Archive for the ‘Health Care’ Category
More Good News for Thanksgiving
In the Wall Street Journal just before Thanksgiving last year, Melinda Beck detailed some of the health care advances that we should continue to give thanks for this Thanksgiving Day:
• Fewer Americans died in traffic fatalities in 2008 than in any year since 1961, and fewer were injured than in any year since 1988, when the National Highway Traffic Safety Administration began collecting injury data. One possible reason: Seat-belt use hit a record high of 84% nationally.
• Life expectancy in the U.S. reached an all-time high of 77.9 years in 2007, the latest year for which statistics are available, continuing a long upward trend. (That’s 75.3 years for men and 80.4 years for women.)
• Death rates dropped significantly for eight of the 15 leading causes of death in the U.S., including cancer, heart disease, stroke, hypertension, accidents, diabetes, homicides and pneumonia, from 2006 to 2007. (Of the top 15, only deaths from chronic lower respiratory disease increased significantly.) The overall age-adjusted death rate dropped to a new low of 760.3 deaths per 100,000 people—half of what it was 60 years ago….
• Around the world, 27% fewer children died before their fifth birthday in 2007 than in 1990, due to greater use of insecticide-treated mosquito nets, better rehydration for diarrhea, and better access to clean water, sanitation and vaccines.…
• Twenty-seven countries reported a reduction of up to 50% in the number of malaria cases between 1990 and 2006.
Read it all. (I should note that Beck attributes more of this good news to government action than I would, and she counts the mere existence of smoking bans as a “health care advance,” despite the lack of evidence that they actually have any health effects. But that’s an argument we can save for next week. Today and tomorrow let’s just celebrate the good news.)
I wrote a couple of years ago about the good news of falling cancer death rates and falling heart disease death rates. Cancer death rates have continued to fall, as have motor vehicle deaths.
In his book The Improving State of the World, Indur Goklany examined, as the subtitle put it, Why We’re Living Longer, Healthier, More Comfortable Lives on a Cleaner Planet.
ObamaCare’s ‘Medical Loss Ratio’ Regs Encourage Fraud, Unnecessary Medical Services
Yesterday, the U.S. Department of Health and Human Services issued regulations implementing ObamaCare‘s rule mandating that health insurers maintain minimum “medical loss ratios.”
Opponents of private health insurance have made a fetish of MLRs – a statistic that insurers developed to show investors the share of premiums they spend on claims. (“See? They call it a ‘loss’ when they pay for medical care — that proves they’re evil!”) So the opponents of private health insurance who crafted ObamaCare included a rule requiring carriers to spend at least 80 percent of premium revenue (large employers must spend 85 percent) on “your health care.” What could possibly go wrong?
The folly and false compassion of ObamaCare are on full display in the MLR regs, where government bureaucrats have evidently determined that unnecessary and harmful medical services, and even insurance fraud, are in fact good for patients. Okay, HHS bureaucrats don’t actually think that. But ObamaCare’s MLR regs include fraud prevention and utilization review among the administrative expenses on which carriers may spend no more than 20 percent of revenue (15 percent for large employers). That will effectively discourage insurers from policing fraud and conducting utilization reviews that protect patients from the expense and risks of unnecessary medical tests and procedures.
ObamaCare’s fatal conceit is that government bureaucrats can determine and deliver what is good for patients. Consumers will continue to feel the pain – costs will continue to rise and more insurers will flee the marketplace – until Congress gives up that conceit and repeals this law.
Filed under: Cato Publications; General; Government and Politics; Health Care
Obamacare and the Drug War
I wrote an op-ed for National Review (Online) last week showing how conservative exploitation of the Supreme Court’s broad misreading of the Commerce Clause to reach intrastate medical marijuana facilitated liberal exploitation of the same to create the individual mandate in Obamacare.
A principled stand on the limits of federal power does not begin and end with health care. The Commerce Clause is a double-edged sword: Conservatives cannot wield it in the drug war without making it a useful tool for advancing progressive visions of federal power.
I’m happy to see Barton Hinkle, winner of the 2008 Bastiat Prize for Journalism, pick up on my writing and drive the point home in today’s Richmond Times-Dispatch:
So far, many conservatives outraged over Obamacare do not seem to have reconsidered their enthusiasm for national drug prohibition. Whether they do so could provide a good indication as to whether they’re standing up for a principle — or merely against the president.
Hinkle points to a recent Heritage Foundation paper opposing Prop. 19, California’s referendum on marijuana legalization. The Commerce Clause makes a prominent appearance:
In 2006, the Supreme Court held in Gonzales vs. Raich that the Commerce Clause confers on Congress the authority to ban the use of marijuana, even when a state approves it for “medical purposes” and it is produced in small quantities for personal consumption. Many legal scholars criticize the Court’s extremely broad reading of the Commerce Clause as inconsistent with its original meaning, but the Court’s decision nonetheless stands.
Yes, the decision “nonetheless stands.” That doesn’t make it right. Several prominent conservative drug warriors signed on to an amicus brief in Raich endorsing an expansive use of the Commerce Clause. Copy, paste, and replace the word “marijuana” with “health insurance,” and you just wrote a Department of Justice brief for any of the suits defending Obamacare across the nation.
There Ain’t No Such Thing as a Tax Subsidy, Either
I hit a nerve with my post, “There Ain’t No Such Thing as a Tax Expenditure.” To recap: The federal tax code has credits, deductions, exemptions, and exclusions that reduce tax revenue. By convention, budget experts call that forgone revenue a “tax expenditure,” a “tax subsidy,” or even “backdoor spending in the tax code.” This is incorrect. To claim that forgone tax revenue is a government expenditure implies that the money at stake actually belongs to the government, which is graciously letting taxpayers keep it, rather than to the people who earned it. Government is not spending that money; it is merely not extracting that money from the private sector. Statists deliberately use terms like “tax expenditure” precisely because that erroneous impression obscures their efforts to raise your taxes.
Less than an hour after posting, Matthew Yglesias of the Center for American Progress Action Fund called me “daringly inaccurate.” (Why be timid?) The Manhattan Institute’s Josh Barro devoted a very thoughtful 1,155 words to the topic at NRO.
Yglesias explains in an email:
I understand why you might want to object to the “tax expenditure” phrasing, but surely we can agree that there’s such a thing as a “tax subsidy,” right? If the government declares that fuel-efficient hybrid cars are now tax-deductible, that’s a subsidy to the makers and purchasers of Priuses.
I’m afraid I cannot agree to that.
- The term “tax expenditure” is nonsense because not taking Peter’s money, conditional on Peter buying a Prius, is not the same as spending the same amount of money on a Prius. The outcome may be exactly the same. But no one can spend money that he doesn’t possess.
- The term “tax subsidy” is likewise nonsense because a subsidy involves giving something to someone else. Not taking Peter’s money, conditional on Peter buying a Prius, is not a subsidy to Peter. The government is not giving Peter anything. Nor is it a subsidy to Paul, even though he profits from Prius sales: the government is not giving anything to Paul, either. Again, the outcome may be exactly the same as a government subsidy. Notably, Paul’s income rises. Yet it does not rise because Paul received a subsidy. Paul’s income rises because the state used coercion in a different way: to alter, for Peter, the cost of a Prius relative to other uses of Peter’s income.
- To see the absurdity, consider what it would mean to eliminate a “tax subsidy.” All else equal, eliminating an actual government subsidy reduces the tax burden. Eliminating a “tax subsidy” increases someone’s tax burden. Which is the whole point, isn’t it?
Barro makes more of our disagreement than actually exists.
- We agree targeted tax preferences are harmful. (I argue, for example, that the tax exclusion for employer-sponsored health insurance operates more like a tax hike than a tax break because, among other atrocities, it denies the typical parent control over $10,000 of her earnings.)
- We agree they expand government power.
- We agree government should account for them. (Along those lines, the Congressional Budget Office has developed a concept it calls the “federal budgetary commitment to health care,” which is the sum of all federal health spending and all tax revenue forgone due to health-related tax loopholes. The CBO calls them “tax expenditures” — grrrr. I dislike “budgetary commitment” for the same reason: the government can’t commit resources it doesn’t possess. But the CBO is on to something. We need an aggregate measure of “federal budgetary interference in the economy.”)
- Finally, Barro and I probably agree that Congress should simultaneously eliminate all such loopholes and reduce marginal payroll- and income-tax rates — perhaps to zero.
I reject the term “tax expenditure” — as distinct from the concept — because it is nonsensical and biases the debate toward more government control of the economy and our lives. Barro asks what term I’d prefer. Until someone comes up with something pithier than “tax revenue forgone due to targeted tax preferences,” I’ll stick with that.
The ‘Public Health’ Confusion Again
The National Transportation Safety Board is calling on states to require motorcycle riders to wear federally approved helmets.
“Too many lives are lost in motorcycle accidents,” Christopher A. Hart, NTSB vice chairman, said in announcing that helmets had been added to the board’s annual “most-wanted list” of safety improvements. “It’s a public health issue.”
No, it’s not. Motorcycle deaths are not a public health problem. If motorcyclist A doesn’t wear a helmet, that has no impact on cyclist B. Riding a motorcycle without a helmet may be a bad idea, but it is an individual and non-contagious problem.
The meaning of “public health” has sprawled out lazily over the decades. Once, it referred to the project of securing health benefits that were public: clean water, improved sanitation, and the control of epidemics through treatment, quarantine, and immunization. Public health officials worked to drain swamps that might breed mosquitoes and thus spread malaria. They strove to ensure that water supplies were not contaminated with cholera, typhoid, or other diseases. The U.S. Public Health Service began as the Marine Hospital Service, and one of its primary functions was ensuring that sailors didn’t expose domestic populations to new and virulent illnesses from overseas.
Those were legitimate public health issues because they involved consumption of a collective good (air or water) and/or the communication of disease to parties who had not consented to put themselves at risk. It is difficult for individuals to protect themselves against illnesses found in air, water, or food. A breeding ground for disease-carrying insects poses a risk to entire communities.
The concern back in 2007 over a tuberculosis patient on an airplane raised public-health issues. You might unknowingly find yourself in an enclosed space with a TB carrier. But nobody accidentally rides a motorcycle without a helmet. And your helmetless ride doesn’t threaten me. That’s why riding a motorcycle without a helmet is not a public health issue, even though it may be a bad choice for an individual. As I wrote before,
Language matters. Calling something a “public health problem” suggests that it is different from a personal health problem in ways that demand collective action. And while it doesn’t strictly follow, either in principle or historically, that “collective action” must be state action, that distinction is easily elided in the face of a “public health crisis.” If smoking and obesity are called public health problems, then it seems that we need a public health bureaucracy to solve them — and the Public Health Service and all its sister agencies don’t get to close up shop with the satisfaction of a job well done. So let’s start using honest language: Smoking and obesity are health problems. In fact, they are widespread health problems. But they are not public health problems.
UPDATE: An astute reader asks: But what about the costs to the taxpayer if an uninsured, helmetless motorcyclist is injured? That’s still not a public health problem, and it’s not the claim NTSB is making. It might be a public finance problem, but libertarians have generally argued that a free market in health insurance is a better response to that problem than a smothering nanny state that bans all dangerous behavior on the grounds of socialized medical costs.
Another Tax-Hike Scheme from Another ‘Bipartisan’ Group of Washington Insiders
I’ve already commented on the proposal from the Chairmen of President Obama’s Fiscal Commission (including a very clever cartoon, if it’s okay to pat myself on the back).
Now we have a similar proposal from the so-called Debt Reduction Task Force. Chaired by former Senator Pete Domenici and Clinton Administration Budget Director Alice Rivlin, the Task Force proposed a series of big tax increases to finance bigger government. I have five observations.
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Notwithstanding a claim of $2.68 trillion of “spending cuts” during the 2012-2020 period, government gets a lot bigger during the decade. All of the supposed “cuts” are measured against an artificial baseline that assumes bigger government. In other words, the report is completely misleading in that spending increases get portrayed as spending cuts simply because government could be growing even faster. Interestingly, nowhere in the report does it show what total spending is today and what it will be in 10 years, presumably because the authors realized that the fiction of spending cuts would be hard to maintain if people could see real-world numbers showing the actual size of government now and in the future.
This chart shows what it would actually take to balance the budget over the next 10 years — and these numbers assume all of the tax cuts are made permanent and that the alternative minimum tax is extended.
- The Task Force proposes a value-added tax, which is estimated to generate more than $3 trillion between 2012 and 2020. They call this new tax a “debt reduction sales tax” and I can just imagine the members giggling as they came up with this term. They may think the American people are a bunch of yokels who will get tricked by this language, but one can only wonder why they think making our tax system more like those in Europe will lead to anything other than more spending and less growth.
- The Task Force proposes to dramatically increase the scope of the Social Security payroll tax. Since this is something Obama called for in the campaign and also something endorsed by the President’s Fiscal Commission, this proposed tax hike should be viewed as a real threat. I’ve explained elsewhere why this is bad tax policy, bad fiscal policy, bad entitlement policy, and bad Social Security policy.
- To add “stimulus” to the package, the Task Force proposes a one-year payroll tax holiday. The good news is that they didn’t call for more spending. The bad news is that temporary tax cuts have very little pro-growth impact, especially if a tax cut will only last for one year. Unfortunately, the Task Force relied on the Congressional Budget Office, which blindly claimed that this gimmicky proposal will create between 2.5 million-7.0 million jobs. But since these are the geniuses who recently argued that higher tax rates boost growth and also claimed that Obama’s faux stimulus created jobs, those numbers have very little credibility.
- While the Task Force’s recommendations are unpalatable and misleading, there is a meaningful distinction between this plan and the Obama Administration’s fiscal policy. The Task Force assumes that government should get even bigger than it is today, but the Obama Administration wants government to grow at a much faster rate. The Task Force endorses massive tax hikes, but generally tries to avoid marginal tax rate increases that have especially large negative supply-side consequences. The Obama White House, by contrast, is fixated on a class-warfare approach to fiscal policy. One way of characterizing the different approaches is that the Task Force represents the responsible left while the Obama Administration represents the ideological left.
Provenge Controversy Argues for Medicare Vouchers
The new prostate-cancer vaccine Provenge (manufacturer: Dendreon) appears to extend life by an average of four months at the relatively high cost of $93,000 per patient. This week, Medicare bureaucrats will conduct a national coverage analysis before deciding whether Medicare will cover the vaccine. This “unusual“ step has sparked charges that government bureaucrats are rationing medical care to save money.
Today’s Washington Post includes letters from two cancer survivors that neatly illustrate why the government should not be in the business of providing health insurance or purchasing medical care at all. Cancer Survivor #1 argues that Medicare should cover Provenge:
“Expensive” treatments have given me many extra years with my family. I witnessed my older daughters graduate from high school, start college and celebrate events doctors told me I would never see…Time is precious, life is priceless and every breath is a gift.
Cancer Survivor #2 says no way:
As a 63-year-old cancer survivor, would I forgo just four more months of life if it would cost $93,000? Yes, in a heartbeat…Let’s quit trying to live forever and put those millions of dollars into educating the next generation.
If the government stayed out of health care, or just subsidized Medicare enrollees with a voucher, then both cancer survivors would get their wish. Cancer Survivor #1 could purchase coverage for expensive cancer treatments. Cancer Survivor #2, and millions like her, could buy lower-cost insurance and donate the savings to scholarships.
Yet politicians and government bureaucrats dictate what type of insurance Medicare enrollees get, which means they also decide what enrollees will not get. And no matter where they draw the line, someone loses. Either Cancer Survivor #1 won’t get her expensive medical treatment, or Cancer Survivor #2 won’t be able to fund scholarships for kids.
The only way out is Medicare vouchers. In addition to being the most plausible way to reduce Medicare spending, vouchers are the only way to protect Medicare enrollees from government rationing.
More Proof ObamaCare Is a Sop to Industry
Reuters has helpfully published another article demonstrating that ObamaCare‘s biggest cheerleaders are the insurance and drug industries. That’s because, barring repeal and despite the Obama administration’s fatuous rhetoric about standing up to the special interests, ObamaCare will shower those industries with massive subsidies. Excerpts follow.
Health Overhaul Should Press Ahead: Industry
By Susan HeaveyThu Nov 11, 2010 1:39pm EST
NEW YORK (Reuters) – Repeal reform? No thanks, say health insurers, drugmakers and others looking for a clearer picture of the U.S. healthcare market after the bruising passage of the controversial overhaul law…
The new healthcare law created “a stable, predictable environment, however painful it has been in the short term,” GlaxoSmithKline Plc’s (GSK.L) Chief Strategy Officer David Redfern said at the summit in New York.
“When you are running a business, the hardest thing is changing policy and a changing environment because it is very difficult to plan, predict and ultimately invest in that sort of scenario,” he said, echoing other speakers.
True enough. How’s a firm supposed to develop a business plan around uncertain taxpayer subsidies?
Health officials must still hammer out how to implement the law and finalize hundreds of new rules and regulations. Many such details are key, as the sector looks to adjust its business for 2011 and beyond.
Wait, I thought the law created a “stable, predictable environment” and repeal would create uncertainty. Hmmmm.
“Anti-reform made good talking points before the election,” said the Department of Health and Human Services’ Liz Fowler, adding that people “will find more to like than to dislike” in the law once it is more in place.
Boy, they just won’t let go of that chestnut, will they? Remember: voters need re-education, not the Obama administration.
Even insurers, which were vilified by Democrats in passing the reforms, said they don’t want a repeal, even as they push for clarity on forthcoming rules and seek additional changes.
Cigna Corp CEO David Cordani and Aetna Inc President Mark Bertolini both urged the nation to move forward on the overhaul.
Even the insurance industry is against repeal? The folks whose products the law will force 200 million Americans to purchase? Never saw that coming.
Since the start of 2009, the Morgan Stanley Health Care Payor index has risen 75 percent, outperforming a roughly 35 percent rise for the broader Standard & Poor’s 500 index.
You don’t say.
Unlike insurers[!], drugmakers have escaped largely unscathed under the law, although there is still incentive to shape it.
Filed under: Cato Publications; General; Government and Politics; Health Care
Tea Party Not Keen on RomneyCare
The following exchange took place yesterday on the Christian Broadcasting Network between host David Brody and Tea Party Express Chairwoman Amy Kremer.
Brody: Mitt Romney…on the Massachusetts health care situation, you’re going to tell me that’s going to fly in the Tea Party movement?
Kremer: Absolutely not…I’m being honest here…You can’t get away from that. And that’s the thing is, the days of people being able to do one thing in their state in front of a microphone, and then going to Washington and doing something else. I mean, the Internet, and 24-hour news cycles changed it all, and these people don’t have short memories, they’re digging up everything from the past, and they’re not going to let go of the health care.
Hmm. I wonder why…
Video of the CBN exchange is available here. For more on RomneyCare, read “The Massachusetts Health Plan: Much Pain, Little Gain.”
Filed under: Cato Publications; General; Government and Politics; Health Care
Debt Commission Reform Proposals – What Are Their Chances?
It’s kudos to President Obama’s Debt Commission co-chairs for clearly outlining the gargantuan size of the fiscal problem facing the United States. The reforms will re-direct the exploding debt trajectory downward by reforming taxes and cutting spending – reminiscent of recent fiscal reforms in the United Kingdom. Unfortunately, history is likely to repeat itself: Even if they are enacted soon — which seems unlikely — chances are bleak that we’ll stick with them for long enough to achieve their stated goals.
The Debt Commission co-chairs have done a stellar job in framing the nation’s fiscal challenge and placing it squarely before the American public. The contrast between the current trajectory that increases the national debt beyond 80 percent of GDP by 2040 and one of declining debt under their reforms likely to be consistent with long-term economic growth because the Commission also proposes limiting government spending to 21 percent of GDP — is striking.
The Commission has marked wide-ranging reforms — to broaden the federal tax base, reduce income tax rates and simplify the tax system; cut discretionary expenditures that are unaffordable and antiquated in all spheres; reduce long-term health care cost growth, and restore Social Security to financial solvency through a combination of benefit cuts and revenue measures.
It’s sad but true that the political barriers stacked up against this promising approach appear to be insurmountable. Given the make-up of Congress and with Obama as President, the chance that something even remotely resembling the Commission’s proposals would be enacted is negligibly small. With the Democratic majority in the Senate, President Obama is unlikely to even have to use his veto.
But what if my conjecture is proved incorrect and a roughly similar set of reforms is enacted in 2011? Remember that our fiscal problem is of a long-term nature. It is produced by an aging population; rapid health care cost growth; slower revenues from a flagging economy as a large cohort of experienced workers retires; slowing education and skill acquisition by younger workers; and slower capital formation as more resources are consumed by an aging population. The commission’s reforms have to be enacted and maintained for at least 30 years to deliver its “target” debt-to-GDP ratio of 40 percent. History tells us that such an outcome is quite unlikely. For example, the Budget Enforcement Act of 1990 — that helped President Clinton accumulate his now much touted laurel as a fiscal conservative — was maintained for just 12 years — until Congressional Budget Office projections revealed “budget surpluses as far as the eye could see” in 2002. With those projections in hand, lawmakers raced to the exits: the BEA was abandoned and federal spending shot through the roof. Even as conservative a policy maven as Alan Greenspan shone a green light to adopt budget busting tax cuts.
To improve the chances that history does not repeat itself, the commission’s proposals need to be combined with proposals to reform the budget process. The first thing to consider on that score is to use better budget measures to assess if reforms are achieving their goals. Stating those goals in terms of the national debt and annual cash flow deficits is unlikely to work – just as those measures have not worked for the European Union in the context of their now defunct Stability and Growth Pact.
Federal debt and the current budget deficit that is reported on the government’s books is the result of past policies and outcomes. They summarize where we came from, not where we’re going. If the commission’s reforms are enacted, a better method would be to anchor judgment about their success on the size of prospective debt—the value in today’s dollars of all future deficits that the federal government would incur under the new policies; alternatively under premature abandonment of those policies – as happened in 2002 when the BEA was abandoned. It is also important to know whether the sacrifices that the commission’s policies require from today’s generations are fairly distributed and are being invested for the future rather than being dissipated. For example, will the Social Security surpluses that the reforms generate be effectively saved and invested, or would they promote additional government spending as in the past? Without a budget process that delivers real investments for the future, and without metrics to measure their operation properly, chances are that even if Congress and the President enact them into law next year, the reforms will be abandoned too soon.
Saving Hayek from the People Who Think They’re Saving Hayek
I’ve been noticing a game lately played in the bookish corners of the left side of American politics. We’ll call it “We Know Hayek Better Than You.” It’s a game not without some attendant dangers. But it’s nothing if not fun.
Writing at Ezra Klein’s spot in the Washington Post, Karl Smith quotes Friedrich Hayek as follows:
That the ideal of justice of most socialists would be satisfied if merely private income from property were abolished and the differences between the earned incomes of different people remained what they are now, is true. What these people forget is that in transferring all property in the means of production to the state they put the state in a position whereby its action must in effect decide all other incomes.
He glosses:
That is, as Hayek goes on to explain, there is nothing fundamentally wrong with communal ownership of the means of production. The mistake is to think that the government could facilitate such ownership because then the government is effectively a monopolist and that would give the government almost unlimited power.
The idea that in principle it would be okay to completely redistribute all capital wealth is far to the left of anything proposed in modern America.
I hate to say it, but this is quite the dog’s breakfast of confusion, misinterpretation, and strained reading. One ought to be suspicious when your author writes an entire book entitled The Mirage of Social Justice. Perhaps he’s not really too enthused about social justice, you know.
Although it’s probably true that most socialists‘ idea of justice would be satisfied if income from private property were abolished, it does not follow that this was Hayek’s idea of justice. Hayek didn’t think it was “okay” to collectivize the entire means of production, whether by the state or by private action.
The ability to accumulate capital and to believe that one held it justly was, for Hayek, a most important incentive for the formation of responsible individuals. If the means of production were collectivized, individual character would suffer, and society would suffer with it. He wrote:
A free society will not function or maintain itself unless its members regard it as right that each individual occupy the position that results from his action and accept it as due to his own action. Though it can offer to the individual only chances and though the outcome of his efforts will depend on innumerable accidents, it forcefully directs his attention to those circumstances that he can control as if they were the only ones that mattered (The Constitution of Liberty, Chicago: University of Chicago Press, 1978, p. 78).
The sense of responsibility has been weakened in modern times as much by overextending the range of an individual’s responsibilities as by exculpating him from the actual consequences of his actions… To be effective, responsibility must be both definite and limited, adapted both emotionally and intellectually to human capacities. It is quite as destructive of any sense of responsibility to be taught that one is responsible for everything as to be taught that one cannot be held responsible for anything…
Responsibility, to be effective, must be individual responsibility. In a free society there cannot be any collective responsibility of the members of a group as such, unless they have, by concerted action, all made themselves individually and severally responsible… If the same concerns are made the responsibility of many without at the same time imposing a duty of joint and agreed action, the result is usually that nobody really accepts responsibility. As everybody’s property in effect is nobody’s property, so everybody’s responsibility is nobody’s responsibility (ibid., p 83).
So no, Hayek wouldn’t have thought it was a good idea to collectivize the means of production. There are some interesting theoretical questions hereabouts regarding corporations, their appropriate size, responsibilities, and attendant knowledge problems, but I suspect that my friends on the left aren’t actually pining for one megacorporation to rule them all. (Are they? I know it can be tough to keep up, but really, this is too much. Even I don’t support that.)
Hayek tells us we have private property and private capital because it does good things to the individual character. While there will be accidents, and while life is sometimes truly unfair, the best course of action is nonetheless for everyone to work as though their efforts actually mattered. And the best way to ensure that they will do so is to allow their efforts, whenever possible, to matter.
And when individual initiative has failed, what did Hayek want then? He wanted a modest system of social insurance — with emphasis on the modesty. After that, he wanted very stern incentives for people to get back up on their feet and leave that system.
One incentive that he considered at least reasonable was to forbid welfare recipients (and government workers!) from voting — an idea far to the right of anything now being considered in America. But not a bad idea in the abstract. He wrote:
It is also possible for reasonable people to argue that the ideals of democracy would be better served if, say, all the servants of government or all recipients of public charity were excluded from the vote (ibid., 105).
I look forward to my friends on the left continuing to deepen their knowledge of Hayek, and maybe entertaining this modest proposal. Were it not for my overwhelming concerns about how our current welfare system entraps its recipients, I might even support it myself.
Obama’s Fiscal Commission and Health Care Spending
Following up on what Dan and Chris have said …
If the co-chairs of President Obama’s fiscal commission were serious about reducing federal spending and deficits, they would have proposed eliminating the federal deficit, rather than “reduc[ing] it to 2.2 percent of GDP by 2015.” Yawn. They would have proposed cutting federal spending (currently, 24 percent of GDP and rising) to match federal tax revenue (currently at 15 percent of GDP). But the co-chairs proposed only to “bring spending down to 22 percent and eventually 21 percent of GDP.” Not only does that elicit another yawn, but since the co-chairs only asked for half a loaf, they won’t even get that much.
If the co-chairs were serious about reducing federal spending and deficits, they would have proposed a balanced-budget amendment. They would have proposed block-granting Medicaid. They would have proposed implementing Medicare vouchers immediately. (Vouchers are the only way to reduce Medicare spending while protecting seniors from government rationing. They would also change the political dynamics that repeatedly stymie efforts to reduce Medicare spending.) Instead, the co-chairs propose the same ol’ failed strategy of trying to limit Medicare and Medicaid spending using government price-and-exchange controls, which they euphemistically describe as “rebates” and ”payment reforms.” Along the same lines, they propose strengthening IPAB, ObamaCare‘s rationing board. IPAB’s mandate is — you guessed it — to ration care by fiddling with Medicare and Medicaid’s price and exchange controls. It will therefore inevitably fall prey to the same political buzzsaw. To appease Republicans, the co-chairs propose unwise and unconstitutional federal rules that would prevent patients injured by negligent physicians from recovering the full amount they are due (euphemism: medical malpractice liability “reform”). Finally, the co-chairs propose that if federal health spending continues to grow faster than GDP growth plus 1 percent, Congress should consider “a premium support system for Medicare” (which could mean vouchers) and “a robust public option and/or all-payer system” for people under age 65 — a debate that wouldn’t even begin until 2020.
Fiscal Commission members, congresscritters, and citizens who are serious about reducing federal spending and deficits — and who are looking for specific ways to cut government spending — should instead consult Cato’s excellent web site DownsizingGovernment.org.
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