Dept. of good ideas II

Via Andrew, Citizen Crain advises:

We are 7 months into the Obama administration and DADT (Don't Ask, Don't Tell) is still on the books. I believe anything the president does to initiate the repeal will cause a firestorm that is much, much greater than any of us activists anticipate and could significantly wound Obama politically. This is in spite of the fact that 75% of the public thinks gays should be able to serve openly in the military. Even though they are a significant minority, right wing reactionaries are waiting to ambush the president the minute he moves to repeal DADT.

So how should we repeal DADT with a minimum of damage? If I were speaking to the president, this is what I would advise him.

Wait until October when Chairman of the Joint Chiefs Mike Mullen's two year term ends. In choosing a new Chief, make sure the general or admiral has impeccable military credentials and is firmly in favor of repealing DADT. Make sure he understands this is a top priority and it is his mission to accomplish this in the first few months of his term. Also instruct the future Chairman that he is to be open and honest about his opinion and plans for DADT during the Senate confirmation hearings.

During the Senate hearings make sure the nominee is asked several DADT questions and that he publicly states that he believes DADT is a bad policy and needs to be repealed. With the Democrats in control he should be confirmed. The hearings will put him on record about his intentions for the future of DADT. By confirming him, Congress has now approved the concept. The public is on notice and Congress is on notice that things are going to change. No one should be surprised when it happens.

Then a month or two later, the Chairman appears before Congress with numerous studies showing how DADT decreases national security, how we are losing talented men and women we cannot afford to lose during war time, and that the unit cohesion argument is a myth. He formerly requests that Congress repeal DADT for the good of the armed forces. The repeal of DADT is initiated by the military.

The request was not initiated by a president who has no military service (a major Achilles heal for many). With the military requesting the change, it would give Congress the cover it needs to repeal DADT. It would also fly better with the American people. And if the military requests the change in the law, it would be much more difficult for the right wing to condemn it.

Looking beyond the immediate

E.D. Kain has a perceptive take on the hidden profit motives in public insurance and why they're worse. He compares a single-payer monopsony to the Dutch system, which looks a lot more attractive.

Reality check

As should be apparent, the grayed areas are periods of negative growth.

(via Econbrowser)

Dept. of good ideas

NRO's corner:

The state of Arizona has a huge deficit. It's now 30 percent of its entire budget. Obviously something needed to be done. Over at Neighborhood Effects, Mercatus Center's Eileen Norcross reports on the state's first step to address the problem:

After months of wrangling over how to meet the shortfall -- program cuts versus tax cuts -- a possible solution was reached this week, four weeks into the state’s new fiscal year: the lease of 32 government-owned properties including the State House, a prison, and a state hospital.

The plan involves selling the properties for a quick infusion of cash, and their leaseback over a period of years.

Of course, the governor of Arizona, like every governor who has leased public property before (think Mitch Daniels in Indiana) is facing protests from voters. This makes no sense. Leasing the state's public property has proven to be the way to go. In Indiana, the state leased its highway, retained the ownership, and made a $4 billion profit. What's not to like? Norcross writes:

Does the state need to own a Coliseum and Exposition Center? Simply because it hosts the state fair doesn’t make it a state business.

With a price tag of $84.3 million, privatization is a win-win situation.  Take a non-essential, non-public good off the state’s books, and it has a chance of becoming a profitable (i.e., job-creating) business for a willing investor.

Read the whole post here.

Jill and Kevin's last day

Following that wedding...

More on The Evolution of God

An interesting discussion that sums up the broad themes of Wright's book. My attitude is closer to Cowen's than Wright's, but we can all agree the book is well worth reading...

Birthers of a nation

Birthism, thy name is racism:

(via Andrew)

In praise of greed

Thirty years ago, in 1979, Milton Friedman schooled Phil Donahue on the nature of greed and virtues of capitalism...



It's everywhere, you see...



But greed is more productively unleashed through market forces than government force and fiat—i.e., taxes and crony capitalism.

(ht Perry)

Understocked

Irrational hopes dashed, wrong lessons drawn

Jonah Goldberg and Krauthammer crow the messiah period is over...

From [Jonah's] column this morning [..]:

All presidents go through rough patches, and Obama’s no exception. Odds are his poll numbers will get better — and worse — in the years to come. All of this is typical.

But this misses a crucial point: Obama isn’t supposed to be a typical politician. He was supposed to be The One. He was supposed to change Washington. Transcend race. Fix souls. Bake twelve-minute brownies in seven minutes.

Oprah promised Obama would help us “evolve to a higher plane.” Deepak Chopra said Obama’s presidency represented “a quantum leap in American consciousness.” Last month, Newsweek editor Evan Thomas proclaimed that Obama stood “above the country, above — above the world, he’s sort of God.”

Well, now he’s the god who bleeds, and once you’re the god who bleeds, it’s hard to get the divinity back in the tube, as it were.

Obama undoubtedly has major accomplishments ahead of him, but in a real way the Obama presidency is over. His messianic hopey-changiness has been exposed for what it was, and what it could only be: a rich cocktail of pie-eyed idealism, campaign sloganeering, and profound arrogance.

As president, he’s tried to apply the post-partisan gloss of his campaign rhetoric to the hyper-partisan dross of his agenda. And he’s fooling fewer people every day.

Update: I like the synergy with Krauthammer's opening line:

Yesterday, Barack Obama was God. Today, he’s fallen from grace, the magic gone, his health-care reform dead.

Yes Jonah, Obama's humanity is plain for all to see. Surprise, surprise. Those still hoping for the second coming of Jesus Christ will be disappointed.

But when was it ever going to be otherwise? History shows people seek a messianic figures when they feel the most need. The origins of the irrational hope Obama rode during the election obviously never lay in anything superhuman about him, but rather rose out of the deep despair created by eight years of Mr. Cowboy in Chief, Dr. Evil, their sidekicks, and would-be successors.

Goldberg & Krauthammer should spend less time joking about Obama's humanity and more time answering for how badly their side fucked up in spreading war, torture, fiscal insolvency, Rovian cynicism, and incompetent cronyism.

Deep thought

— Good (quality & innovation)
— Cheap (economical & efficient)
— Socialized (egalitarian & government-run)

Choose two.

(came up with this in comments at LG's place)

The myth of free-market health-care

America doesn't have it.

Zero tolerance policy

Philadelphia residents were caught having fun, so the city banned it.

(ht Radley)

Uh-oh

Often during the last election, I visited NRO's Corner—that bastion of neocon and other rightist nuttery. This was back when we were all scared about the prospect of trigger-happy Johnny boy and his pet MILF pulling an upset and heeding their advice for another disastrous four years.

I haven't read the Corner much since after the election, as their atrociously poor RSS feed mangled everything into an unformatted single-paragraph word soup that really wasn't worth dealing with.

But today they switched to a new well-formated version (link here).

Given this improvement, I'm about to undergo the dangerous experiment of placing them back in my reader's "Must Read" tag.

This could be rough.

Please be on the lookout for any outbreak of symptoms—including, but not limited to, posts on unconditional support for Israel, why we need to bomb Iran, an introduction to the new "Axis of Stealth Evil" which includes France, Sweden, and the Netherlands—or just generic diatribes about how Obama is simultaneously a dyed-in-the-wool Islamic theocrat, atheistic communist, and national socialist who hates Catholic children but poses as a mainstream, center-left politician.

I might need you to stage an intervention...

"I now pronounce you monetized."

I was surprised when embedding the awesome "Forever" wedding entrance was disabled after it had gone viral. Didn't the couple want even more views?

As it turns out, there was money involved. Yes, YouTube—owned by Google—allows you to make money off a viral video of your own wedding.

Ah...the free spirit of love and capitalism, combined! Such a doubly warm and fuzzy feeling ;)

Baffling

Reprinted from Stephen Walt because these things baffle me, too...

I've been studying politics a long time now, and there are still lots of things about it that at some level I just don't get. I'm not saying that I have no idea why these things occur or suggesting that they are totally inexplicable. I'm just saying that I still find them a bit baffling.

1. I've never really understood why plenty of smart people think the United States still needs thousands of nuclear weapons (or ever did). I'm familiar with the abstract theology of nuclear weapons policy and I don't favor total nuclear disarmament, but the case for an arsenal of more than a few hundred weapons eludes me. See here or here for convincing arguments to this effect.

2. I'm still puzzled by why Americans are so willing to spend money on ambitious overseas adventures, and yet so reluctant to pay taxes for roads, bridges, better schools, and health care here in the United States. My fellow Americans, where's your sense of entitlement? And frankly, I’m also surprised that the U.S. armed forces haven't put up more resistance to the seemingly open-ended missions they keep getting handed by ambitious politicians. I can think of various reasons why they remain willing to make these sacrifices (it's a volunteer force, there’s a long tradition of civilian authority, our soldiers, sailors and airman are dedicated patriots, the top brass are often chosen for their political malleability, etc.), but it still surprises me.

3. I don't understand why many people think invoking God is a compelling justification for their particular policy preferences, and why they assume that this move is a trump card that ends all discussion. The idea that Jehovah, Jesus, Allah, Odin, or Whomever gave some people permanent title to some patch of land, dictated how men and women should relate to each other for all eternity, or provided the incontestable answer to ANY public policy question is simply beyond me. Yet it remains a common feature of political discourse at home and abroad. Weird.

4. I'm equally baffled by when someone invokes "history" to justify a territorial claim and assumes that this basis is unchallengeable. This view assumes that sovereignty over some area is infinitely inheritable (no matter what has happened in the interim), ignores the fact the borders have changed a lot over time, and further assumes that there's only one version of history that matters. I understand why Serbs invoke the Battle of Kosovo in 1389 to justify their current claims to control that region, why Israelis and Palestinians invoke different readings of history to justify their positions on Jerusalem, or why certain Asian states invoke different historical claims to assorted rocks in the South China Sea -- they are all looking for some way to persuade others to let them have what they want. What's odd is that people who make such claims tend to think their view is simply incontestable and other equally valid historical claims aren’t worth paying attention to. You're entitled to your version of history, I suppose, but why do you assume that anyone is going to be persuaded by it?

5. I do not understand why Americans are so susceptible to the self-interested testimony of foreigners who want to embroil us in conflicts with some foreign government that they happen to dislike. A case in point would be Iraqi exile Ahmad Chalabi, who sold a lot of fairy tales to the Bush administration prior to the 2003 invasion. As Machiavelli (himself an exile) warned in The Discourses: "How vain the faith and promises of men who are exiles from their own country. .. Such is their extreme desire to return to their homes that they naturally believe many things that are not true, and add many others on purpose; so that with what they really believe and what they say they believe, they will fill you with hopes to that degree that if you attempt to act on them, you will incur a fruitless expense, or engage in an undertaking that will involve you in ruin." This sort of thing goes back to the Peloponnesian Wars (at least), and you’d think we’d have learned to be more skeptical by now.

6. I certainly don't get the business model that informs the content of the Wall Street Journal's editorial page. The rest of the newspaper is an excellent news source, with reportage that is often of very high quality. The editorial page, by contrast, is often a parody of right-wing lunacy: the last refuge of discredited neoconservatives, supply-siders, and other extremists. Do the Journal's editors really think democracy is best served by offering the public such a one-sided diet of opinion? Do they feel no responsibility to offer a wider range of views to their readers, as the rival Financial Times does? More importantly, wouldn't their market share (and profits) be increased if they offered a more diverse range of views? I'm equally puzzled by the op-ed page of the Washington Post: what's the business model that says cornering the market on tired neoconservative pundits is the best way to attract new readers?

7. A related point: I can't figure out why newspapers aren't hiring more bloggers to write columns for them on a regular basis. I started reading blogs because the stuff I read on the web tends to be smarter, funnier, better researched, and more entertainingly written than the pablum that appears on the op-ed pages of most newspapers. A lot of bloggers seem to produce more material too; frankly, doing a column twice a week sounds almost leisurely compared to what some bloggers pound out. There are dull bloggers and some excellent mainstream print pundits, of course, but I'm amazed that more bloggers aren't breaking into the so-called big-time mainstream media. Probably another good reason why newspapers are dying.

8. In an era where the United States is facing BIG problems at home or abroad, it is both puzzling and disheartening to observe the amount of ink and airspace devoted to the Skip Gates arrest, Michael Jackson's demise, or the "birther" controversy. But then I didn't get the Princess Di phenomenon or the whole reality-TV thing either.

9. I don't understand why academics defend the institution of tenure so energetically, and then so rarely use it for its intended purpose (i.e., to permit them to tackle big and/or controversial subjects without worrying about losing their jobs) When it comes to politics at least, the Ivory Tower seems increasingly populated by methodologically sophisticated sheep.

10. I'm both amused and annoyed by the highly intrusive security procedures that now exist at airports, which are almost certainly not cost-effective. The key to preventing another 9/11 wasn’t to have us all removing our shoes or carrying shampoo in a plastic bag; the key to preventing another 9/11-style attack was to put locks on the cockpit doors, so terrorists couldn't gain control of the airplane and turn it into a weapon. (A smarter Middle East policy wouldn't hurt either). I'll concede that additional screening is probably preventing a few additional incidents, but I question whether the extra expense and inconvenience is ultimately worth it. Alas, nobody is going to relax those procedures now, because they’d worry about being blamed the next time someone managed to blow up an airliner. I understand the CYA impetus that will keep these procedures in place from now until doomsday, but the irrationality of it all annoys me every time I fly.

And now back to your regularly scheduled programing

Right-wing douche watch:



Whoops, I do share a couple of those concerns, such as the public option being a trojan horse from people who actually want single-payer health insurance, and the government's finances headed toward insolvency. It's a shame to see it mixed up with the other, kooky stuff.

Sane Republican sighting

They do exist:

Senate Republican Conference Chairman Lamar Alexander said Thursday he would support Sonia Sotomayor’s nomination to the Supreme Court, breaking with Republican leaders who have questioned whether she would bring a bias to the bench.

Alexander, the No. 3 Republican in Senate leadership, said that her “political and judicial philosophy may be different than mine, especially regarding Second Amendment rights.”

[..] Alexander criticized then-Sen. Barack Obama and Democratic senators for voting against John Roberts’s nomination for chief justice in 2005, “solely because they disagreed with what Sen. Obama described as Roberts’s ‘overarching political philosophy’ and ‘his work in the White House and the solicitor general’s office’ that ‘consistently sided’ with ‘the strong in opposition to the weak.’”

“Today, it would be equally wrong for me to vote against Judge Sotomayor solely because she is not on my side on some issues,” Alexander said.

“It is my hope that my vote now not only will help to confirm a well-qualified nominee but will help to return the Senate to the practice only recently lost of inquiring diligently into qualifications of a nominee and then accepting that elections have consequences, one of which is to confer upon the president the constitutional right to nominate justices of the Supreme Court of the United States.”

Earlier: A Republican Obama would vote against Sotomayor.

Meet the new boss...

...same sausage-making urgency as the old boss. In 2004, Obama was pro-transparency and against rushing legislation:



Now that Dems are in charge? Not so much.

Stimulus...URGENT—the economy is DYING!

Cap and trade...URGENT—the planet is DYING!

Health-care reform...URGENT—people are LOSING their insurance and costs are SOARING!

As the Patriot Act and invading Iraq were URGENT—action was needed to KEEP US SAFE!

The "goodies"

I apologize for the "all healthcare, all the time" topic du jour. Actually, more like du mois. But I'm reading a lot about it, so that means re-blogging the crud that interests me.

Here's the White House's new sales pitch, which Yglesias calls "the goodies":

1) No Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.

2) No Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.

3) No Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.

4) No Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.

5) No Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.

6) No Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.

7) Extended Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.

8) Guaranteed Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.

Great stuff, right? Stick it to those evil profit-gouging insurance companies! Well, life's more complicated then that.

I think 1,4,6, and 8 may be good ideas. Perhaps 3 as well.

No "gender discrimination" is a bit bizarre. Women consume more health-care then men, so covering them is more expensive. Why pretend this isn't true? If you charge women the same amount as men, men will be subsidizing their care. Is that what we want? I'm sure it's what the mean Democratic voter would want--they got the women's vote--but it hardly seems fair in an abstract sense.

The other ideas are more mundane populist cost controls and guarantees of coverage. They will, invariably, increase the amount of care that is dispensed, and reduce out-of-pocket expenses. But can you figure out what will also happen, as a consequence of these reforms?

Take a moment.



..premiums are gonna shoot up at even greater rates. Far from dampening costs for most people, these reforms put us on a path to consuming more care. Maybe that's what we'd like, but it's not free. If you consume more, the price goes up. It's supply and demand, that most basic of economic laws. You can't escape it just because you have a D next to your name and the best of intentions. Yet Obama has tried to sell his plan as having the effect of reducing costs.

Additionally, reducing out-of-pocket expenses is really the opposite of what we want to do for the market to function properly. Liberals are fond of claiming that market-based healthcare is a failure, but this is due at least in part to ill-conceived price controls like the ones above. It's really impossible for market-based care to work properly when you remove price signals.

For example, here's Yglesias:

The current market creates strong incentives for people to develop “better and more expensive” methods of treatment, but almost no incentive to develop “as good but cheaper” methods of treatment.

Well, right. That's what happens customers have low out-of-pocket expenses. When you remove the incentive to live healthy and seek out the most cost-effective care, people aren't going to motivated to brush their teeth more to avoid that extra filling, and providers and researchers aren't going to be motivated to provide cheaper products. They're going to be motivated to provide better and more expensive products, since that's what consumers clamor for when they aren't paying much out-of-pocket.

In response to Yglesias, Andrew proposed something sensible yesterday:

I still fail to see why a simple reform - requiring patient co-pays to be a percentage of the actual cost of the drug - cannot be deployed.

It would unleash the market power of consumers to keep healthcare costs down in the pharmaceutical area, which is one of the most expensive. I just switched HIV meds because one of my previous ones had been shown to dramatically increase the rate of heart attacks. But the new ones are almost certainly more expensive - they're newer, a new type of drug, etc. But I had no incentive to weigh the risks of a heart attack against the costs of the new meds, which might, after a few years in use, show similar side-effect problems.

One key issue is taking power away from doctors and giving more to patients. As an aggressive HIV survivor, I long ago learned to treat doctors with respect but not deference. But the system prevents me from managing the costs of my own care in even the slightest way. I pay $20 co-pay each time. It's madness.

Yet above we have the White House proposing worse madness--lower co-pays--in a blatant attempt to rachet up populist support for their reform package.

It's going to be a long mois.

Children of the revolution

DIA examines the disenchantment of "process-oriented moderate liberals" Ezra Klein and Matt Yglesias.

I'm with Conor, who prefers it slow and steady.

The most important part of health-care reform

Ezra educates Firedog Lake.

Wyden not?

von at Obsidian Wings aptly touts Wyden-Bennett as a quantum leap over HR 3200. Don't look at me, I'm already in the choir.

Tyler Cowen explains what this blog is about

Creating my own "economy"—collating stuff that interests me—is essentially all this blog is about. I enjoy it more than I would, say, doubling my paycheck. I also happen to be one of those self-diagnosed aspergers, a mild form of autism, which he thinks society has started to emulate.

And of course I agree with his assessment of Obama and worries about the Democrats' behavior.

Uh-oh

WSJ: Health insurance makes people fat?

A commenter at Megan's

I really love that logic. They'll get fat if we give them benefits because they know they can afford to actually see a doctor! If we just made sure they didn't have those benefits, they'd go exercise! And if we took away unemployment benefits and social security, they'd work really hard not to lose their job and make sound long-term financial decisions!

Obviously he's being dismissive. But, actually, yes, if he means they'd work relatively harder and plan relatively sounder. That's the magic of individual responsibility.

Which is why I have to laugh at liberals who think free/cheap health-care is some right that every person should be entitled to and thus be better off in every respect. Life doesn't work that way. There are always trade-offs to subsidizing benefits. You might even call the undesired ones unintended consequences. (gasp!)

Mobocracy

(meme) Sen. Landrieu is trying to find the "center" of health care reform, and Firedoglake protests:

Seventy-six percent of the country wants a public plan, Landrieu doesn't. Center of what -- her own ego?

Democrats control the House, the White House, and the Senate -- with a 60 vote majority. Yet they can't find a way to do what 76% of the country wants in the midst of a health care crisis because they're focused on making three rich Republicans happy.

What the hell is it going to take?

First of all it's going to take 60 voting Senators, and there are two Democrats who aren't firing on all cylinders.

Secondly, surely you can find at least 76% of Americans who want a lot of things. 76% of Americans want to pay fewer taxes. 76% of Americans want better government services. 76% of Americans want to be rich and famous. 76% of Americans want to win the lottery. 76% of Americans want to have their cake, eat one every day, and not gain an inch of waistline. 76% of Americans are self-centered human beings..

Searching for the center means trying to balance all the things people want with what's actually possible.

I think we can be confident most of this 76% is even less versed than I am in the projected tradeoffs of offering a new publicly-run health insurance plan. So pardon me for waxing in my elitist, undemocratic conceit that my opinion counts more than the mean respondent of a six-week old poll. Landrieu and her staff are presumably doing their homework and know an order of magnitude more.

The same poll that produced this 76% figure showed that only 33% specifically approved of Obama's health-care reform plan, so does Firedoglake think only 33 Senators should vote for it?

Direct democracy is no way to run a country. Kathy Kattenburg, who supports the public option, explains away the 33% figure with: "This may be at least partly because they did not know much about [Obama's plan]". Well, duh, she goes on to quote that 30% has no opinion.

We elect representatives because we're trusting them to educate themselves (or have an educated enough staff) to make the right calls about things we don't have enough working knowledge of. That's why the United States is a republic and does not hold direct public referendums on nationalizing sectors of its insurance industry.

As imperfect as governments are--catering to special interests, favored constituencies, influential parties, etc--Sen. Landrieu is doing her job. Firedoglake needs to work on its appreciation of that job and quit advocating mob rule.

Punchline

"When tempers run a little high, there's one thing that always helps people think a little more rationally: beer."

—Andy Borowitz in "Obama Names Thursday "Drink A Beer With Someone Who Arrested You Day."

(via Political Browser)

An (un)fortunate health-care irony

The Post points out:

Reid told reporters Tuesday that he might be willing to compromise on points of [health-care] policy if it meant getting the 60 votes needed to turn back GOP procedural objections. The Senate Democratic caucus now stands at 60 members, but two members -- Robert C. Byrd (W.Va.) and Edward M. Kennedy (Mass.) -- have battled serious illness, requiring Reid to win support from at least two Republicans to make up for their absence.

So, de facto, there are not 60 voting Democrats in the Senate. Depending on where you stand, this is fortunate or unfortunate.

But either way, still sad. Sad that two accomplished men are in bad health, and sad that our political institutions have such a high rate of incumbency that 92 year-old Senators are re-elected virtually unopposed.

This relates to a fillibuster reform that I am in favor of: the 3/5ths requirement should be based on the number of Senators present and voting, rather then "all duly chosen and sworn."

Sigh

NPR:

The nation is close to evenly split in its assessment of the president's policies to date, and there is great intensity on both sides of the debate with dwindling numbers in the middle.

Those are the chief findings of the latest NPR poll of registered voters conducted nationwide Wednesday through Sunday by a bipartisan team. The pollsters found 53 percent approving of the president's handling of his job, while 42 percent disapproved — the narrowest gap of the Obama presidency to date. Most of the approving group said they approved strongly, and an even greater majority of the disapproving group said they disapproved strongly.

Poll respondents liked a Democratic statement on solving health care problems better than a Republican statement (51 percent to 42 percent). However, when asked about the plan now moving through Congress, a plurality of 47 percent was opposed and 42 percent said they were in favor, based on what they had heard about the plan so far.

I hope Obama's declining popularity is due to a recognition of bad policy choices in collusion with the Democratic congress, rather than Americans taking the deranged right seriously...

More Dem infighting

The Hill:

A House fight among Democrats on overhauling the nation’s healthcare system has spread to the Senate, where centrists and liberals are clashing over the direction the legislation should take.

Trouble is brewing now that a bipartisan group of senators — led by Finance Committee Chairman Max Baucus (D-Mont.) — has signaled it will exclude a government-run insurance option from the committee’s draft legislation that could be marked up next week.

Leaving it out would be a major step toward attracting Republican support for President Barack Obama’s signature issue. But it also would alienate liberals, who say the effort is wasted without it and are preparing a barrage of amendments for the Finance markup.

The House legislation has divided Democrats in that chamber along similar lines and is built around a public option to be paid for by raising taxes on the wealthy, an idea that has almost no chance of winning GOP votes. The Senate Health, Education, Labor and Pensions (HELP) Committee this month voted along partisan lines to approve legislation with a public option at its core.

Infighting among House Democrats has led to an impasse at the Energy and Commerce Committee that is expected to prevent House Speaker Nancy Pelosi (D-Calif.) from meeting her deadline of completing work before the August recess.

And on Tuesday it prompted Rep. Maxine Waters (D-Calif.) to hint that more liberal members of the party should consider challenging centrist Blue Dogs in next year’s primaries.

Back when Arlen Specter switched parties, Sen. DeMint (R-SC) said:

I would rather have 30 Republicans in the Senate who really believe in principles of limited government, free markets, free people, than to have 60 that don’t have a set of belief.

So here's a straighter Maxine Waters (though she's probably thinking more of the House):

I would rather have 40 Democrats in the Senate who really believe in government-run health insurance, than to have 60 that don't have that beliefs.

That's what would happen over time if you somehow primaried freshmen and sophomore Dems in more conservative districts with True Progressives. Republicans would pick them off in the general. There's nothing they would like more than to run against left-liberals in districts that are not left-liberal (much like Palin turned out to be a very desirable opponent for Dems). Even if the more liberal Dem doesn't win a primary, the incumbent Blue Dog or business-friendly New Dem has to waste time and funds fending off the challenge. And he has to run more to his left for the primary, which leads to some incoherent whiplash as he then runs back to toward the right in seeking to win the general.

Maxine Waters (D) and Jim DeMint (R) are blind partisans. All principle, no pragmatism. It's nice when people have principles, but you can't run a country on ideological rigidity. You have to find ways to further your goals through compromise.

There are plenty of helpful reforms we could enact, which I've discussed previously (like in the post below). And I think insisting on public health insurance is a really dumb hill to die on. But you'd expect me to say that, since I'm opposed to it on principle*. So listen to Ezra, who isn't.

*of course, I've tried to back it up with arguments about price controls and growth.

Reality check

Sans bogus Rassmussen, three Pollster.com charts:








Andrew guesses on health-care:

It's the worst selling job he's done in a long time. I can't tell what's in it, not in it, what he's for, what he's against. My best bet is that Obama's insurance reform will end up requiring big tax hikes for people like me (I can live with them if they bring real health improvements to sick people) for a modest ability to get insurance for almost anyone regardless of previous conditions. That's a good thing. Not a radical thing. And won't do anything much about costs, let alone allow a public option. It will be like the climate change bill, a very modest, largely toothless start with very modest potential to affect change.

Well, let me just collect my thoughts on reforms I would like to see:

-No denials for pre-existing conditions. This will raise costs for everyone else (supply and demand!), but there is a moral argument for it and most people seem on board, so I'm going with the flow.
-Health insurance exchanges open to any individual who wants to participate, with their employers paying the same portion as any benefits they offer.
-End tax breaks for employer health benefits. These distort the market in favor of the well-off and the employed, which is a really, really bad idea if you expect the poor and unemployed to be able to afford coverage. The revenue raised could be used to subsidize care for the poor/unemployed with a voucher or tax-credit system.
-No loss of benefits when someone is unemployed. They should be able to keep paying for the same coverage from savings or by collecting unemployment.

Reforms I'm against:

-Public/government-run insurance.
-Entitlement expansion using revenue from surtaxes on the rich. If we're going to raise such taxes, that money ought to go toward closing the deficit, not further spending and subsidy. But either way, I sure don't think we should be doing this in a downturn. Wait for recovery, then if you want to raise taxes to close the deficit it will be fiscally responsible.
-An employer mandate to provide insurance. Eww! The House bill has this. We should be transitioning away from the current, broken system, not doubling down on it!

Reforms I can live with:

-Entitlement expansion (Medicare, Medicaid, and the ilk) using revenue from ending the tax breaks on employer benefits. I dislike entitlements, but if we're going to offer such progressive handouts, the way to pay for them is by ending the regressive and distortionary tax breaks. Offering more progressive benefits without repealing the regressive distortion makes no sense, as it means inefficiencies in both areas, the worst of both worlds and a quintessential example of bad governance dragging down the market by causing it to operate with less efficiency.
-An individual mandate: This is problematic because some people are healthy or wealthy and don't need or want insurance. But it could be acceptable if the bar is sufficiently low, e.g. only catastrophic coverage with a $5,000/yr. deductible and 20-30% co-pay. This is how real insurance is supposed to work anyway, vs. the cadillac cover-everything with measly $20 co-pays that it's ridiculous to expect everyone to need or want to pay for.

Thanks for all the fish

The world's second-largest aquarium tank in Okinawa, Japan.

(via Viral Video Chart)

Why Megan opposes national healthcare

A long post with good stuff.

House bill TKOed?

Keith Hennessey argues the CBO did so.

Obama recently reiterated his promise to veto legislation that does not bend the cost curve down. Will he keep it?

Or will he argue that all the healthcare reforms taken together will somehow bend the cost curve down in a magical way that the CBO can't project?

Punchline

"Now she has a book deal presumed to be worth millons, and I cannot wait to read it. I believe on the tenth page she decides since the book is going to end anyway to leave the last 200 pages blank."

—Stephen Colbert on Sarah Palin's resignation in Alaska.

(ht Political Browser)

47 million, ctd.

On the 47 million people without health insurance point, that too is a statistic where there is less than meets the eye. First, health insurance does not equal health care (there are not just emergency rooms but cash-based clinics, and conversely, a lot of people with insurance don't get good health care). Second, of that 47 million, 14 million are already eligible for existing programs (Medicare, Medicaid, veterans' benefits, SCHIP) yet have not enrolled, 9.7 million are not citizens, 9.1 million have household incomes over $75,000 and could but choose not to purchase insurance, and somewhere between 3 and 5 million are uninsured briefly(<2 months) between jobs. That leaves about 10 million Americans who are chronically without insurance. Needless to say, extending the blanket of coverage to this group should not cost $1.5 trillion and require a wholesale overhaul of all of medicine.

—Dr. Bala Ambati

Estimates vary, but 10 million is in the ballpark.

25 years too late

Reason:

"Legal Age 21 has not worked." Of course, any 20-year-old could, and probably would, tell you that. But the quote in question was written by Dr. Morris Chafet, a psychiatrist who served on the presidential committee that pushed to have the legal drinking age raised to 21. That push paid off on July 17, 1984, when President Ronald Reagan signed the new drinking age into law.

Since that time, however, Chafet has apparently had a change of heart. The Los Angeles Times reports that in an editorial that has yet to be published, Chafet describes his effort to raise the drinking age as the "single most regrettable decision" of his career. "To be sure, drunk driving fatalities are lower now than they were in 1982," Chafet notes. "But they are lower in all age groups. And they have declined just as much in Canada, where the age is 18 or 19, as they have in the United States."

That observation, while welcome, hardly warrants a "better late than never" response. As Chafet also notes in his piece, the arbitrary age restriction is partially to blame for things like binge drinking, injury, and property destruction.

Simply passing a law isn't going to stop young adults from drinking, an activity that has long been a sign of adulthood. Yet because of the fear of punishment, those young adults are much less likely to seek help when the partying gets out of hand, and the results are frequently disastrous. Furthermore, underage drinking only breeds disrespect for the law. So much for keeping people safe.

Chafet may be 25 years too late. But here's hoping he can use whatever influence he has left to push for lowering the drinking age, if not abolishing it all together.

Abolish it.

Or, at worst, make sure it's lower than the driving age. Learning to drive before learning to drink responsibly is perverse.

Irony of the day

"At a recent town-hall meeting in suburban Simpsonville, a man stood up and told Rep. Robert Inglis (R-S.C.) to "keep your government hands off my Medicare."

(ht Marginal Revolution)

Where compromise is happening

(meme)

Reportedly, what comes out of these negotiations and on to pass the Senate Finance Committee will not have a public option. But it must be reconciled with the Senate HELP Committee, which does, and then conferenced with whatever passes the House, which likely will as well.

Wallabies

Two little orphaned wallabies become best of friends at Emerald Monbulk Wildlife Shelter, Melbourne, Australia...

...mirroring each other's behaviour...

..and play-fighting.

Wiki entry

(via naked capitalism)

KY-Sen update: Bunning drops out

WSJ:

Sen. Jim Bunning, the Senate Banking Committee member who has castigated Federal Reserve chairmen for years, won’t be around after next year.  The Kentucky Republican said today he won’t run for reelection in 2010 because he can’t raise enough money.  Our friends at WashWire have the details.

Mr. Bunning was the only committee member to vote against Ben Bernanke’s confirmation as Fed chairman almost four years ago. It wasn’t personal: He also was the lone vote against Alan Greenspan’s confirmation for his final term leading the central bank.  The former Major League Baseball pitcher, inducted into the Hall of Fame in 1996, could always be counted on to spend his seven minutes at a hearing attacking the Fed for its monetary policy, its bailouts and just about everything else it did.

He’ll still be around for a year and a half to attack the central bank. And among the GOP candidates for the Bunning seat: Rand Paul, the son of Texas Rep. Ron Paul, whose anti-Fed sentiment is gaining traction among lawmakers.  (Imagine what the father-and-son team could do from both sides of Capitol Hill.)

The Post:

On the Democratic side, state Attorney General Jack Conway's $1.3 million haul over the last three months established him as the frontrunner against Lt. Gov. Dan Mongiardo in next year's primary.

"Democrats will be will be targeting this seat whether we are running against Ernie Fletcher acolyte Trey Grayson, Ron Paul's son Rand, or George Bush fundraising Ranger Cathy Bailey," promised Democratic Senatorial Campaign Committee communications director Eric Schultz

Cathy Bailey doesn't seem to have a website yet, though the cathybailey.org domain has been registered. Trey Grayson's blog is here, and Rand's is here.

Jack Conway isn't a shoe-in for the Democratic nomination:

A Garin-Hart-Yang Research Group (D) poll; conducted 5/12-13 for '04 nominee/LG Dan Mongiardo (D); surveyed 336 Dem RVs; margin of error +/- 5.3% (McArdle, Roll Call, 5/28).

Tested: Mongiardo and AG Jack Conway (D).
Primary Election Matchup
D. Mongiardo 43%
J. Conway 28
Undec 29

But that could just be initial name recognition; with a year to go before the primary, these numbers don't mean much.

Kentucky is a conservative state but has many more registered Democrats than Republicans (holdover from the Dixiecrat era) so it's difficult to guess how this race will play out.

Rand Paul is organizing a money bomb for August 20th. The goal is to raise $1,000,000 by getting 10,000 people to donate $100 apiece. I will be one.

Nietzsche, updated for Palin

God has resigned.

Quote of the day

"Almost all serious experts who used to argue against allowing gays in the military have either changed course or died."

—Nathaniel Frank

Authority and conflict

  Being a pagan, I was theoretically free from prosecution, for by Church law a pagan could not be prosecuted for heresy. [..] Had I been a Christian, I would undoubtedly have been considered a heretic, for what the world has always needed is more heretics and less authority.  There can be no order or progress without discipline, but authority can be quite different.  Authority, in this world in which I move, implied belief in and acceptance of a dogma, and dogma is invariably wrong, as knowledge is always in a state of transition.  The radical ideas of today are often the conservative policies of tomorrow, and dogma is left protesting by the wayside.

  Each generation has a group that wishes to impose a static pattern on events, a static pattern that would hold society forever immobile in a position favorable to the group in question.

  Much of the conflict in the minds and arguments of those about me was due to a basic conflict between religious doctrines based primarily upon faith, and Greek philosophy which was an attempt to interpret experience by reason. Or so it seemed to me, a man with much to learn.

—Louis L'Amour, The Walking Drum

Beauty evolves

London Times:

Scientists have found that evolution is driving women to become ever more beautiful, while men remain as aesthetically unappealing as their caveman ancestors.

The researchers have found beautiful women have more children than their plainer counterparts and that a higher proportion of those children are female. Those daughters, once adult, also tend to be attractive and so repeat the pattern.

Over generations, the scientists argue, this has led to women becoming steadily more aesthetically pleasing, a “beauty race” that is still on. The findings have emerged from a series of studies of physical attractiveness and its links to reproductive success in humans.

Hmm, so...



...how many years of evolution would that be?

And you thought food was expensive

Casual Kitchen:

It's pretty easy to find articles in the media and in various food blogs complaining (or worse, whining) about how expensive food is these days. But the chart below tells quite a different story:

Now stop bitchin' and go enjoy that $5 footlong.



(via Perry)

"Blue Dog Bozos"

Reihan Salam reluctantly and unflatteringly roots for them. But hey man, being the big tent ain't no walk in the park.

Love and learning

The moon arose, holding its light beyond the minaret of the great mosque, and Valaba said, "Then you will be leaving soon?"
"At any moment."
"We have hoped you would remain. [..] I think of you, Kerbouchard. The way you take is filled with risk."
"Are there other ways?"
"For some, even for you, perhaps. You are a strange man, Kerbouchard. You are an adventurer yet a scholar."
"There have been many such, even Alexander, and Julius Caesar. I but dabble in scholarship. Learning to me is a way of life. I do not learn to obtain position or reputation. I want only to know."
"Is not yours the best way? To learn because one loves learning?"
"There are places I have not seen, Valaba. I would feel their suns upon my face, the brine of their seas upon my lips. There are too many horizions, and too many dreams of what may lie beyond those horizons."
"What are you seeking, Kerbouchard?"
"Must one seek something? I seek to be seeking, as I learn to be learning. Each book is an adventure as is each day's horizon."
"What of love, Kerbouchard? Did you love Aziza?"
"Who is to say? What is love? Perhaps for a time I loved her; perhaps in a way I love her still. Perhaps when a man has held a woman in his arms, there is a little of her with him forever. Who is to say?
"A ruined castle, an ancient garden, a moon rising over a fountain . . . love comes easily at such a time. Perhaps we loved each other then; perhaps we do not love each other now, but we each have a memory.
"Love is a moment of stillness that sometimes a word can shatter to fragments, or love can be a thing that endures, a rich deep current that flows unending down the years.
"I do not think one should demand that love be forever. Perhaps it is better that it not be forever. How can one answer for more than the moment? Who knows what strange tides may sweep us away? What depths there may be or twists and turns and shallows? Each life sails a separate course, although sometimes, and this is the best of times, two lives may move together until the end of time?
"Listen to the music out there. Is the song less beautiful because it has an end? I believe each of us wishes to find the song that does not end, but for me that time is not now.
"You see?" I spread wide my hands. "I have nothing. I have no home, no land, no position. I am an empty gourd that must fill itself.
"I would owe no depts to destiny, Valaba, nor could I exist on the bounty of another. I am not a lapdog to be kept by a woman. I do not know what awaits me out there beyond the rim of things, but destiny calls, and I must go. For you and me, today is all we have; tomorrow is a mirage that may never become reality."

—Louis L'Amour, The Walking Drum

Clutch finish

An epic moment for Street Fighter, the entire Justin vs. Daigo fight from EVO 2004:



Notice how low Daigo (ken)'s health is at the 2:40 mark, then the insane parrying of kicks at 2:46. Yee-ow.

Question of trust

Krugman observes:

You could rely on a health maintenance organization to make the hard choices and do the cost management, and to some extent we do. But HMOs have been highly limited in their ability to achieve cost-effectiveness because people don’t trust them — they’re profit-making institutions, and your treatment is their cost. [Emphasis in the original.]

This gets Mankiw thinking:

Perhaps a lot of the disagreement over healthcare reform, and maybe other policy issues as well, stems from the fundamental question of what kind of institutions a person trusts. Some people are naturally skeptical of profit-seeking firms; others are naturally skeptical of government. (There is, of course, the issue that an HMO can be run as a nonprofit organization. The one I use through Harvard is an example. But let's put that issue aside for another day.)

I tend to distrust power unchecked by competition. This makes me particularly suspect of federal policies that take a strong role in directing private decisions. I am much more willing to have state and local governments exercise power in a variety of ways than for the federal government to undertake similar actions. I can more easily move to another state or town than to another nation. (I am not good with languages.)

Most private organizations have some competitors, and this fact makes me more comfortable interacting with them. If Harvard is a bad employer, I can move to Princeton or Yale, and this knowledge keeps Harvard in line. To be sure, we need a government-run court system to enforce contracts, prevent fraud, and preserve honest competition. But it is fundamentally competition among private organizations that I trust.

This philosophical inclination most likely influences my views of the healthcare debate. The more power a centralized government authority asserts, the more worried I am that the power will be misused either purposefully or, more likely, because of some well-intentioned but mistaken social theory. I prefer reforms that set up rules of the game but end up with power over key decisions as decentralized as possible.

What puzzles me is that Paul seems so ready to trust solutions that give a large role to the federal government. (In the past, for instance, he has advocated a single payer for healthcare.) I understand that trust of centralized authority is common among liberals. But here is the part of puzzles me: Over the past eight years, Paul has tried to convince his readers that Republicans are stupid and venal. History suggests that Republicans will run the government about half the time. Does he really want to turn control of healthcare half the time to a group of policymakers that he considers stupid and venal?

These thoughts, I appreciate, are broad generalizations. They don't immediately lead to a specific set of reform proposals. But I wanted to give Paul credit for a key insight: A central question in this and perhaps other debates is, Whom do you trust?

Naturally, I'm totally on Mankiw's side here.  And it seems to me that a large part of the distrust of private health-care in particular (as compared to non-health-care sectors) originates from a lack of choice.  Health insurance and management organizations may not be selling a commodity like bread, as Krugman argues, but they are selling something you could potentially have healthy market-based competition on.  The problem is right now we don't have good competition.

The market has been distorted by employers offering single or a limited selection of plans--a relic of World War II price controls that prohibited wage competition, leading employers to compete by offering more lavish benefits instead.  (This is a fine example of the unintended consequences of government regulation.)  To make matters worse, not only is there a limited selection, but those plans are tied to employment and not portable once you leave a job.  The status quo is perverse.

The lack of healthy competition causes problems.  If the insurance company you have refuses to cover a procedure that most health care consumers would expect to be covered (a situation that isn't specific to healthcare and can occur in other areas like insurance and finance) you don't have an effective recourse.  You probably can't switch to a provider that covers the procedure, because a) your employer may not offer that plan, and b) you might be denied based on the pre-existing condition.  You also couldn't start a backlash against the company that causes other customers to switch, the threat of which serves to keep companies honest (e.g., retention-attitudes like "the customer is always right").  Thus, health insurance and management organizations have a perverse incentive: denying coverage, particularly of more obscure and expensive procedures, offers them a much higher upside than the potential downside, because maintaining a good reputation with customers is less important to them than a healthy level of competition would dictate.

So how do we fix the market's competition?  Set up health insurance exchanges where anyone can choose any plan and not be denied on the basis of pre-existing conditions.  Require every employer that offers health benefits to contribute the same portion to these premiums if chosen.

For example, suppose that an employer offers to cover 70% of a $10,000/yr. BlueCross plan.  That's $7,000.  The employee should be able to take this very $7,000 and apply it toward any of the plans in the health insurance exchange.  Suppose there are several plans on offer there:

MoreBasicThanBlue -- $7,000/yr., with higher deductibles and such.
GoldPlated --- $15,000/yr., better coverage
MoreTrusted -- $10,000/yr., very similar to BlueCross but higher customer satisfaction

Presently, this employee would pay $3,000/yr. for their portion of the employer's BlueCross offer.  They might opt for the more basic plan, and pocket the difference as savings.  Or they might want want to shell out that extra $8,000/yr. for the Gold.   Or, maybe they heard from a friend or read at Consumer Reports that "MoreTrusted" offers better care then BlueCross (e.g. better customer service, fewer spuriously denied claims, etc).  They could select the most trusted provider.

This concludes my illustration of a functional, for-profit market-based system.  A government-run plan and greater bureaucracy does not seem helpful to me--and if you have a healthy distrust of government intervention and price controls, you should be concerned about direct public involvement making things worse.

Meanwhile, Tyler Cowen looks at examples of free market health care, which Krugman thinks there are no successful examples of.

Haven't we been through this before?

OMB vs. CBO

Wheels within wheels. Ezra quotes this from the Orzag-CBO wonkdown:

As a former CBO director, I can attest that CBO is sometimes accused of a bias toward exaggerating costs and underestimating savings. Unfortunately, parts of today’s analysis from CBO could feed that perception. For example, and without specifying precisely how the various modifications would work, CBO somehow concluded that the council could "eventually achieve annual savings equal to several percent of Medicare spending...[which] would amount to tens of billions of dollars per year after 2019." Such savings are welcome (and rare!), but it is also the case that (for good reason) CBO has restricted itself to qualitative, not quantitative, analyses of long-term effects from legislative proposals. In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped.

Then adds: "That paragraph reads a bit like a very angry Data trying to hurt Spock's feelings."

Wedding entrance

A sublime Mental Health Break from the Dish today; apparently a real wedding:



Update 7/31: And now, the unexpected conclusion...

An unequal relationship

Gotta stick with real, merely irrational ones, like Harold and Kumar or Two Man Gentlemen : )

Sigh-inducing quote of the day

"We need someone to stand up to Barack Obama and his policies. We must protect our culture, our Christian identity."

—Curtis Reynolds, Arkansas GOP Senate candidate and retired Army officer

Minimum wage debate

Dean Baker writes (emph. mine):

The impact of a rise in the minimum wage on employment is one of the most heavily researched topics in economics. Virtually all of this research shows that it will have little or no impact on employment. It would have been useful if the news reports had mentioned this research instead of treating this topic as a he said/she said, implying that those who claim that it will lead to large rises in unemployment are on an equal footing with those who emphasize the benefits to low wage earners. Reporters should have the time and expertise to find the evidence on this issue, readers do not.

This was surprising to me, because I've read plenty of things to suggest the minimum wage raises unemployment. Unfortunately Baker doesn't provide links to his evidence. I went looking for an introduction, and Wikipedia's overview of the debate is helpful. The bottom line there seems to be: "Today's consensus, if one exists, is that increasing the minimum wage has, at worst, minor negative effects". This has a citation from an Economist article, which is now premium content, but I found a copy via google:

The minimum wage
A blunt instrument
Oct 26th 2006 | WASHINGTON, DC
From The Economist print edition

A higher minimum wage may not kill many jobs, but won't help many poor people

IF THE mid-term elections have one central economic issue, it is higher minimum wages. Nancy Pelosi, the leading Democrat in the House of Representatives, has vowed that if her party wins control of that chamber on November 7th, she will introduce legislation to raise the federal minimum wage from $5.15 to $7.25 an hour within her first 100 hours as speaker. In six states, including the swing states of Ohio and Missouri, voters will also decide on whether to raise their state minimum wage. Democrats hope the presence of such initiatives on the ballot will lure their supporters to the polls. Politically, the strategy makes sense. Americans are hugely in favour of raising minimum wages. In one recent poll 85% of respondents said they supported the idea. Over half said they would be more likely to vote for a candidate if they found out that he supported introducing a rise.

Advocates claim more than politics on their side. They argue that a higher minimum wage also makes economic sense. The Economic Policy Institute (EPI), a left-wing think-tank, recently published a letter signed by over 650 economists, including five Nobel prizewinners, which
advocated a rise. Since the federal minimum wage was last raised in 1997 its real value has eroded dramatically. It is now less than in 1951 (see chart). Not only would a modest rise have “very little or no effect” on employment, the letter said, it would be an important tool in fighting poverty.

Strong stuff. But, laureates notwithstanding, it does not reflect a consensus among the dismal scientists. Overall, economists have become less worried about the job-destroying effects of a modest hike in the minimum wage. But most still reckon that it is at best a blunt
instrument for fighting poverty.

The academic argument—and there has been plenty of it in recent years —has focused on the employment effects. Elementary economics would suggest that if you raise the cost of employing the lowest-skilled workers by increasing the minimum wage, employers will demand fewer of them. This used to be the consensus view. But a series of studies in the 1990s—including a famous analysis of fast-food restaurants in New Jersey and Pennsylvania by David Card at Berkeley and Alan Krueger of Princeton University—challenged that consensus, finding evidence that employment in fast-food restaurants actually rose after a minimum-wage hike. Other studies though, particularly those by David Neumark of the University of California at Irvine and William Wascher at the Federal Reserve, consistently found the opposite. Today's consensus, insofar as there is one, seems to be that raising minimum wages has minor negative effects at worst. Lawrence Katz, an economist at Harvard University and signatory of the EPI's letter, agrees that “most reasonably well-done estimates show small negative effects on employment among teenagers”.

So the academic debate has shifted elsewhere, although the division between sceptics and advocates remains much the same. Mr Neumark, perhaps the leading sceptic about the minimum wage, has published several papers arguing that employers spend less on training their workers as their labour costs rise; that more students drop out of school, lured by fatter pay-packets; and that workers in their late twenties earn less if they were exposed to high minimum wages as teenagers. Other studies, however, do not find this.

Where most economists agree is that the higher minimum wage does not do much to relieve poverty. That is partly because many poor people would not gain (since they do not work); partly because some of the costs of higher minimum wages are shifted onto poor consumers; but mainly because many minimum-wage workers are not poor. Only 5% of the workforce—some 6.6m people—will gain directly from a rise in the minimum wage, and 30% of those are teenagers, many from families that are not poor. Supporters of an increase, though, argue that once you include the “spillover” effects on workers who earn just above the minimum wage (but whose wages would rise as a result), the income gains from a hike are concentrated among poor families.

Not surprisingly, studies that try directly to measure the distributional consequences reach divergent conclusions. Several studies of the 1990s find that higher minimum wages helped reduce poverty, albeit modestly. Mr Neumark, unsurprisingly perhaps, finds the opposite result. He claims that increased minimum wages actually increased slightly the number of families in poverty (presumably because these workers disproportionately lost their jobs while well-off teenagers got higher wages).

Either way a better tool exists for helping the working poor: the earned-income tax credit (EITC). This tax subsidy, a “negative income tax” that tops up the earnings of the low-paid, was introduced in the 1970s and has been expanded four times since. Its benefits are currently focused on families with children. Single men get little from the EITC. Some left-leaning economists argue that it is important both to raise the minimum wage and expand the EITC. But a big EITC expansion is politically hard (unlike raising the minimum wage, it involves spending taxpayers' money). So others support a higher minimum wage as a second-best solution. If it were up to the economists though, fatter tax subsidies would be top of the list for helping the working poor.

Good information, but do note that the analysis is from 2006. Perhaps back then a higher minimum wage would not have killed many jobs, but surely it will kill relatively more now that conditions are bad, just as raising taxes and reducing spending during a recession is harmful.

Tall people are happy

The abstract of a new paper:

According to the Gallup-Healthways Well-Being Index daily poll of the US population, taller people live better lives, at least on average. They evaluate their lives more favorably, and they are more likely to report a range of positive emotions such as enjoyment and happiness. They are also less likely to report a range of negative experiences, like sadness, and physical pain, though they are more likely to experience stress and anger, and if they are women, to worry. These findings cannot be attributed to different demographic or ethnic characteristics of taller people, but are almost entirely explained by the positive association between height and both income and education, both of which are positively linked to better lives.

Alex Tabarrok comments: "Now if I were in favor of redistribution..."

Beware of Greeks bearing gifts

Rebalancing the economy

Videographic:



The 1980 shift to consumerism is stark, and lefties with a sense of irony should point to the faster growth from Reagan's 1980 reforms that made the country richer as having the "unintended consequence" of imbalancing consumption and savings, as people forgot that the real key to lasting wealth is savings.

So basically, we've had it too easy with all the easy credit. The economy is adjusting—people are saving more, and there is agreement that this will be good in the long term—but this means a painful transition of low demand for the short-term.

Supply and demand is not—repeat NOT—optional

Caracas, July 22 - Venezuela, a traditional coffee exporter that boasts one of the best cups of java in South America, may have to import coffee for the first time ever this year or face shortages, industry experts said. Producers say rising costs and prices fixed by the government have caused production to fall and illegal exports to rise. The government says poor climate and speculation by growers and roasters is to blame.

Venezuela is known to produce some of the best quality Arabica coffee anywhere and, unlike many countries in the region, traditionally consumed most of it itself. But more recently large quantities of coffee have been smuggled across the border to Colombia, where prices have been more than double the fixed 470 Bolivares ($218) per bag that producers are paid in Venezuela.

Perry remarks:

This story provides yet another example of how central planning and price controls always fail. The laws of supply and demand are not optional. Artifically fix a price below (above) the market-clearing price and you create a guaranteed shortage (surplus). Period.

Meanwhile, in the US, Michigan has the highest unemployment rate -- 15.2%. State leaders are looking for a solution. Here's what they've come up with:

A $10 minimum wage in Michigan is the centerpiece of a number of populist proposals unveiled Wednesday by the Democratic Party, which hopes to get some of the initiatives on next year's ballot...

Increasing the state's minimum wage from $7.40 an hour to $10 an hour would give Michigan the highest standard in the nation. Washington state has the highest rate at $8.55 an hour.

The initiative also would remove exceptions that allow employers to pay less than the minimum wage to some workers, such as restaurant wait staff.

Labor unions and Democrats were pushing a ballot plan to raise the minimum wage in 2006, but the Legislature approved an increase before it could go to voters. That measure gradually raised the minimum wage from $5.15 an hour to $7.40 an hour, which went into effect July 1, 2008.

Union officials see the minimum wage as a quality of life issue for hourly workers, but business groups say many employers, especially small businesses, can't afford another increase.

So the state is bleeding jobs, and Democrats' solution is to price-fix wages even higher so that hiring low-skill workers becomes even more expensive, resulting in a greater labor surplus—more unemployment. Unfuckingbelievable!

Any economist worth a dime will explain how the minimum wage reduces employment. But the Democratic Party and labor unions, they think they know better. Cough. Gag. Spittle.



(via Free Exchange)