Archive for July, 2009

Instead of a Fairness Doctine, a Fair Shake

Tuesday, July 28th, 2009

[digg-reddit-me]Regular readers of this blog will know that I’m no fan of the Fairness Doctrine. (See this, this, and this.)

I believe – as do many other liberals whom I respect from Bill Moyers to Lawrence Lessig – that in a media environment such as we have today with blogs, Twitter, cable TV, the network news, talk radio, books, newspapers, magazines, blogs, online communities, Facebook, and the other half-dozen types of media, it does not make sense for to have a law impinging on free speech as much as the Fairness Doctrine did.

But I do think it is worthwhile – as a society – to stand for fairness, including in the coverage of controversial matters in the media. We don’t need government regulation to express our own opinion and to direct our behavior as a consumer. Rather than seeking to boycott Glenn Beck because he says something outrageous, we should demand that he include alternate points of view in his show and threaten to boycott him if he does not comply with this. Rather than attacking Keith Olbermann for his rants, we should demand that he give over some minutes to a conservative and have a real debate – without using the O’Reillian trick of cutting off his opponent’s mic.

The fact is – as this Bill Moyers piece catalogues, there is a real cost to our society that comes from the one-sided extremism that dominates so much of our media. Coupled with this, we have less and less contact with people of other opinions, as Americans are increasingly clustering geographically by political views. This creates and encourages the cycle of hatred and eventually violence that we can see operating in various extremists groups around the world; it creates a dynamic of escalating moral outrage.

The government should not be the solution to all of our problems. And this is not a matter of essential security. It is about the type of society that we are, whether or not we will be a well-informed citizenry. I’m still thinking on the issue – but I would think a set of basic standards would be helpful – that can be equally applied to the right and left – with gradually escalating steps of opposition to those who refuse to honor them.

In the end, if the principles were articulated clearly, and it was not used for merely partisan ends, I could see such an initiative affecting the national debate. The fine line that would need to be drawn would be between allowing commentators to address controversial issues while giving their opinion – and determining how the other side could be treated fairly. In the end, no matter what standards were suggested, it would have to be a matter of judgment rather than of formula.

[Image by Rich Lewis licensed under Creative Commons.]

Health Care Reform: Choice and Security

Tuesday, July 28th, 2009

[digg-reddit-me]There’s been a lot of commentary and puzzlement in the opinionsphere about exactly how Obama is trying to sell his health care reform. Part of the problem is that our system is messy – and Obama does not feel it is feasible to try to start anew. So, instead, Obama is seeking to accomplish two goals with his reform: to “bend the curve” of overall spending on health care; and to provide some form of health insurance to those Americans without it. The problem is that each of these problems seem to be inherent parts of our status quo – as the health insurance industry has sought to drive down medical costs not by incentivizing cheaper effective treatments as in most industries, but by purging the sick from its coverage. Ezra Klein describes this business model most vividly:

Private insurance is a bit like a fire department that turns a profit by letting buildings burn down.

But, as medical professionals swear an oath to provide aid to those who need it, hospital emergency rooms and the government then are forced to pick up the slack. Thus, the health insurance model does not reduce the cost of health care but merely pushes these costs onto the rest of us. This is at least part of the reason America pays about $6,500 more for health care per person – as David Leonhardt writes:

We may not be aware of this stealth $6,500 health care tax, but if you take a moment to think, it makes sense. Over the last 20 years, health costs have soared, and incomes have grown painfully slowly. The two trends are directly connected: employers had to spend more money on benefits, leaving less for raises.

In exchange for the $6,500 tax, we receive many things. We get cutting-edge research and heroic surgeries. But we also get fabulous amounts of waste — bureaucratic and medical.

One thing we don’t get is better health than other rich countries…

This isn’t the only thing causing health care costs to rise so quickly – but it is the most obviously flawed compenent of our system and one of the drivers of the escalating costs and declining level of care. And it is very unclear what benefits – if any – our health insurance model provides. It is an industry which seems designed purely to create profits for a select few and disburse costs to the population at large.

Obama has done rather well in making this case – in attacking the status quo. But the question is: What is he offering? Matt Yglesias suggested, “Health care security” and I think that’s about right. Obama expressed the same idea:

Reform is about every American who has ever feared that they may lose their coverage…

At the same time, as Ezra Klein points out, most people are currently satisfied with their health care – and want more choices rather than less. Klein suggests:

The answer, put simply, is that you don’t institute rapid change. You don’t take what people have. But you give them the option to trade up to something better. As the theory goes, if the current system really is so inefficient, and your alternative really is so much better, then the lure of lower costs and better quality will persuade Americans to switch to the new system of their own accord.

The policies to address these issues are there – in some form in the plans being discussed. The measures that deal with these should be strengthened. And the positive case for health care reform should be simple, always repeated the words choice and security:

Health Care Reform: Delivering Security and Choice to the Middle Class

[Image by dmason licensed under Creative Commons.]

A Leap of Faith on Health Care

Tuesday, July 28th, 2009

[digg-reddit-me]Last week, Matt Yglesias explained how the relationship between Congress, the media, and the public doesn’t often lead to positive policy results. His these is that a policy idea do not become popular and then receive bipartisan support and those presidents who support such ideas then succeed; instead, the observing affects the observed: if an idea is promoted by the president at the head of one party and is supported by at least some of his opposition party then the media conveys this in such a way that the idea becomes popular; if instead his opponents remain solidly opposed, the idea is seen as overreach. It was this insight that allowed Bill Clinton to bounce back after his defeat on health care in 1993/1994. The plan was solid enough – but failed, among other reasons, because the Republicans solidly opposed it and were able to peel off a few Democrats. The public thus assumed that the health care plan was a bad thing, that it was a result of Clinton’s liberal overreach. Clinton, to his credit learned from this defeat and subsequently exploited this dynamic by consistently peeling off a few Republicans for the rest of his initiatives – or sometimes siding with them more substantially – and thus accomplished things as he needed to in order to save his presidency. The problem is that Clinton’s approach often hurt the Democratic party – and resulted in many small initiatives at a time when there were festering problems that needed to be dealt with.

Obama has tried to be the un-Clinton on this and other issues. Clinton was often seen to be insincere in reaching out to the Republicans – but he helped the class of 1994 pass a significant part of their agenda. Obama has taken pains to appear sincere, but has been more interested in ideas of his own – including incorporating Republican ideas into his proposals. While Bill Clinton had started out happy with partisan victories, but then gradually came to see how the above dynamic could be used to protect himself, and became a proponent of bipartisanship, Obama started out trying to reach out to Republicans, but has become disillusioned with bipartisanship as he saw how the necessity of it gave inordinate power to a few Republicans to derail his agenda.

All of this creates a situation which Jonathan Chait over at The New Republic‘s Plank describes:

Democrats simply have to accept that health care reform is going to be polling badly when they vote on it. There’s no mechanism in the current media configuration that would allow them to convey the details of the plan in a positive way without getting overrun by negative process stories. It’s just not possible. What they have to focus on is which alternative is likely to make them better off: reform passing or reform failing. It’s an easy call, which is why I think reform will pass.

But it’s a bit depressing that the actual merit of a policy has little to nothing to do with whether or not it will pass. I agree with Chait that health care reform will pass – and it will be substantial – because the Democrats know they must just take that leap of faith and trust the president (or whoever the architect of this health care bill ends up being). It’s an easy choice between whether each representative wants to survive together, or hang separately.

[Image by ClickFlashPhotos licensed under Creative Commons.]

Dreaming can be dangerous

Monday, July 27th, 2009

Gavin Kennedy responded to my post of several weeks ago, written in response to the spectacular success of Goldman Sachs, which I saw as a repudiation of the free market in which I offered the “modest proposal” of tearing down our capitalist system and replacing it with a free market. Kennedy responded:

Much of Joe’s thinking is well motivated but he is confused because he advocates root and branch transformation in a long-established socio-economic system, and that isn’t going to happen.

The sheer impracticality of it is breathtaking.

I can understand why Kennedy responded as he did to this post. The tone was radical – deliberately so. I tried to suggest in the opening that I was writing “looser” than normally and called my radical suggestion a “modest proposal” – realizing it was not. I intended to suggest Jonathan Swift’s “Modest Proposal,” though I did not intend the piece to be satire – but rather a rant unmoored from my usual pragmatic hedgings.

Barack Obama said a few times with regards to health care that “if he were starting from scratch” he would suggest a single-payer system – but then acknowledge that we were not starting from scratch. This post was my attempt to “start from scratch” without attempting to triangulate what position was and was not practical – to explain what was fundamentally wrong, and to suggest what we should be moving towards. Rather than sudden, centralized changes though, I advocate tinkering, reforming processes at the outsides, carefully modulating incentives, experimenting with changes at more local levels before trying them nationally or internationally. I subscribe to Friedrich Hayek’s idea that we shouldn’t willy-nilly “disturb complicated systems that have been around for a very long time [as w]e don’t understand their logic.”

But there are time to be bold – there are times when the faults of the current order are revealed. Sometimes these call for revolution – but I am no revolutionary. Which is why I believe now is the time to try to try to change the philosophical underpinning of our economic system from focusing on capital to one focusing on opportunity. This doesn’t require a revolution as much as a (and I hate this phrase) paradigm shift.

On one point though, I have to disagree almost wholly with Kennedy. He says that “Dreaming can be dangerous,” seemingly because it is impractical. But what’s dangerous is when you confuse dreams with reality. T. E. Lawrence wrote:

All men dream: but not equally. Those who dream by night in the dusty recesses of their minds wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible. This I did.

Dreaming with open eyes can be dangerous – just as any risk can. But this doesn’t mean it is bad. The danger lies in the fact that one cannot know in advance whether the decision you are about to make will end well or badly. Living is what happens when you take that risk.

[Image by me.]

Apologizing to the Associated Press

Friday, July 24th, 2009

Earlier this week, I wrote that the Associated Press had “jumped the copyright shark” in  demanding a licensing fee from anyone emailing an article to more than five people or posting excerpts of any size.

I was wrong.

When this new program comes out – in which the Associated Press turns all of the images, text, and other content into a giant trojan horse type program, then they will have officially – and entirely – “jumped the shark.”

Brief Thoughts for the Week of 2009-07-24

Friday, July 24th, 2009

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The Federal Reserve, Henry Gates, Popular Policies, Health Care, Krugman on Cap and Trade, and High Times

Friday, July 24th, 2009

1. Down with the Fed! William Greider suggests we “dismantle the temple” that is the Federal Reserve in a piece this week. Greider is not only one of my favorite authors and one of the best writers on economics, he is also one of the foremost experts on the Federal Reserve. They key problem for Greider is that the Federal Reserve is an essentially anti-democratic institution:

The Federal Reserve is the black hole of our democracy – the crucial contradiction that keeps the people and their representatives from having any voice in these most important public policies.

Ezra Klein gives the piece a symapthetic audience, but then explains his reservations:

[F]or a period of time, Ben Bernanke ran our economy under a monetarist’s version of martial law. And the really problematic thing is that it probably worked. It may be all that saved us. You could argue that in the absence of the Federal Reserve, Congress would have been a whole lot more aggressive and responsible because Bernanke wouldn’t have been there to backstop them. But would you really want to bet the U.S. economy on it?

2. Sanity on the Henry Gates Controversy. Jacob Sullum in Reason‘s Hit ‘n’ Run blog gives what I think to be the essential take-away from the Gates fiasco:

[E]ven if we accept the facts as presented by Crowley, it’s clear he abused his authority, whether or not the color of Gates’ skin had anything to do with it.

Let’s say Gates did initially refuse to show his ID (an unsurprising response from an innocent man confronted by police in his own home). Let’s say he immediately accused Crowley of racism, raised his voice, and behaved in a “tumultuous” fashion. Let’s say he overreacted. So what? By Crowley’s own account, he arrested Gates for dissing him.

3. The Appearance of Bipartisanship Creates Popularity. Matt Yglesias has an interesting piece exploring the difference between how the media treats the relationship between public opinon, Congress, and policy issues and how that relationship actually works.

4. Imitation is the Sincerest Form of Flattery. Ezra Klein points out that one passage from Obama’s speech Wednesday night seemed to be taking arguments directly from articles by Steven Pearlstein and David Leonhardt this week that got a lot of traction in the blogosphere. Both columns are worth reading even independent of their apparent influence on the Obama administration’s tactics.

5. Krugman on Cap and Trade Speculation. Paul Krugman takes on doubters encouraged by Matt Taibbi’s piece describing cap-and-trade as a giant scheme:

The solution to climate change must rely to an important extent on market mechanisms — it’s too complex an issue to deal with using command-and-control. That means accepting that some people will make money out of trading — and that yes, sometimes trading will go bad. So? We’ve got a planet at stake; it’s crazy to cut off our future to spite Goldman Sachs’s face.

6. A Laid-back Beat. Lastly, I came across this song in an episode of the British series Skins this week:

[Photo by me.]

Our Wall-Street Run Health Care

Friday, July 24th, 2009

[digg-reddit-me]
There are quite a few ways to explain what is causing our health care and health insurance costs to skyrocket, but in terms of crude political terms, there are really only two possibilities: either health care costs are skyrocketing because the government is involved in a major way – with Medicare, Medicaid, the prescription drug benefit, the subsidy for employer-based coverage, etc.; or the market for health care and health insurance is inefficient independent of government interference.

I don’t have the expertise to resolve the issue – but to me it is telling that the costs of health care and health insurance began to rise exponentially not shortly after Medicare and Medicaid were begun, but during the early years of the Reagan administration with his derogatory fervor. Then the medical loss ratio began to decrease – as health insurance companies began to squeeze as much profit as they could from their businesses. In other words, the prices for health care and health insurance began to rise precipitously as Wall Street began to take a more assertive role in running the economy including health insurance. At the same time, the costs of government insurance has risen slower than that of private insurance companies.

Economists long ago discovered that health care markets are not efficient on their own – as most individuals do not treat health care as a typical service. Rather if people have a choice, they avoid using the service until they absolutely need it – and then are willing to pay whatever is necessary to get better. This also is demonstrated by the fact that despite the fact that America spends far more on health insurance than nations with similar health care systems, statistics show our overall level of care is generally lower than in these countries (fewer doctors per patient; a lower life expectancy; etcetera). At the same time, most individuals treat some level of health care as a right. Even right-wingers – as they decry the attempts to make health care a right in America – implicitly treat it as one when they tell the anecdotes about the 21-year old alcoholic who was denied a liver transplant under Britain’s system because the bureaucracy in place required him to prove he would not endanger his new liver. But unless getting medical treatment to extend this young man’s life is a right, why would anyone be outraged over it?

Because of these various factors, health care operates as an inefficient market as demand does not appreciably respond to changes in price. This helps explain how the health insurance industry began to fall under the sway of Wall Street and take on the telltale characteristics of a Wall Street-run corporation that exists primarily to generate exorbitant profits instead of to provide a service or product. When Wall Street focuses on an indursty, there follows certain predictable steps:

  • as a precondition, there needs to be a market inefficiency that Wall Street can exploit; for example, the inflexibility of demand for a product or service allows the creation of a rapidly inflating bubble in costs;
  • the pay of top corporation executives rises exponentially above that of most employees;
  • increasingly, these executives began to make decisions that benefit their shareholders in the short-term so as to maximize their paychecks and keep their jobs;
  • the product or service is degraded as corporations turn their focus to creating mass short-term profits;
  • the inefficiences present initially are exacerbated;
  • most important, many major risks and costs are deliberately externalized to the public so as to maximize private profits;
  • at some point, this becomes unsustainable and the bubble bursts.

This is exactly what we saw in Exxon’s massive profits during the surge in oil prices in 2008; and it is very similar to what we saw in the housing market; and it is also clearly what we have seen with health care in America for the past twenty to thirty years as the inflation in health care costs far outpaced all else.

I actually don’t like the idea of blaming everything on Wall Street – but the telltale signs are here:

  • health care demand is generally inflexible, although when costs are paid can be shifted as most people see health care as a right and medical facilities and doctors swear an oath to provide care to everyone;
  • health insurance companies – rather than maintaining their large dollar profits as prices skyrocketed in the 1980s and 1990s instead began to increase their percentage of the profit – as a Wall Street-run company always does, thus exacerbating the inefficiencies already present;
  • rather than seeking to reduce the costs of care while providing the best service possible, they sought to exclude as many sick individuals as possible and to cancel coverage for as many individuals who got sick as possible and to use other means of artificially lowering their costs without lowering the price of their service;
  • by refusing to pay for so many sick individuals, many of these costs are externalized to the public; by refusing to cover those who have preexisting conditions – and thus those who are more likely to need to use health care resources – the costs of taking care of these individuals is put upon hospitals and the public; while doing all of this, the insurance industry sought greater and greater government subsidies.

The toxic effect of this inflating cost bubble coupled with the attempts to externalize as many costs as possible have created the twin problems of a growing number of uninsured Americans and rapidly growing federal deficit fueled almost entirely by health care costs.

This is the status quo that we need to change. As Steven Pearlstein explained:

Among the range of options for health-care reform, there’s one that is sure to raise your taxes, increase your out-of-pocket medical expenses, swell the federal deficit, leave more Americans without insurance and guarantee that wages will remain stagnant.

That’s the option of doing nothing…

Doing nothing means leaving our Wall Street-run health care in place; and while right-wing critics focus on the specter of rationing by government bureaucrats and government bureaucrats in between you and your doctor and complain about the complex system the Democrats are proposing – they fail to acknowledge that this Wall Street-run health care rations care by cost and interjects bureaucrats reporting to CEOs imbued with the culture and ethos of Wall Street as they attempt to exploit every inefficiency in our current extremely complex system as much as possible, externalizing as much cost to the public as they can.

If the problem with our current system is not that the government is too involved – as right-wingers assert – but that the market is inefficient in providing health care – and that these inefficiencies are being exploited by Wall Street-run health insurance companies – and if with the economy still fragile from the bursting of the bubble in home prices and with radical changes not feasible or desired – then you turn to the various plans that the Obama administration and Democratic Congress are looking at which attempt to introduce various processes and incentives that will gradually shape the health care system into a more rational market – creating regulated markets for individuals to buy health insurance; eliminating abusive practices that artificially decrease medical costs for insurance companies; creating a public option to compete with these private companies; empowering an independent body (MedPAC) to regulate Medicare prices and practices; creating a body to look at and disseminate information on the comparative effectiveness of treatments and medicines.

It’s clear that our Wall Street-run health care industry isn’t working. More of the same – more deregulation as the Republicans propose – isn’t going to fix this problem. We need change. We need to take back our health care from Wall Street and make it responsive to consumers again. Our system won’t be perfect – and it won’t happen overnight – but the Democrats are clearly working to reform this system. The Republicans are merely seeking to obstruct.

The Intoxicating Effect of Fatigue

Thursday, July 23rd, 2009

Michael D. Shear wrote in the Washington Post last week about the extreme hours the Obama administration was putting in – given the magnitude of the tasks they were facing and taking on. He added this word of warning:

One study conducted for the British Parliament found that “mental fatigue affects cognitive performance, leading to errors of judgement, microsleeps (lasting for seconds or minutes), mood swings and poor motivation.” The effect, it found, is equal to a blood alcohol level of .10 percent – above the legal limit to drive in the United States.

Tom Ricks ridiculed what he characterized as the “whining” of the Obama staffers in the piece – and I can see why he is annoyed. But I think fatigue can be a serious issue – especially when people are responsible for doing so much.

[Image by me. It’s supposed to demonstrate the intoxicating effect of fatigue.]

The Option of Doing Nothing on Health Care

Thursday, July 23rd, 2009

[digg-reddit-me]Steven Pearlstein began his muchremarked column yesterday morning with a basic observation that most deficit-hawk opponents of Obama’s “experiment” with health care reform don’t seem to acknowledge:

Among the range of options for health-care reform, there’s one that is sure to raise your taxes, increase your out-of-pocket medical expenses, swell the federal deficit, leave more Americans without insurance and guarantee that wages will remain stagnant.

That’s the option of doing nothing…

I have yet to see any opponent of health care reform acknowledge that our current health care system is unsustainable and getting worse, or to acknowledge that the situation has reached a point where it undermines the very legitimacy of America’s model of the state.

Opponents of any of the Democratic health care reform proposals often argue that they are actually in favor of reform – just not this “fast” and not any of the plans being considered at the moment. They don’t have much of a response as to why they showed no concern for this issue when those more inclined to accept their ideas were in power. There have been some attempts to come up with an alternative health care reform, but it doesn’t seem like any actual plan will be offered. For example, Representative Roy Blunt, head of the GOP’s Health Care Solutions Group, is suggesting that no plan will be offered by the Republicans as he asks rhetorically:

[W]hy start diverting attention from this really bad piece of work they’ve got to whatever we’re offering right now?

This is good politics – as long as you’re not serious about reform. As long as your goal is to “break” Obama rather than to fix health care and our growing deficit problem.

I try to take things that people I disagree with politically seriously, assuming their good faith on the issue. But if opponents of the reforms on the table now don’t offer an alternative, talk about “breaking” the Democrats, and refuse to acknowledge the basic fact that the status quo which their opponents are trying to reform is leading to a disaster – all while simultaneously blaming Obama for this looming disaster – what other explanation is there for this behavior than “bad faith”?

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