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Barack Obama China Criticism Domestic issues Economics Financial Crisis Foreign Policy Green Energy Immigration Life New York City Politics The Bush Legacy The Opinionsphere The Web and Technology

Must-Reads of the Week: American Power, Inequality, 1 Billion Heartbeats, Hacking Life, Anthora Cups, Structural Deficit, Financial Doomsedays and Crises, China, the Tea Party’s Views on Immigration, and Lady Gaga

There were a lot of good articles and posts I came across this week — so brace yourself…

1. The American Power Act. David Brooks makes the case for progressive reform — specifically the American Power Act regarding climate change:

When you read that history, you’re reminded that large efforts are generally plagued by stupidity, error and corruption. But by the sheer act of stumbling forward, it’s possible, sometimes, to achieve important things…The energy revolution is a material project that arouses moral fervor — exactly the sort of enterprise at which Americans excel.

Matt Yglesias had earlier this week critiqued Brooks (among others) for taking the exact opposite stance of the one he was adopting here:

Oftentimes in the Obama Era the difference between “reasonable” conservatives (David Brooks and Greg Mankiw often leading the charge) and reasonable liberals has been that reasonable liberals look at flawed legislation that would improve on the status quo and support it while “reasonable” conservatives look at flawed legislation that would improve on the status quo and oppose it, while claiming to support alternative flawed proposals that they don’t actually lift a finger to organize support for within their own ideological faction.

2. Inequality, social mobility, and the American Dream. The Economist had a good piece that can serve as a starting point for a post I’ll be writing soon on inequality, social mobility, and the American dream:

The evidence is that America does offer opportunity; but not nearly as much as its citizens believe.

Parental income is a better predictor of a child’s future in America than in much of Europe, implying that social mobility is less powerful.

3. The Science of Life. Jonah Lehrer for Seed magazine has a brilliant piece on how cities are like living organisms. As a side matter, he notes this beautifully poignant data point:

[A]n animal’s lifespan can be roughly calculated by raising its mass to the 1/4 power. Heartbeats scale in the opposite direction, so that bigger animals have a slower pulse. The end result is that every living creature gets about a billion heartbeats worth of life. Small animals just consume their lives faster.

4. Fine-tuning life. Gary Wolf for the New York Times Magazine explains how the accessibility of computers is creating data about every aspect of our lives — and of the efforts of some people to begin to catalog and find insights in their own data. Surprisingly, Lifehacker was never mentioned.

5. The Anthora Cup. Margalit Fox of the New York Times writes the obituary for Leslie Buck, the designer of the Anthora cup:

It was for decades the most enduring piece of ephemera in New York City and is still among the most recognizable. Trim, blue and white, it fits neatly in the hand, sized so its contents can be downed in a New York minute. It is as vivid an emblem of the city as the Statue of Liberty, beloved of property masters who need to evoke Gotham at a glance in films and on television.

6. Unified Theory of the Financial Crisis. Ezra Klein synthesizes various narratives into a unified theory of the financial crisis.

7. The Structural Deficit. Donald B. Marron provides a coherent and reality-based conservative look at America’s structural deficit. Absolutely a Must-Read.

8. The Financial Doomsday Machine. Martin Wolf dedicated his column in the Financial Times last week to describe the “financial doomsday machine“:

[T]he financial sector has become bigger and riskier. The UK case is dramatic, with banking assets jumping from 50 per cent of GDP to more than 550 per cent over the past four decades…The combination of state insurance (which protects creditors) with limited liability (which protects shareholders) creates a financial doomsday machine. What happens is best thought of as “rational carelessness”. Its most dangerous effect comes via the extremes of the credit cycle.

9. Realism on China. Stephen Walt explains his take on China’s strategic ambitions — and its inevitable rivalry with the United States and other regional powers.

10. The Tea Party & Immigration. Radley Balko explains his take on the widespread support among the Tea Party for the massive government power grab that is Arizona’s new immigration law:

It also makes a mockery of the media narrative that these are gathering of anti-government extremists. Seems like in may parts of the country they’re as pro-government as the current administration, just pro-their kind of government.

Coincidentally, I made that exact point about the Tea Party back in September 2009 entitled: These Protests Aren’t Against Big Government, But About Liberals Running the Government.

Andrew Sullivan piles on:

Worse, on the fiscal front, they’re total frauds. They have yet to propose any serious cuts in entitlements and want far more money poured into the military-imperial complex. In rallies, the largely white members in their fifties and older seem determined to get every penny of social security and Medicare. They are a kind of boomer revolt – but on the other side of that civil conflict, and no longer a silent majority. In fact, they’re now the minority that won’t shut up.

More and more, this feels to me like an essentially cultural revolt against what America is becoming: a multi-racial, multi-faith, gay-inclusive, women-friendly, majority-minority country.

11. Sovereign Debt Crisis. Felix Salmon and Paul Krugman are both very pessimistic about how Greece will get out of this crisis — and what it means for the global economy.

12. Lady Gaga’s Ambition. Brendan Sullivan for Esquire chronicles the life and ambitions of Lady Gaga:

“There is a musical government, who decides what we all get to hear and listen to. And I want to be one of those people.” The girl who said that didn’t yet have the number-one hits (although she had already written most of them).

She was not yet the creative director of the Haus of Gaga, which is what she calls the machine of more than a hundred creative people who work for her. She didn’t make that statement in an interview or from the stage. She made it in 2007, when she was a go-go dancer sewing her own outfits and I was her DJ. She wrote it in one of my notebooks…

Lady Gaga is a student of fame, and the fame she studies most is her own — being famous seems to both amuse and fascinate her.

[1st image by me; 2nd image by LarindaME licensed under Creative Commons.]

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Barack Obama China Criticism Economics Financial Crisis Foreign Policy Health care National Security Politics The Opinionsphere The War on Terrorism

Must-Reads of the Week: China’s distortionary exchange rate policy, Mario Savio, David Brooks, Ezra Klein, & Dana Priest’s The Mission

Apologies for the very, very light posting. There are quite a number of personal issues I’ve been dealing with – aside from the uprooted tree in my yard and miscellaneous damage.

But let me still give you some must-reads for the week.

1. China’s distortionary exchange rate policy. On Sunday, Keith Bradsher in the New York Times gave a good primer on how China is using currency manipulation and the global trade organizations to gain economic advantages as part of a global strategy to increase China’s power. China has also been using the global financial crisis to further their economic aims:

China is starting to describe its currency interventions as stimulus. But unlike extra government spending in the United States and other countries, currency intervention does not expand global demand, but shifts it from other countries to China.

Paul Krugman followed this up with a column urging action regarding China:

Today, China is adding more than $30 billion a month to its $2.4 trillion hoard of reserves. The International Monetary Fund expects China to have a 2010 current surplus of more than $450 billion — 10 times the 2003 figure. This is the most distortionary exchange rate policy any major nation has ever followed.

And it’s a policy that seriously damages the rest of the world. Most of the world’s large economies are stuck in a liquidity trap — deeply depressed, but unable to generate a recovery by cutting interest rates because the relevant rates are already near zero. China, by engineering an unwarranted trade surplus, is in effect imposing an anti-stimulus on these economies, which they can’t offset. [My emphases.]

My first attempt to make sense of this issue here.

2. Mario Savio. Scott Saul of The Nation follows up with an excellent profile of Mario Savio who at one point seemed poised to lead the 1960s radical New Left, but who then dropped out of public view:

Savio was a revolutionary and civil libertarian, logician and poet, scientific observer and self-aware partisan–and in his heyday a virtuosic extemporizer who seemed not so much to perform all these identities as to incarnate them. He was, in short, an icon of possibility for his generation of student activists; and so it’s a great historical riddle, tinged with pathos, why he was, in Berkeley in 1964, the lightning rod of his time and, almost immediately afterward, a man who couldn’t conduct the energy he’d summoned.

3. David Brooks on Obama. David Brooks wrote an excellent column last Friday arguing that both the right and left have Obama wrong, as they accuse excessive fealty to an extreme left wing ideology and of being a weak, passive, unprincipled traitor respectively. Brooks describes Obama as I have always understood and described him – and in fact, as he has described himself:

Obama is as he always has been, a center-left pragmatic reformer. Every time he tries to articulate a grand philosophy — from his book ”The Audacity of Hope” to his joint-session health care speech last September — he always describes a moderately activist government restrained by a sense of trade-offs.

4. Ezra Klein. Ezra Klein best summarized the CBO score released yesterday and how it gave the Democrats exactly what they needed:

According to the Congressional Budget Office, the bill cuts deficits by $130 billion in the first 10 years, and up to $1.2 trillion in the second 10 years. The excise tax is now indexed to inflation, rather than inflation plus one percentage point, and the subsidies grow more slowly over time. So one of the strongest cost controls just got stronger, and the automatic spending growth slowed. And then there are all the other cost controls in the bill: The Medicare Commission, which makes entitlement reform much more possible. The programs to begin paying doctors and hospitals for care rather than volume. The competitive insurance market.

This was a hard bill to write. Pairing the largest coverage increase since the Great Society with the most aggressive cost-control effort isn’t easy. And since the cost controls are complicated, while the coverage increase is straightforward, many people don’t believe that the Democrats have done it. But to a degree unmatched in recent legislative history, they have.

Klein then succinctly explained what was missing from the Republican approach to the deficit that this health care bill – to its great credit – attempted to address:

Our long-term deficit is not a function of our current spending, which is manageable. It is a function of our expected spending growth, particularly in health care. With the system growing at 8 percent a year and GDP growing at 2 percent or 3 percent a year, there’s a real long-term problem there. But you can’t cut, or even tax, your way out of it. If you cut 5 percent from the system in one year, that cut disappears by the next year.

5. The Mission. I’m currently reading this 2003 book by Dana Priest who writes for the Washington Post on the military’s mission and how it evolved after the Cold War through the 1990s and into the War on Terror. Absolutely excellent. I highly recommend it.

[Image by me, this morning.]

Categories
Barack Obama Criticism Health care Politics The Opinionsphere

Paul Krugman Attempts to Fill Ted Kennedy’s Shoes

[digg-reddit-me]Ezra Klein had a smart bit of analysis about the role Ted Kennedy could have played on health care were he still with us:

If you know the health-care debate really well, it means a lot to say that Jay Rockefeller and Sherrod Brown support this bill. If you don’t know the debate very well, it means virtually nothing. Kennedy was the only liberal with the stature to sell a painful compromise to the base. [my emphasis]

There aren’t many liberals out there with that kind of stature and with the trust of those to the left, and you only get to use your position this way a limited amount of times. But Paul Krugman today took on this task with his op-ed, largely echoing arguments made by me yesterday, as well as Ezra Klein. First, is from me:

So, to my brethren on the left posting at reddit, and on progressive blogs around the nation, remember this: Be angry the bill has been undermined. Be angry that various interest groups have gotten their way at the expense of the majority. But keep perspective, and see which direction the bill moves us. And ask: Does it create a framework of exchanges and subsidies that can improve our health care system? Does it bring us closer to universal health insurance? Will it be easier to add a public option to this structure in the years ahead if, as seems likely, the health insurance industries continue their abusive behaviors, than to start anew?

The answers are clearly, Yes, Yes, and Yes.

As a progressive, as a liberal, you don’t have to be happy about supporting this bill. But you should support it.

And now Krugman:

A message to progressives: By all means, hang Senator Joe Lieberman in effigy. Declare that you’re disappointed in and/or disgusted with President Obama. Demand a change in Senate rules that, combined with the Republican strategy of total obstructionism, are in the process of making America ungovernable.

But meanwhile, pass the health care bill.

[Image licensed under the GNU Free Documentation License.]

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Barack Obama Criticism Economics Financial Crisis National Security Politics The Bush Legacy The Media The Opinionsphere The War on Terrorism

Dueling Op-Eds

Last Friday saw two sets of dueling op-eds on the opinion pages of the Washington Post and the New York Times.

At the Post, Charles Krauthammer, professional pundit, accuses the Obama administration of aiding Khalid Sheikh Muhammad in giving “voice” to the “propaganda of the deed” that was September 11. Krauthammer accepts no justification offered and launches one after another attack on the very idea of trying KSM, and most of all, on the Obama administration for bringing him to trial. Reading Krauthammer, it is difficult to understand why Attorney General Holder made the decision he did. It seems unfathomable and downright un-American.

Elsewhere in the section, two former top Bush Justice Department officials – Jack Goldsmith and James Comey – make the case that Attorney General Holder’s decision was reasonable, though there may be reason to disagree with it. They go through some of the advantages of the Attorney General’s decision, and conclude:

The wisdom of that difficult judgment will be determined by future events. But Holder’s critics do not help their case by understating the criminal justice system’s capacities, overstating the military system’s virtues and bumper-stickering a reasonable decision.

Over at the New York Times, David Brooks and Paul Krugman have a more evenly balanced argument over Timothy Geithner.

Brooks’s conclusion was that Geither’s intervention was effective:

On the other hand, you would also have to say that Geithner, like many top members of the Obama economic team, is extremely context-sensitive. He’s less defined by any preset political doctrine than by the situation he happens to find himself in…In the administration’s first big test, that sort of pragmatism paid off.

Krugman though concludes Geither is part of the problem, and even if he got the short-term economics right, the political situation won’t allow for any significant course corrections because the initial steps were so against the popular mood:

Throughout the financial crisis key officials — most notably Timothy Geithner, who was president of the New York Fed in 2008 and is now Treasury secretary — have shied away from doing anything that might rattle Wall Street. And the bitter paradox is that this play-it-safe approach has ended up undermining prospects for economic recovery.

It’s interesting to see such jousting on the same op-ed page. As opposing sides make their case, one can often learn more than from reading mere news.

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Prose Quotations The Opinionsphere The Web and Technology

Rothkopfian Aphorisms

[digg-reddit-me]Although the conventional wisdom holds that blogging and the internet is leading us to become cretins who cannot compose full sentences (lest they run longer than 140 characters), there is reason for hope. And not just because Twitter and WordPress have made more prolific writers out of all of us. I have never read the news as intensely as I have this past years, so I cannot judge from even the limited perspective of my life, but there is some great prose written on blogs. I’ve found though, that when reading on a computer screen, I “read/skim” and don’t notice the finer sentences as I jump about the piece searching for the most interesting bits. However, I have taken to printing out substantial entries from blogs, and found much of the writing is in fact quite good.

One of the writers who has consistently drawn my attention with his witty aphorisms is David Rothkopf. His blog is well worth reading, for the insight, yes – but also for the wit.

On diplomacy:

In marriage, a lack of intimacy usually means you are not getting fucked… but in diplomacy, it means you almost certainly will be.

On the advantages America has over most other potential great powers:

We’re also protected by two great oceans and our neighbors are fairly easy to get along with. (Mexico is a bit of a concern at the moment but Canada lost its last remaining offensive capability when Wayne Gretzky moved to the United States.)

On Venezuela’s announcement of a nuclear program:

I’ve been predicting this problem for so long that it gives me a little lift even if it is a potential calamity for millions of others. Take note: that’s what narcissism makes possible.

On Eliot Spitzer’s desire for publicity:

The A.I.G. scandal and the collapse of Wall Street could have been [Spitzer’s] apotheosis, the moment the howling dogs of ambition in his breast might have finally gotten enough red meat of press exposure.

On the mania of the government for ensuring constant economic growth, specifically of GDP growth:

Didn’t our founders specify that the purpose of our country was to guarantee the right of all of us (well, white men anyway) to life, liberty, and the pursuit of constant growth in “the total market values of goods and services produced by workers and capital within a nation’s borders during a given period (usually 1 year).”

Commenting on GQ’s “50 Most Powerful People in Washington” edition:

If you follow Washington without losing your appetite, you’re not paying attention.

On the relationship between capitalism and Wall Street:

Because 21st Century Wall Street is to capitalism as Pope Alexander VI was to the teachings of Jesus Christ. There was a connection but it was remote and observed more in the breach than in the honoring of the essentially good underlying ideas.

On why Wall Street will finally be reformed:

Personally, I think they miscalculate. They finally may be undone by their greed. Except it won’t be because they stole too much or blew up the international economy. It’ll be because they stopped paying off the people who set the rules. And nothing puts a politician back in touch with his principles like a failure to keep up payments by the banker to whom he has mortgaged them.

Describing the dust-up between Kim Jong Il and Hillary Clintons:

No doubt drawing on his extensive training in rhetoric and stand-up comedy at the University of Malta (training ground for all of Malta’s best comics), Kim fired back with the tell-tale wit that once had him referred to as “the anti-factionalist Oscar Wilde of Baekdu Mountain” until someone discovered who Oscar Wilde was and the guy who invented the nickname was dropped out of a Russian helicopter into the Amnok River. (Wilde, meanwhile, might have called North Korean official efforts at humor “the unspeakable in pursuit of the unattainable.”)

Comparing America’s hegemony with Microsoft’s monopoly:

In the mid-90s, America and Microsoft were clearly the future of the world. Then both started to abuse their power. America, in the wake of 9/11, undercut the international system it built, rhetorically flaunted its hallowed values and then crudely and repeatedly undercut them in its behaviors. Microsoft went from a symbol of the garage-launched entrepreneurial energy of the tech revolution to being a ruthless crusher of competitors. In fact, it became so dominant, that it felt it could foist on the American public products that didn’t work, were full of bugs, were vulnerable to security breaches and, as in the case of Vista, should never have been released in the first place.

Defining the foreign policy precept, the law of the prior incident:

A reason for the swift action on Honduras is that old faithful of U.S. foreign policy: the law of the prior incident. This law states that whatever we did wrong (or took heat for) during a preceding event we will try to correct in the next one … regardless of whether or not the correction is appropriate. A particularly infamous instance of this was trying to avoid the on-the-ground disasters of the Somalia campaign by deciding not to intervene in Rwanda. Often this can mean tough with China on pirated t-shirts today, easy with them on WMD proliferation tomorrow, which is not a good thing. In any event, in this instance it produced: too slow on Iran yesterday, hair-trigger on Honduras today.

I had also accidentally included this Paul Krugman quote in the mix of Rothkopfian aphorisms – because it seemed so like something he’d say. Only on searching for the quote did I find its true author, but I’ll include it here anyway:

Serious Person Syndrome, aka it’s better to have been conventionally wrong than unconventionally right.

[Image adapted from a photograph by the New America Foundation licensed under Creative Commons.]

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Barack Obama Health care Politics The Opinionsphere

Obama’s Promise Was To Break the Hold the Idiocrats Have On Our Society

[digg-reddit-me]It’s pretty clear that our national conversation, our national debate is broken – as Al Gore persuasively argued in The Assault on Reason. On health care – for example – we’re arguing over distractions and barely touching on the issues at stake.

When Barack Obama ran for office, he won in a large part because he convinced Americans he could change the debate – that he didn’t have a stake in the Baby Boomer arguments that had dominated our political debate since the 1980 election – that he would tackle the long-term festering issues these Baby Boomer debates had put off. This was the promise of Barack Obama, the source of people’s hope, the attraction he had for the young and indeed for the aging Baby Boomers themselves.

During his election campaign, he proved at least once that  he could rise above the vitriol of base politics that had accustomed the people to expect Clintons and Bushes to exchange presidencies in dirty campaigns. He broke the cycle that threatened to destroy his candidacy with his speech on race. In the end, he also prevailed over the forces of xenophobia, of racism, of bigotry. The fact that he won was extraordinary and proved something else – that not only was Obama able to raise the level of the national conversation – but that he could inspire a majority of the country to give his new approach a chance. For those who supported him, his failure to change this conversation is the root of their disappointment in him. I still think it’s early – but it has become clear that if Obama cannot fix our national conversation, he will not be able to accomplish most of what he has set out to do.

On health care, Paul Krugman has been gloating that he predicted this – that he knew the right wing would throw everything they had at Obama and at every one of his policies. But Obama never promised to stop people from throwing stuff at him. His promise was to rise above it.

This is what is the base issue at stake in this health care fight – more profound than our unsustainably increasing costs or the thousands who die each year because they are without coverage.

Fareed Zakaria pointed out that in a crisis our system proved it could act. But the financial crisis did not prove our system could handle a crisis; instead, it proved that we were lucky to have individuals in place who appropriated whatever power they needed. And it was the least accountable person in the room – Ben Bernanke – who had the most power and used it the most. Congress, responding to popular pressure, almost destroyed the whole process.

Obama – if he is to tackle any issues after health care – must break this budding idiocracy that derails every attempt to have an adult conversation; he must deflate the growing fears. I can see only one way he can do this – or at least begin to: He has to take the health care bill – and get it through with a strong public option and with end of life counseling. He has to call, “Bullshit.” Explain to the country again the point of these programs and what they will do – and ask anyone who experiences otherwise to contact the White House.

They called Medicare and Social Security and the entire New Deal “socialism” and “tyranny” too. And now they are broadly popular and considered key components of our market-based system. To break these idiocratic forces, Obama needs to force these controversial measures through and allow the Republicans opposing it to demagogue it in every way possible. Then make sure there are strong transparency measures in place. And then let those who predicted a Holocaust look foolish. It’s the first step to discrediting their methods and reforming our national conversation.

[Image not subject to copyright.]

Categories
Health care Politics

A Jumble of Health Care Related Points

I’ve been collecting a number of interesting points regarding health care that I haven’t yet found a way to incorporate into a post. So to stop lugging this paper around, here’s a jumble of different facts, arguments, and stories:

Robert Borsage explains one argument for “going all in” on health care reform. He explains that bringing everyone into the health insurance system would remove the hidden tax the uninsured levy on the rest of society:

This removes the hidden charge – estimated at $1,100 per person – we each pay for the 47 million who aren’t insured and are forced to use the emergency room as their doctor, often putting off treatment that results in higher costs when the untreated illness becomes critical.

The Boston Globe points out that the Romney-backed health reform there is actually working, despite headlines that seem to suggest the contrary:

In the myth that these critics have manufactured, this state’s plan is bleeding taxpayers dry, creating nothing less than a medical Big Dig.

The facts – according to the Massachusetts Taxpayers Foundation – are quite different. Its report this spring put the cost to the state taxpayer at about $88 million a year, less than four-tenths of 1 percent of the state budget of $27 billion. Yes, the state recently had to cut benefits for legal immigrants, and safety-net hospital Boston Medical Center has sued for higher state aid. But that is because the recession has cut state revenues, not because universal healthcare is a boondoggle. The main reason costs to the state have been well within expectations? More than half of all the previously uninsured got coverage by buying into their employers’ plans, not by opting for one of the state-subsidized plans.

Ezra Klein follows up to say that the Massachusetts plan “has come in at about the cost predicted” and – in the most important point for him: “Doing coverage actually pushed Massachusetts to begin addressing cost.”

Greg Mankiw questions the need for a public option in an interesting post.

Several progressives have pointed out the irony of seniors angrily telling Congressmen to “keep the government’s hands off of their Medicare.” Harold Pollack in taking on the euthanasia scare tactics of the right muses:

The irony of yammering to seniors about the evils of government-financed care is always notable, as is the selfish appeal. In 1965, liberals enacted Medicare, perhaps the most radical social engineering project in American history.

Paul Waldman in The American Prospect makes a similar point:

Forty-four years after its passage, the success of Medicare — just to review, a big-government program that has provided health care to tens of millions of seniors who would not have otherwise had it, does so more efficiently than private insurance, has seen costs grow at a slower rate than private insurance, and is smashingly popular with its recipients — has not seemed to fundamentally alter the public’s receptiveness to anti-government arguments. Ditto for Social Security. Ditto for the Veterans Administration, which is the only truly socialized health-care system in America, and one that is considered by many health-care experts to provide the best health care in the country.

Ezra Klein points out that our media-political system does not respond in the same way to all types of grassroots pressure – and that the right is benefiting from this now. He explains how single-payer advocates are organized, loud, and present (and have been present) at these town hall meetings and other health care events for years. Yet no one seems cowed by them – and they get virtually no media coverage. On the other hand, complain about socialism and you’re the story of the day… Klein reflects:

[It’s] worth keeping in mind as people begin to focus on the anti-health-care tea parties. The political system does not have some sort of consistent reaction to grassroots pressure. Rather, it picks and chooses when it wants to listen to the views of the very, very non-representative groups of people who sit through at town halls and panel discussions

Paul Krugman details a story with a similar message:

I was tentatively scheduled to be on a broadcast dealing with — well, I won’t embarrass them. But first they had to find someone to take the opposite view. And it turned out that they couldn’t — which led to canceling the whole segment.

In a way this goes beyond my original point, which was the unwillingness of the news media to referee a controversy by actually reporting the facts. Now it seems that a fact isn’t worth reporting unless someone is prepared to deny it.

And finally, I’ve already linked to this post by Ezra Klein maybe two or three times, but I haven’t cited this passage yet which almost but didn’t quite fit into my the Health Insurance Exchange is like ebay post:

The Health Insurance Exchange, combines the benefits of choice that are theoretically available on the individual market with the bargaining power and scale that’s generally accessible only in large employers (and the exchange will, in theory, have more bargaining power than even the largest employers, as it will have a much larger base of customers). You also have a space to test out innovative ideas that might make the market better, like Sen. Jay Rockefeller’s (D-W.Va.) insurance rating agency, or the public insurance option. You can standardize billing and payment methods and force the adoption of electronic medical records.

[Image by romanlily licensed under Creative Commons.]

Categories
Health care

Krugman Summarizes the Health Care Problem

While researching a few facts about health care, I came across this excellent Paul Krugman article on health care in the New York Review of Books from 2006. Anyone who wants a good overview of the debate should check out the article in full – but here are a few highlights.

Krugman sees the growth of health care costs as being driven by new technology but exacerbated by aspects of our private system. He includes this informative graph to demonstrate the significance of health care spending:

He points to a study which quantifies the difference in spending between private and public health care plans:

For example, a study conducted by researchers at the Urban Institute found that

per capita spending for an adult Medicaid beneficiary in poor health would rise from $9,615 to $14,785 if the person were insured privately and received services consistent with private utilization levels and private provider payment rates.

He points to another study which tracked the changes in the growth of spending in Medicare and private insurance:

Comparing common benefits, says the Kaiser Family Foundation,

changes in Medicare spending in the last three decades has largely tracked the growth rate in private health insurance premiums. Typically, Medicare increases have been lower than those of private health insurance.

He makes a good point (with his wry wit) about the fragility of Medicaid:

Unlike Medicare’s clients—the feared senior group—Medicaid recipients aren’t a potent political constituency: they are, on average, poor and poorly educated, with low voter participation. As a result, funding for Medicaid depends on politicians’ sense of decency, always a fragile foundation for policy.

Krugman also points out yet another study which demonstrates how a market-based approach does not necessily lead to better health results – or even cheaper results – as bad choices in the short-term often lead to expensive treatments in the long-term:

A classic study by the Rand Corporation found that when people pay medical expenses themselves rather than relying on insurance, they do cut back on their consumption of health care—but that they cut back on valuable as well as questionable medical procedures, showing no ability to set sensible priorities.

Finally, Krugman continues to make the case that our health are system is simply not the best one out there:

The data in Table 1 show that the United States does not stand out in the quantity of care, as measured by such indicators as the number of physicians, nurses, and hospital beds per capita. Nor does the US stand out in terms of the quality of care: a recent study published in Health Affairs that compared quality of care across advanced countries found no US advantage. On the contrary, “the United States often stands out for inefficient care and errors and is an outlier on access/cost barriers.”

Categories
Barack Obama Criticism Health care Politics The Opinionsphere

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

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.]

Categories
Barack Obama Health care Politics Videos

Our Wall-Street Run Health Care

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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.