Posts tagged ‘Mickey Kaus’

Crony Capitalism

Perhaps I do not give Sarah Palin enough credit, because this is a really good passage, from one of her recent speeches (emphasis added by Mickey Kaus)

We sent a new class of leaders to D.C., but immediately the permanent political class tried to co-opt them – because the reality is we are governed by a permanent political class, until we change that. They talk endlessly about cutting government spending, and yet they keep spending more. They talk about massive unsustainable debt, and yet they keep incurring more. They spend, they print, they borrow, they spend more, and then they stick us with the bill. Then they pat their own backs, and they claim that they faced and “solved” the debt crisis that they got us in, but when we were humiliated in front of the world with our country’s first credit downgrade, they promptly went on vacation.

No, they don’t feel the same urgency that we do. But why should they? For them business is good; business is very good.  Seven of the ten wealthiest counties are suburbs of Washington, D.C. Polls there actually – and usually I say polls, eh, they’re for strippers and cross country skiers – but polls in those parts show that some people there believe that the economy has actually improved. See, there may not be a recession in Georgetown, but there is in the rest of America.

Yeah, the permanent political class – they’re doing just fine. Ever notice how so many of them arrive in Washington, D.C. of modest means and then miraculously throughout the years they end up becoming very, very wealthy? Well, it’s because they derive power and their wealth from their access to our money – to taxpayer dollars.  They use it to bail out their friends on Wall Street and their corporate cronies, and to reward campaign contributors, and to buy votes via earmarks. There is so much waste. And there is a name for this: It’s called corporate crony capitalism. This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk. No, this is the capitalism of connections and government bailouts and handouts, of waste and influence peddling and corporate welfare. This is the crony capitalism that destroyed Europe’s economies. It’s the collusion of big government and big business and big finance to the detriment of all the rest – to the little guys. It’s a slap in the face to our small business owners – the true entrepreneurs, the job creators accounting for 70% of the jobs in America, it’s you who own these small businesses, you’re the economic engine, but you don’t grease the wheels of government power.

So, do you want to know why the permanent political class doesn’t really want to cut any spending? Do you want to know why nothing ever really gets done? It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed – a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.

It's Hard To Change Corporate DNA

Especially when the government is doing all it can to damp the forces of evolution and extinction.  Via Mickey Kaus

Dysfunctional–or at any rate, not-functional-enough–corporate cultures are hard to change. That would include both the culture of the Old GM and that of many of its suppliers. Obama should have been more skeptical about “New GM’s” ability to turn itself around with its same old workforce and same old union

I warned of something similar long before GM was rescued by Bush and Obama:

But things change.  Sometimes that change is slow, like a creeping climate change, or sometimes it is rapid, like the dinosaur-killing comet.  DNA that was robust no longer matches what the market needs, or some other entity with better DNA comes along and out-competes you.  When this happens, when a corporation becomes senescent, when its DNA is out of date, then its multiplier slips below one.  The corporation is killing the value of its assets.  Smart people are made stupid by a bad organization and systems and culture.  In the case of GM, hordes of brilliant engineers teamed with highly-skilled production workers and modern robotic manufacturing plants are turning out cars no one wants, at prices no one wants to pay.

Changing your DNA is tough.  It is sometimes possible, with the right managers and a crisis mentality, to evolve DNA over a period of 20-30 years.  One could argue that GE did this, avoiding becoming an old-industry dinosaur.  GM has had a 30 year window (dating from the mid-seventies oil price rise and influx of imported cars) to make a change, and it has not been enough.  GM’s DNA was programmed to make big, ugly (IMO) cars, and that is what it has continued to do.  If its leaders were not able or willing to change its DNA over the last 30 years, no one, no matter how brilliant, is going to do it in the next 2-3.

So what if GM dies?  Letting the GM’s of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM’s DNA has a less than one multiplier, then releasing GM’s assets from GM’s control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe’s productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe’s most productive human and physical assets into organizations with DNA multipliers less than one.

Welcome to the Emergency Room. Can I See Your Insurance Card and Polling Numbers, Please?

From Mickey Kaus:

Democratic blogger Ezra Klein appears to be positioning Dem health care reforms as a way to cut costs, on the grounds that a reformed system will be able to make "hard choices" and "rational" coverage decisions, by which Klein seems to mean "not providing" treatments that are unproven or too expensive--when "a person's life, or health, is not worth the price." Matthew Yglesias' recent post seems to be saying the same thing, though clarity isn't its strong suit. (He must have left it on Journolist.)


The "rational," cost-cutting, "hard-choices" pitch isn't just awful marketing--I don't even think it's accurate. Put it this way: I'm for universal health care in large part precisely because I think the government will be less tough-minded and cost-conscious when it comes to the inevitable rationing of care than for-profit insurance companies will be. Take Arnold Kling's example of a young patient with cancer, where "the best hope is a treatment that costs $100,000 and offers a chance of success of 1 in 200." No "rational bureaucracy" would spend $20 million to save a life, Kling argues. I doubt any private insurance company is going to write a policy that spends $20 million to save a life.  But I think the government--faced with demands from patient groups and disease lobbies and treatment providers and Oprah and run, ultimately, by politicians as terrified of being held responsible for denying treatment as they are quick to pander to the public's sentimental bias toward life--is less likely to be "rational" than the private sector.

That is to say, the government's more likely to pay for the treatment (assuming a doctor recommends it). So it's government for me.

He comes oh-so-close to getting it right, but then falls short.

Klein is right that the pressure will be to ration care -- we already see such rationing being seriously considered in Massachusetts (the model of choice for Democrats) under the weight of massive expenditures.

But Kaus is correct that if some high-powered and well-funded interest group gets behind a certain procedure, cost-effective or not, the government overlords of the program will likely approve it.   As a result, for example, no potential treatment for breast cancer will ever be denied given the proven strength of women's groups lobbying for breast cancer treatment (already, breast cancer research is hugely over-funded vs. other diseases given its mortality, due in large part to this powerful lobbying).

But it is not one dynamic or the other.  Both will exist.  There will be huge pressures to cut back somewhere, as costs skyrocket.  And there will be huge pressure from certain interest groups to fund treatment for certain diseases in unlimited amounts.  The result will not be, as Kaus posits,  that everything will be funded more than it is today -- the result will be that certain procedures and conditions with strong lobbying and political muscle will get funded more, with the difference being made up from cutting funding for conditions and procedures without a well-organized lobby.

Access to care will no longer be determined by money, but by political pull.  (Yeah, I know, it's Ayn Rand's world and we all just live in it).

Economic Question

Mickey Kaus says:

And I was excited about Windows XP,
because I thought its sturdier code would stop it from crashing. I was
wrong, at least for the early version of XP that I bought. Now I can't see a thing Vista's going to do for me that seems worth braving the inevitable Microsoft early teething problems.... Needless
to say, if everyone has this attitude Vista (and the need to buy new
computers powerful enough to run Vista, etc.) won't provide much of a
boost to the economy

Does upgrading an operating system just to fix bugs and flaws in the old version ever really "boost the economy?"  I mean, isn't that the broken Windows fallacy?

[sorry, I couldn't resist.  You don't get many chances at an economics joke]

Mistrust of Individual Decision-Making

In my post on "Respecting Individual Decision-Making",  which to-date I consider my favorite post, I wrote:

As a capitalist and believer in individual rights, one of the things
I notice a lot today is just how many people do not trust individual
decision-making.  Now, I do not mean that they criticize other people's
decisions or disagree with them -- in a free society, you can disagree
with anybody about anything.  I mean that they distrust other people's
free, private decision-making so much that they want the government to

Interestingly, most people don't think of themselves as advocating
government interference with people's private decisions.  However, if
you ask them the right questions, you will find that they tend to fall
into one of several categories that all want the government to
intervene in individual decision-making in some way:  nannies,
moralists, technocrats, and progressive/socialists.  Though the
categories tend to overlap, they are useful in thinking about some of
the reasons people want to call in the government to take over parts of
people's lives.

I then spent a lot of time with examples from each category.  On Sunday, Keith Thompson in the San Francisco Chronicle (of all places) wrote an article about his disaffection with the left, which said in part:

A certain
misplaced loyalty kept me from grasping that a view of individuals as morally
capable of and responsible for making the principle decisions that shape their
lives is decisively at odds with the contemporary left's entrance-level view
of people as passive and helpless victims of powerful external forces, hence
political wards who require the continuous shepherding of caretaker elites.

I'm not sure that he and I are in exactly the same place, but we are both looking for allies who are consistent in their defense of classical liberal values and individual rights.

In a related post, Mickey Kaus, who I seldom read because he spends more time than I care on inside-the-beltway political tactics and media stuff, has an interesting related post about the left and trusting people to do right by their own lives.  Kaus resists permalinks, but the gist is:

Two good critiques of the ubiquitous, left-pleasing menace, George Lakoff--by Marc Cooper and Noam Scheiber. Oddly, neither attacks Lakoff at what would seem to be his central weak point, namely his conflation of politics and parenting--identifying "conservative" values with "the strict father" and "liberal" values with the "nurturant parent."

Is a country really like a family? Isn't that an idea with a ... checkered
history? A family is a relationship between inherently unequal,
not-completely-free people--parents and children. A country, at least
in one American conception, is the relationship of equal, autonomous
people. Using the family as the template for politics stacks the deck against social equality (the value I'd suggest as the liberal touchstone). For one thing, it lends itself all too easily to the condescending liberal notion of compassion,
an anti-populist idea if there ever was one. It's also horribly
misleading as a guide to practical policies--no wonder that when
Scheiber asks Lakoff about President Clinton's welfare reform, Lakoff
responds "Why did he have to do that? ... I still don't understand it
fully." In Lakoff's mind, Clinton wasn't changing the welfare system,
he was beating his family's children! Aren't there values that aren't
family values?

A good example of that in recent debate has been social security.  As I argued before:

Advocates for keeping forced savings programs like Social Security in
place as-is by necessity argue that the average American is too stupid,
too short-sighted, and/or too lazy to save for retirement without the
government forcing them.  Basically the argument is that we
are smarter than you, and we are going to take control of aspects of
your life that we think we can manage better than you can
.  You are
too stupid to save for retirement, too stupid to stop eating fatty
foods, too stupid to wear a seat belt, and/or too stupid to accept
employment on the right terms -- so we will take control of these
decisions for you, whether you like it or not.  For lack of a better
word, I call this intellectual welfare.

Given these fairly accurate descriptions of the state of liberalism in America, it is ironic that several weeks ago, Kevin Drum made the following observation:

Whenever I talk about the underlying principles that should guide liberals, as
I did a couple of days ago,
one of the ideas that always pops up is privacy
rights. In fact, it comes up so often that it strikes me that we're missing a
bet by not making a bigger deal out of it.

The reason, Mr. Drum, is that a true privacy right defined as you are considering it (in particular, one defined broadly enough to give women an absolute right to abortion) would undermine much of the left's statist agenda.   A true privacy right would force the government to respect individual free decision-making, and require that the government allow individuals to make what elites might consider are bad decisions for themselves. 

Does the Left really want broad privacy rights, or just a constitutional justification for abortion?  If they really want a general primacy of a woman's decision-making over their bodies, why do they support abortion yet oppose letting women choose breast augmentation or the use of Vioxx?  Why do the same leftist politicians that oppose parental approval or even notification for teenage abortion simultaneously support requiring parental permissions for teenagers to use tanning salons?  Why do they resist random searches for terrorists but support such searches to enforce seat belt laws?

As I wrote here,

A true privacy right would allow us complete freedom over who we sleep
with, what we do with our bodies, where we work, and what we pay for
goods.  And, not incidentally, how we choose to invest for our
retirement.  Both parties want the government to control parts of our
lives, so don't expect either Conservatives or liberals to be pushing
the privacy issue very hard.

The government is not our parent, not our boss, not our priest, and not our partner.  It is our servant.  Unfortunately, a large element behind creeping statism in this country is a desire by both left and right to "correct" individual decision-making, even when those decisions affect no one but the actor himself.