perhaps even more than the cost issue, it is amazing to me that anyone believes that government involvement will make some service more effective.  If you think it can, I urge you to take two identical copies of documents, and go through the process of sending and tracking one by Fedex and sending and tracking one via the post office

Outlines of A Plan

I am not sure how you actually do this, but I think being clear on the goal and the useful (and not useful) roles of government in the process are good.  Rather than a plan, I offer some design goals for a plan

  1. Make the government the insurer of last resort to make sure that all Americans are protected against catastrophic health care costs in a year.  One approach, though probably not the most compact, is to make the government responsible for all non-discretionary individual health care expenditures in a year above a certain percentage of that person's adjusted gross income for that year.   I am thinking personal responsibility numbers that start at 15% of AGI and could increase in higher income brackets. Yes, if you are a person making $50,000 a year, then $7,500 of out of pocket health care expenses will be difficult -- but likely not bankrupting and not a barrier to getting needed care.   Perhaps we exclude social security from AGI and apply this to seniors as well, effectively eliminating medicare and phasing out government benefits for wealthy seniors.I am open to a more compact way of doing this. Perhaps guaranteed-entry government subsidized high-risk pools for health insurance.  The problem is that insurance companies will just dump all their expensive customers into those pools and we will end up with a system as costly to the taxpayers as the one above but less rationally organized.
  2. Shift as many of the individual spending price / value tradeoffs as possible into individual hands.  The step outlined above in #1 is a good start, at least for more routine purchases.  As a design goal, at every turn, try to build in ways for consumers to get money back or get rewarded for choices to use less or more inexpensive care.I do not think there is anything with more potential leverage for improving the health care world than bringing back individual shopping for medical care.  My kid used to injure himself a lot in sports and we had a high deductible on our insurance, so we found a sports medicine guy who charged us only $50 a visit if we paid cash.  Then he told us that when we went downstairs to the radiology company, to tell them we were paying cash.  Sure enough, the lady there pulled out a special book from behind the counter and the $300+ they charge to the insurance companies became $40 to us.  On the other hand, we have spent weeks talking to doctors and hospitals about  heart surgery my mother-in-law (who is covered by Medicare) needs.  You know what has not come up a single time?  Price.  I have zero idea how much it will cost -- but let's say it is $100,000.  Can you imagine buying anything else that expensive without discussing the price once?
  3. Any medical benefits paid by the employer become fully taxable
  4. Price transparency mandates -- every provider must disclose the best price it sells a product and service at, as well as your price.  For all but emergency procedures, a cost estimate must be given in advance (My dog had to have surgery and even in an emergency condition they gave me a detailed cost estimate in advance).
  5. Systematic review of supply restrictions and rethinking of licensing arrangements. Banning of state and local certificate of need processes.
  6. Accelerated and streamlined drug approval process.  Really what I would like to see is that there is a government led testing process that leads not to an approval/refusal but to the publication of safety/effectiveness data that doctors and patients can then use to make their own decisions.

Hat tip to Megan McArdle who has been suggesting something like this for years, probably long before I started thinking about it.

How I Am Getting Driven Towards Being A Single Issue Voter

I confess that historically, I have always had a bit of disdain for folks who say they are single issue voters.  "Really?" I would ask, "You are going to ignore everything else going on and only vote based on X?"  I thought it was a narrow-minded and shallow way to vote.

My apologies.  I may have become a single issue voter myself.  Here is why:

Two years ago, when the Republicans manage to elect Trump, I was sure I was going to vote straight-ticket Democrat in reaction.  I find Trump's entire style distasteful in the extreme.  And while I think there has been some good news on the regulatory front in various Departments under him, on his signature issues of immigration and trade I am 100% opposed to his goals and his approach.  And while I have always believed Trump is probably a social liberal himself, he has a lot of advisors and cabinet members who are pretty hard-core opposed to a variety of freedoms, from gay marriage to marijuana use.

But that was two years ago, before the Democrats decided that their future was in a hard left turn into Marxism.   I am not sure how a serious person can really entertain socialism  given its pathetic history, but it seems to be a product of several cardinal sins of the modern generation (e.g. ignorance of history, evaluating policy based on its intentions rather than its logical consequences, and categorizing all perceived problems as resulting from white male European hetereosexual priviledge).  At first I thought perhaps people were just using "democratic socialism" as a synonym for more redistributive taxes and greater welfare spending within an otherwise capitalist society.  But over time I see proposals like one in Congress with fully 100+ Democratic sponsors calling for banning health care companies of all sorts from making a profit.  This is straight-on socialism and ignorant in the extreme of any consequences beyond good intentions.  By the way, I actually don't think we will end up with socialism under the Democrats but a form of European-style corporatism.  This will mean that large companies like Google and Amazon with political influence will be ok, maybe even better.  But small companies like mine with no hope of political access will get hammered.

So here is my voting problem.  Republicans suck on many issues -- gay rights, drug law liberalization, immigration, trade -- that I am extremely passionate about (I briefly ran an Arizona initiative to legalize gay marriage) but that don't directly affect me.  Yes, they affect many of my friends -- I have friends with potential immigration issues, I have friends with businesses getting hammered by tariffs, I have friends who are gay and married, I have friends that smoke rope and would rather not go to jail for it -- but not me directly.  On the other hand, Democrats suck on most business regulatory issues, trying in the near term to turn the US into California and in the long-term into Venezuela.  These are issues that DO affect me directly and greatly as a business owner.   Already I have had to red line states such as California, Oregon, Illinois, New York, and Rhode Island where I formerly did business but backed out because the business climate was impossible.  If this spreads to more states, I will be wiped out.

All of this is being made worse as both parties have started to get worse in the areas where they were traditionally more sensible.  Republicans have abandoned whatever free market credentials they had by pursuing trade protectionism and increased restrictions on companies trying to hire foreign workers.  Democrats are in the process of turning against free speech and have started sticking their nose in the bedroom (for example, by shifting the discussion of sex work to "trafficking," Republicans have successfully gotten Democrats to turn against a number of sorts of sexual freedom).

For years I have voted against my personal interests in elections, because my interests did not seem as weighty as other issues in play.  Folks are being denied basic civil rights, so am I really going to vote for the folks enabling that just to avoid (admittedly costly and loony) California meal break laws to be applied in Arizona? Now, though, I am starting to rethink this position.  In part because threats to businesses like me are more existential, and part because I am exhausted spending time defending other people's rights who in turn actively work to take away mine.  For certain offices like sheriff, that don't affect my business, I will still be voting as I always have -- which person is least likely to harass the sh*t out of certain marginalized groups.  But for others, and particularly the national offices, I am thinking about voting a straight "it's all about me" ticket (I am reminded, ironically, of the old "Me, Al Franken" SNL news bit he used to do.)

By the way, you might ask, "Coyote, you are a libertarian, why not just vote for the Libertarian candidate."  Good question.  Well, it turns out that the Arizona state legislature changed the rules for third parties explicitly to get the libertarian party off the ballot and prevent libertarians from "taking" votes from Republicans.  Seriously, they were not even subtle about it.  Instead of having to get a certain percentage of libertarians to sign a petition to get on the ballot, libertarian candidates now have to get a certain percentage of all independents to sign a petitions to get on the ballot.  This is an very high bar and one that most libertarians could not clear this year (cynically, somehow the rules allowed green candidates to get on easier as Republicans want them on the ballot to "steal" votes from Democrats.)  This is the #1 reason I may not vote tomorrow at all -- I cannot vote for our Marxist Democratic candidate for Senator, but I refuse to be forced to vote for the Republican.  Ugh.

The Good Intentions Generation

This seems to be a generation in which good intentions are enough.  Actually, I am not sure this is exactly right, let me try again.  This seems to be a generation in which the signaling of good intentions is enough.


Socialism will work because we have good intentions for it.  Trade wars will work because we have good intentions.  Tesla is valuable because it has good intentions.

Democratic socialism supporters don't even know what socialism is.  Trump supporters don't understand squat about economics but just feel that Trump genuinely wants to help them.  Tesla bulls don't even try to look at a balance sheet but just really, really love the idea of Elon Musk being a real-life but progressive Tony Stark.  Not sure where I am going with this, but just frustrated this morning trying to talk policy in a world of virtue-signalling.  In the last few elections I have been presented with discouraging but predictable choices.  Now I am presented with a choice between two parties that have both lost their minds.

Arnold Kling on the Evolving State of US Politics

I loved Kling's book on the three languages of politics.  While I find this a bit depressing, I mostly agree

I think that I would have preferred that the elite stay “on top” as long as they acquired a higher regard for markets and lower regard for technocratic policies. What has been transpired is closer to the opposite. There was a seemingly successful revolt against the elite (although the elite is fighting back pretty hard), and meanwhile the elite has doubled down on its contempt for markets and its faith in technocracy.

I am disturbed about the news from college campuses. A view that capitalism is better than socialism, which I think belongs in the mainstream, seems to be on the fringe. Meanwhile, the intense, deranged focus on race and gender, which I think belongs on the fringe, seems to be mainstream.

The media environment is awful. Outrage is what sells. Moderation has fallen by the wayside.

 

Thoughts on the Oscars and Politics

I was talking to a Conservative friend the other day and mentioned that I was not watching the Oscars, that I just had not stomach for all the smug political virtue signalling.  He said that he knew why he and fellow Conservatives were not watching, but why me?  He observed that for most issues that would come up -- immigration, gay marriage, distaste for Trump -- that I probably would agree with most of what was going to be said.  My answer to him was in three parts

  1. I am exhausted by the addition of politics to every sphere of life - there is nowhere to escape any more.  This politicization of everything, including sports and entertainment, has historically been a feature of totalitarian governments.  In Hitler's Germany, you couldn't just cut hair, but you had to be in the league of national socialist barbers and be ready with a plan for how your barbering was going to advance national socialism.  yuk.
  2. People seem to like it when famous movie stars and sports stars espouse political opinions that they share.  I am not sure why.  I can only imagine that these folks are in their hearts unsure of themselves and thus get renewed confidence when some famous person agrees with them, like counting likes on Facebook or something.  I on the other hand already am pretty sure I am right and I have thought a lot about the issue including reading opposing opinions on it.  Nothing Martin Sheen or Beyonce says about the issue, unless it is related to the entertainment industry, is likely to either change my mind or make me more confident in my opinions.  In fact...
  3. Hearing actors who I know to be dumb as a post agree with me using facile and hysterical reasoning is only likely to make me question whether I really feel good about agreeing with this dolt.  When Rosie O'Donnell agrees with me, it's time to rethink that issue.  I feel like I was stampeded into supporting the Iraq war in part due to the incredible lameness of a lot of the anti-war "arguments".  That was a mistake on my part, and I own up to it, but I still feel tempted to do the opposite of whatever Sean Penn says even when I agree.

Capitalism vs. Socialism

This is a good video about various voting mechanisms for handling voting between more than 2 choices.

VotingParadoxes from Paul stepahin on Vimeo.  Via Alex Tabarrok

The video is about voting, but to make things simple it discusses voting among people for a single ice cream flavor they all have to share.   I don't think this video was meant to have any broader application beyond just highlighting basic paradoxes and strategies well-known in voting theory.   To me, though, this video highlights the strong advantages of capitalism over socialism in at least three ways

  1. Forcing one-size-fits-all socialist and authoritarian solutions sucks vs. allowing individuals to make choices based on their personal preferences regardless of other preferences in the group.  While the video discusses a variety of voting approaches for forcing everyone into a single choice, all of these result in a lot of folks who don't get their first preference.  Obamacare is a great example, where product features have been standardized, essentially through a voting process (though indirectly) and huge numbers of people are unhappy.
  2. The video fails to discuss one shortcoming of simple yes/no voting, and that is degree of preference.  In the real world, we both may prefer vanilla over chocolate, but your preference might be pretty close whereas I might be so allergic to chocolate that eating it will kill me.  Socialist and authoritarian approaches don't have a solution for this, but market capitalism does, as prices signal not only our preference but our degree of preference as well.  The real market for ice cream is a preference expression process orders of magnitude more sophisticated than voting.
  3. It is almost impossible for even an autocrat who legitimately wants to maximize well-being to do so, because the mass of individual preferences are impossible to encompass in any one mind.  Towards the end of the video, it became harder and harder for a person to synthesize a best approach from the preference data, and this was just for 10 people.  Imagine 300 million preferences.

Venezuela's Directive 10-289

I have written before that the best way to read Ayn Rand's Atlas Shrugged is not as a character-based novel, but as an extended exposition taking socialism to its logical conclusion.  That ultimate conclusion in the novel is directive 10-289, whose first two points are these:

Point One. All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment, under penalty of a term in jail. The penalty shall be determined by the Unification Board, such Board to be appointed by the Bureau of Economic Planning and National Resources. All persons reaching the age of twenty-one shall report to the Unification Board, which shall assign them to where, in its opinion, their services will best serve the interests of the nation.

Point Two. All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation, and the owners of such establishments shall not quit nor leave nor retire, nor close, sell or transfer their business, under penalty of the nationalization of their establishment and of any and all of their property.

When I first read this at age 18, I thought this was a bit over the top.  But I have seen similar things in my lifetime, even in the US.  I remember years ago a law in Oregon where companies could not go out of business without the state's permission.

More recently, Atlas Shrugged has started to become redundant -- we don't need it to see the logical conclusion of socialism, we can just watch Venezuela.  Here is a brief dispatch from that country via Glen Reynold's, showing that Venezuela has gone full 10-289

This is not a joke nor even an exaggeration. I just found out that my sister in law’s other brother-in-law was arrested in Venezuela at the airport while trying to leave the country. His crime, he was an employee for a company that went out of business. Waiting for more? There isn’t any. Maduro has decreed that any business that goes out of business has committed economic treason and its employees are subject to arrest. They had already arrested numerous owners and managers but this is the first time they went after rank and file worker bees.

Feel the Bern, suckers.

The Wages of Communism -- The Chinese Catastrophe Under Mao

Apparently new Communist Party archives are becoming available to scholars in China, and the true story of the Great Leap Forward appears to be even worse than we imagined.

A catastrophe of gargantuan proportions ensued. Extrapolating from published population statistics, historians have speculated that tens of millions of people died of starvation. But the true dimensions of what happened are only now coming to light thanks to the meticulous reports the party itself compiled during the famine. My study, Mao’s Great Famine: The History of China’s Most Devastating Catastrophe (2010), relies on hundreds of hitherto unseen party archives, including: secret reports from the Public Security Bureau; detailed minutes of top party meetings; unexpunged versions of leadership speeches; surveys of working conditions in the countryside; investigations into cases of mass murder; confessions of leaders responsible for the deaths of millions of people; inquiries compiled by special teams sent in to discover the extent of the catastrophe in the last stages of the Great Leap Forward; general reports on peasant resistance during the collectivisation campaign; secret police opinion surveys; letters of complaint written by ordinary people; and much more.

What comes out of this massive and detailed dossier is a tale of horror in which Mao emerges as one of the greatest mass murderers in history, responsible for the deaths of at least 45 million people between 1958 and 1962. It is not merely the extent of the catastrophe that dwarfs earlier estimates, but also the manner in which many people died: between two and three million victims were tortured to death or summarily killed, often for the slightest infraction. When a boy stole a handful of grain in a Hunan village, local boss Xiong Dechang forced his father to bury him alive. The father died of grief a few days later. The case of Wang Ziyou was reported to the central leadership: one of his ears was chopped off, his legs were tied with iron wire, a ten kilogram stone was dropped on his back and then he was branded with a sizzling tool – punishment for digging up a potato.

There is more like this in the article.  When I read this, I can't help thinking about Hannah Arendt and her classic "Origins of Totalitarianism."  During the 60's and 70's, this fabulous work was targeted for marginalization by the academic Left because many in academia were admirers of Stalin and the Soviet Union and deeply resented the parallels Arendt raised between European fascism and Soviet communism.   Arendt's partial rehabilitation came after 1989, when Eastern European scholars and historians coming out from under communism looked around for a framework to describe their experiences under communism, and found Hannah Arendt to be most compelling.  This new wave of scholarship on communist China likely will vindicate Arendt as well.

American university campuses, in their current orgy of admiration for socialism, will have to work extra hard to whitewash this, but I am sure they are up to the task.

Update:  Venezuela goes full Great Leap Forward.

 

Living Atlas Shrugged in Venezuela

This sounds so much like the latter stages of Atlas Shrugged, when one by one Colorado businesses shut down, worsening shortages across he country.  The government tries to come in and restart each factory, but there is no confidence that the government can actually do the job and within months the whole thing has imploded forever.

Over the weekend, Kimberly-Clark said that the South American nation’s deteriorating economic situation had made “it impossible to continue our business at this time."  The company had made a number of hard-to-find staples in Venezuela such as diapers and face tissues.

As Bloomberg adds, the decision will likely to add to shortages that have gripped Venezuela for the past few years after the ruling socialists capped the price on many consumer basics below production costs." As we have documented repeatedly, desperate shoppers now routinely spend long hours in front of stores to purchase essential products ranging from toilet paper to rice. At the same time, companies face hefty losses on price-controlled goods, while the products are often flipped on the black market for many times their sticker price.

So in retaliation, Venezuela's government announced it had seized the factory.  Labor Minister Owaldo Vera said Monday that the socialist government took the action at the request of the 971 workers at the factory that the company decided to shutter. The seizure follows a similar takeover from 2014 when Clorox announced it was closing its doors.

"Kimberly-Clark will continue producing for all of the Venezuelans," Vera said in a televised statement from the factory surrounded by workers chanting pro-government slogans. That statement was not exactly true: former workers of the company would continue producing under the observation of government management. We doubt this "forced restructring" will survive more than a few months.

I have written this before, but I interpret Atlas Shrugged a bit differently than most.  There is much criticism of the one-dimensional characters and limited character development in the book.  But I have always thought this beside the point.  The main character in Atlas Shrugged is the world itself, and the main story arc is the decline and fall of the world under the increasing influence of socialism.  All the human characters are just props to this main drama.

In this interpretation, the climax of the book is when the hobo Jeff Allen tells the story of 20th Century Motors to Dagny on the train.  This story shows the final death throws of a group of people attempting to pursue socialism in its purest form.  It's a statement of the end towards which everything else is quickly heading.  After this point in the book, we immediately are in Galt's Gulch and end up with Rand's Utopian vision, which from a literary standpoint is awkward and boring.  That's because utopian novels are always dull as dirt.  Rand's triumph in that book was that she was absolutely prescient about how socialism plays out, which we are seeing today in Venezuela.

If Bernie Sanders and His Supporters Get Their Way, This Would Be the Food Line

Update:  Food lines in socialist Venezuela

food

Progressives are going to try to memory-hole their support for Chavez and Venezuela, but don't you forget that most prominent progressives were enthusiastic supporters of the imposition of socialism by Chavez in Venezuela.  It is only now, when its predictable failures are becoming too obvious even for the American media to ignore, that progressives have gone silent on Venezuela.  Give them a few years and they will likely develop a meme that this was some sort of failure of free markets.

This is the Basic Idea Behind Opening Up Cuba to American Business... Though It Would Be Nice to See Internet Access from a Company That Doesn't Roll Over to Authoritarian Censorship

The idea of opening up Cuba is NOT to somehow reward or even ignore their bad behavior but to open them up to the world.  Google wants to be in the forefront of providing Internet access, but given their history of rolling over on censorship to the Chinese, it would be nice to see someone less evil in the vanguard.

I meant to post this a while back, but Jeff Flake totally gets it on Cuba, and I appreciate his leadership among the Republicans on this.  I absolutely loved this quote:

Flake has long said that Americans should be free to see for themselves the stunted fruit of socialist policy. He tells the story of meeting with Lech Walesa, the great activist who challenged Soviet domination of Poland. "I have no idea," Walesa complained, "why you guys have a museum of socialism 90 miles from your shore and you won't let anybody visit it."

After three generations, I think one can safely call a policy like our embargo "failed" and try something else.

The Aristocracy of Huckterism

I was thinking about the crazy populist nuttiness of Donald Trump and the misguided focus of Black Lives Matter and the musty socialism of Bernie Sanders.  As I drive around Europe and see ruins of castles and palaces, it occurred to me that we had almost always been saddled with an aristocracy exercising power over us.  Sometimes they won that position through violence and military action, and sometimes by birth.

But it struck me that we have a new sort of aristocracy today:  the Aristocracy of Hucksterism.  These new aristocrats are just as wealthy and powerful as the old sort, but they have found a new way to gain power -- By suckering millions of people to simply hand it to them.   And when they inevitably fail, and make things worse for everyone, they additionally manage to convince people that they root cause of the failure is that they had not been given enough power.

I Have This Argument All The Time With The US Forest Service

I operate recreation areas in the US Forest Service and from time to time get criticized that my profit adds cost to the management of the facilities, and that the government would clearly be better off with a non-profit running the parks since they don't take a profit.  What they miss is that non-profits historically do a terrible job at what I do.  They begin in a burst of enthusiasm but then taper off into disorder.    Think about any non-profit you have ever been a part of.  Could they consistently run a 24/7/365 service operation to high standards?

Don Boudreaux has a great quote today that touches on this very issue

from page 114 of the 5th edition (2015) of Thomas Sowell’s Basic Economics:

While capitalism has a visible cost – profit – that does not exist under socialism, socialism has an invisible cost – inefficiency – that gets weeded out by losses and bankruptcy under capitalism.  The fact that most goods are more widely affordable in a capitalist economy implies that profit is less costly than inefficiency.  Put differently, profit is a price paid for efficiency.

It is also the "price" paid for innovation.

Rental Market in San Francisco

One of the problems with making predictions about bad public policy is that sometimes you have to wait 20-30 years until after the policy was passed to see all the negative consequences play out, by which time people have forgotten about the initial policy changes that caused all the disruption.

But I got to skip those 30 years in San Francisco.  I never really paid that much attention to the city until I read a book called "Season of the Witch" written by a progressive about life in San Francisco in the 60's and 70's.  As I wrote previously:

What struck me most were the policies these folks on the Progressive Left had on housing.  They had three simultaneous policy goals:

  1. Limit San Francisco from building upward (taller).  San Francisco is a bit like Manhattan in that the really desirable part where everyone wants to live is pretty small.  There was (and I suppose still is) a desire by landowners to build taller buildings, to house more people on the same bit of  valuable land.  Progressives (along with many others across the political spectrum) were fighting to have the city prevent this increased density as a threat to San Francisco's "character".
  2. Reduce population density in existing buildings.  Progressive reformers were seeking to get rid of crazy-crowded rooming houses like those in Chinatown
  3. Control and cap rents.  This was the "next thing" that Harvey Milk, for example, was working on just before he was shot -- bringing rent controls to San Francisco.

My first thought was to wonder how a person could hold these three goals in mind without recognizing the inevitable consequences, but I guess it's that cognitive dissonance that keeps socialism alive.   But it should not be hard to figure out what the outcome should be of combining: a) some of the most desirable real estate in the country with b) an effective cap on density and thus capacity and c) caps on rents.  Rental housing is going to be shifted to privately owned units (coops and condos) and prices of those are going to skyrocket.  You are going to end up with real estate only the rich can afford to purchases and a shortage of rental properties at any price.  Those people with grandfathered controlled rents will be stuck there, without any mobility.

Since reading the book, I have paid attention to stories on the rental market in San Francisco.  In short, it is just as screwed up as would have expected 40 years ago when both density and rent caps were put in place.

As San Francisco's housing crisis continues to pit long-term residents against the recent influx of affluent tech employees, Airbnb and other short-term rentals have become a source of tension. Today San Francisco Mayor Ed Lee and Supervisor Mark Farrell hoped to ease some of that tension by introducing reforms to the city's short-term rental laws that put a 120 day yearly cap on all short-term rentals. The package of amendments also introduced the creation of a new Office of Short-Term Rental Administration and Enforcement for the city staff to "coordinate in the administration and aggressive enforcement of the law."

Airbnb and other short-term rental services have come under fire in San Francisco because they take rental units off an already limited housing market. The current law caps short-term rentals at 90 days when the host is not present. If the host is present -- for example a room rental in an occupied home -- there is no yearly cap. Today's amendment package sets caps for both types of rentals. Mayor Lee said in a statement, "this legislation will help keep our City more affordable for homesharers, preserve rental housing for San Franciscans, protect neighborhood character and streamline permitting and enforcement under a fair set of regulations."

This is from a tech site that has developed a reputation, at least with me, for being astoundingly ignorant of even basic economics, so one has to make some guesses at what is going on here.  For example, it seems odd to say that renting a space on a short term lease rather than long-term somehow takes rental units off the market.  They are still being rented, are they not?  How could one describe them as being taken off the market?

My guess at what is going on here is that short-term rentals are likely exempt from some of the most onerous portions of San Francisco tenant law.   Likely, renting short-term allows one to bypass rent controls and charge more.  It also likely gives one some relief from the city and the state's horrendous tenant protections that make it virtually impossible to evict a tenant.  You lease to someone in SF, and you are stuck with them for life like a shark with a remora on his back, even if that tenant refuses to pay rent for years or constantly trashes the apartment.

San Francisco has created a system where they are absolutely guaranteed to have a shortage of rental properties.  Rather than address those laws that create the problem, politicians put their whole effort -- creating brand new agencies, no less -- to stop entrepreneurs from circumventing the madness and trying to provide housing.

Postscript:  The war against wealthy tech workers in SF is in full swing.  What SF would really like to do, I think, is close its borders and institute immigration controls to keep these folks out.  I know there are many parts of the world, including unfortunately our country, that work to keep poor uneducated immigrants seeking opportunity out.  But has there ever been a time or place in history where a particular place worked so hard to keep out rich educated immigrants seeking only to spend their money?

Scenes from the Last Chapters of Atlas Shrugged

I have always read Atlas Shrugged not as a character story (and thus I don't get bent out of shape by the stiff black and white characters) but as a story about the world itself changing and crashing under socialism and cronyism.  As such, my favorite scene in the book is the hobo's tale of the socialist experiment on the 20th Century Motor Company.

Anyway, the final chapters of the book are full of more and more outrageous state interventions that build to a point that they are hard to believe anyone would actually ever try such things.   Unbelievable, until one looks at Venezuela

Venezuelans soon may need to have their fingerprints scanned before they can buy bread and other staples. This unprecedented step was proposed after Maduro had the brilliant idea of proposing mandatory grocery fingerprinting system to combat food shortages. He said then that "the program will stop people from buying too much of a single item", but did not say when it would take effect.

Privacy concerns aside (clearly Venezuelans have bigger, well, smaller fish to fry) there was hope that this plunge into insanity would be delayed indefinitely, as the last thing Venezuela's strained economy would be able to handle is smuggling of the most basic of necessities: something such a dramatic rationing step would surely lead to.

Unfortunately for the struggling Venezuelan population, the time has arrived and as AP reported over the weekend, Venezuela "will begin installing 20,000 fingerprint scanners at supermarkets nationwide in a bid to stamp out hoarding and panic buying" as of this moment.

The government has been selectively rolling out the rationing system for months at state-run supermarkets along the western border with Colombia where smuggling of price-controlled goods is a major problem.

On Saturday, President Nicolas Maduro said that seven large private retail chains had voluntarily agreed to install the scanners.

Last month the owners of several chains of supermarkets and drugstores were arrested for allegedly artificially creating long queues by not opening enough tills.

It gets better: Maduro also accused Colombian food smugglers of buying up price-controlled goods in state-run supermarkets along the border.

What a mess.  An entirely predictable mess.

Yet Another Reason to Open our Relations to Cuba

The only reason people like Michael Moore or Tom Harkin can get away with singing praises of Cuban socialism is because most Americans can't go visit and see for themselves.  By keeping Cuba off-limits, we are doing the communists' work for them by allowing them to provide cherry-picked videos and stories through useful idiots that have zero bearing on the true life of the average person in Cuba.

Two DVD Reviews of Poorly Rated Movies That Had Some Redeeming Characteristics

I had pretty good experiences this week with not one but two movies rated 6 and under (which is pretty low) on IMDB

Atlas Shrugged, Part II:  A mixed bag, but generally better than the first.  The first episode had incredibly lush, beautiful settings, particularly for a low budget indie movie.  But the acting was stilted and sub-par.  Or perhaps the directing was sub par, with poor timing in the editing and dialog.  Whatever.  It was not always easy to watch.

The second movie is not as visually interesting, but it tossed out most of the actors from the first movie (a nearly unprecedented step for a sequel) and started over.  As a result, the actors were much better.  Though I perhaps could wish Dagny was younger and a bit hotter, she and the actor who played Rearden really did a much better job (though there is very little romantic spark between them).  And, as a first in any Ayn Rand movie I have ever seen, there were actually protagonists I might hang out with in a bar.

The one failure of both movies is that, perhaps in my own unique interpretation of Atlas Shrugged, I have always viewed the world at large, and its pain and downfall, as the real protagonist of the book.  We won't get into the well-discussed flatness of Rand's characters, but what she does really well -- in fact the whole point of the book to me -- is tracing socialism to its logical ends.  For me, the climactic moment of the book is Jeff Allen's story of the fate of 20th Century Motors.  Little of this world-wilting-under-creeping-socialism really comes out well in the movie -- its more about Hank and Dagny being harassed personally.  Also, the movie makes the mistake of trying to touch many bases in the book but ends up giving them short shrift - e.g. Jeff Allen's story, D'Anconia's great money speech, Reardon's trial, etc.

I would rate this as worth seeing for the Ayn Rand fan - it falls short but certainly does not induce any cringes  (if only one could say that about the Star Wars prequels).

Lockout:  This is a remake of "Escape from New York", with a space prison substituting for Manhattan and the President's daughter standing in for the President.  The movie lacks the basic awesomeness of converting Manhattan to a prison.  In fact, only one thing in the whole movie works, and that is the protagonist played by Guy Pierce (who also starred in two of my favorite movies, LA Confidential and Memento).

The movie is a total loss when he is not on screen.  The basic plot is stupid, the supporting characters are predictable and irritating, the physics are absurd, and the special effects are weak.  The movie is full of action movie cliche's -- the hero throwing out humorous quips (ala Die Hard or any Governator movie), the unlikely buddy angle, the reluctant romantic plot.  But Pierce is very funny, and is thoroughly entertaining when onscreen.  I think he does the best  job at playing the wisecracking, cynical hero that I have seen in years.

OK, So We Greens Are Communists After All

This is pretty hilarious. Environmentalist and global warming advocate Chris Mooney writes

My latest DeSmogBlog post is about how climate skeptics basically seem to believe that their opponents are driven by socialism and communism. We aren’t, of course–duh–but it is fascinating to listen to how they explain this, in their own words.

After some participation years ago in this kind of finger-pointing over motivations in the climate debate, I have of late found such activity to be worthless at best and have tried to stay away from it.

But this became funny when Mooney's readers started commenting on the post.  In effect, they wrote "we are anti-growth socialists."  Mooney was forced to write, in comment #32:

yes. i guess my side loses this round, thanks to this thread. depressing

Thanks to Climate Depot for the tip.

Happy Lenin's Birthday

Nothing better illustrates the succesful rebranding of most of the principles of socialism into environmentalism than Earth Day, itself a rebranding of Lenin's birthday.

It is no accident that all the things we supposedly have to do to fight climate change are the exact same things socialists used to demand under the banner of Marxism.

After the failure of communism in Eastern Europe, promoters found their message -- to give up our freedoms for the collective -- didn't really have much power.  I guess they deserve some credit as marketers to have successfully gotten so many people who rejected the socialist message to buy into the plea that they need to give up all their freedoms for a 0.01% change in atmospheric CO2 concentration.

The Danger of Community Rating

From Boston.com. via a reader:

Thousands of consumers are gaming Massachusetts' 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses.

In 2009 alone, 936 people signed up for coverage with Blue Cross and Blue Shield of Massachusetts for three months or less and ran up claims of more than $1,000 per month while in the plan. Their medical spending while insured was more than four times the average for consumers who buy coverage on their own and retain it in a normal fashion, according to data the state's largest private insurer provided the Globe.

The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month. The previous year, the company's data show it had even more high-spending, short-term members. Over those two years, the figures suggest the price tag ran into the millions.

Other insurers could not produce such detailed information for short-term customers but said they have witnessed a similar pattern. And, they said, the phenomenon is likely to be repeated on a grander scale when the new national health care law begins requiring most people to have insurance in 2014, unless federal regulators craft regulations to avoid the pitfall.

I would argue that these numbers for system gamers would be even higher save for a residual sense of honor in the population that resists such gaming, a sense of honor that will tend to be eroded over time by these incentives.  This is a theme I have discussed before, in answer to the question of why socialized nations seem to do well at first.  My answer to that question was that residual work ethic and values tend to mitigate, initially, against the horrible incentives inherent in socialism, but that these values erode when people see themselves effectively punished for their values and work ethic.

A Few More Thoughts on Citizen's United

A friend of mine from Princeton days writes:

... and you seem in favor of the Supreme Court decision in Citizens United vs the FEC, I was wondering how you feel about being a customer or supplier or competitor of large businesses who can spend far more than your business to influence the rules of the game.

From what I read, I am sure you have a compelling answer, but I would be scared to death. (Maybe that's why I work for a large corporation [Target] instead of attempting to run my own business.)

I thought this was a pretty good question, and I answered:

  1. I try hard not to make utilitarian arguments to Constitutional and rights issues.  As an example, I am sure we might have less crime if the police were empowered to incarcerate anyone they wanted without trial, but we don't do it that way.
  2. I worry most about corporate lobbying (e.g. by Immelt at GE) and this is unaffected by this ruling - it was legal before and after.   This decision allows corporate advertising, which is public and visible, which I can at least see and react to, as opposed to back room deal making.
  3. Libertarians certainly worry about your question, and why many of us fear that what we are creating in this country is a European-style corporate state, rather than socialism.  To a libertarian, the answer is not less speech, but less government power to pick winners and losers in commerce.

America Bought Me for 20 Tons of Wheat

A Russian immigrant  (escapee?) discusses how he got out of Russia as part of an ongoing series of videos pleading with Americans not to head down the path to socialism.

Copenhagen as Income Redistribution

I am slammed here at work, but I will give you a couple of nice articles on this topic.  First from IBD:

The United Nations' Copenhagen Climate Conference is going fast into meltdown. It may be because it's not about climate anymore, but fitting a noose on the world's productive economies and extracting wealth transfers.

Poor countries have gone from defending their right to economic development as a reason for exemptions to emissions cuts to claiming a "legitimate" right to vast wealth transfers from the West to prevent emissions. They call it "climate justice."

Monday, the Group of 77, led by African states, shut down the conference for the second time, saying they would pick up their marbles and go home if the West didn't agree to their formula for emissions cutbacks and send them more than the $10 billion promised by the West....

Having manipulated the foreign aid racket for decades, the African officials knew just what buttons to push with Western Europeans. Not surprisingly, they won concessions. No doubt they'll do it again to get more, and the Danes and other one-worlders will give them what they want.

The second is from Charles Krauthammer

The idea of essentially taxing hardworking citizens of the democracies to fill the treasuries of Third World kleptocracies went nowhere, thanks mainly to Ronald Reagan and Margaret Thatcher (and the debt crisis of the early '80s). They put a stake through the enterprise.

But such dreams never die. The raid on the Western treasuries is on again, but today with a new rationale to fit current ideological fashion. With socialism dead, the gigantic heist is now proposed as a sacred service of the newest religion: environmentalism.

One of the major goals of the Copenhagen climate summit is another NIEO shakedown: the transfer of hundreds of billions from the industrial West to the Third World to save the planet by, for example, planting green industries in the tristes tropiques....

Socialism having failed so spectacularly, the left was adrift until it struck upon a brilliant gambit: metamorphosis from red to green. The cultural elites went straight from the memorial service for socialism to the altar of the environment. The objective is the same: highly centralized power given to the best and the brightest, the new class of experts, managers and technocrats. This time, however, the alleged justification is not abolishing oppression and inequality but saving the planet.

Update:

Leaders of fifty African nations came to Copenhagen asking $400 billion for the next three years to "offset" carbon credit "damages" which they claim to suffer. Inexplicably, two days ago, that demand was increased to an eye-goggling 5% of GDP (gross domestic product), estimated at $722 billion from the United States alone. There never was a response from the industrialized world.

The London Guardian reports today that the disgruntled Africans may boycott the rest of the climate summit. The conference's own web page quotes the Ethiopian prime minister as saying he will "scuttle" talks unless there is discussion of "real money" and "not an illusion."

From The Copenhagen Climate Change Treaty

The treaty draft is really hard to read, as it has all kinds of alternate language in brackets.  However, a few folks have already started reviewing the treaty, and what they are finding is less of a climate treaty and more of a blueprint for world socialism.  One example, via Anthony Watt, from page 122 of the draft:

17. [[Developed [and developing] countries] [Developed and developing country Parties] [All Parties] [shall] [should]:]
(a) Compensate for damage to the LDCs' economy and also compensate for lost opportunities, resources, lives, land and dignity, as many will become environmental refugees;

(b) Africa, in the context of environmental justice, should be equitably compensated for environmental, social and economic losses arising from the implementation of response measures.

Compensating for "lost opportunities?" Isn't that number just whatever they want it to be? And don't get me started on lost "dignity."

The New Obama 5-Year Plan

We really couldn't be more screwed when it is up to an NPR reporter to make the argument for free enterprise:

EPA Administrator Lisa Jackson told NPR's Michelle Norris yesterday: "The President has said, and I couldn't agree more, that what this country needs is a one single national road map that tells automakers who are trying to become solvent again what kind of car it is they need to be designing and building for the American people." Norris then asked: "Is that the role of Government though? That doesn't sound like free enterprise." Jackson responded: "Well it is free enterprise in a way."

via Maggies Farm.

Update: Q&O has a great post deconstructing Obama's view of government as health care planner.  Very frightening.