Thursday, April 29, 2010

New-Fangled Gadget

I don't take the fact that others follow this blog for granted, and am instead sincerely thankful for those that do visit, follow, and comment. I have been making an effort recently to be a bit more consistent in my production after "sababatical gigante!"

Those who visit the blog homepage will notice a new gadget in the right column containing items from my Google Reader that I mark as share. I will try to share stories that i think are interesting but that I don't have the time, intelligence, or further comment required to turn the item into a blog post. For those of you that subscribe to the "other WSJ" via reader, you may be interested to know that you can also subscribe to these new shared items. Also, my understanding is that comments can be left within the shared items, so this will give us another forum for discussion.

Give it a try and let me know what you think, and let me know if you have any further suggestions.

Thank you!

Wednesday, April 28, 2010

No Super Bowl, Or BCS, For You, Arizona

Drawing parallels to the confederate flag waiving state of South Carolina, and with historic reference to apartheid South Africa, Kevin Blackistone advocates a boycott of Arizona as a destination venue for college and pro sports:

It is time for the governors of college athletics -- and the officials who control the BCS -- to expand their postseason ban. Arizona should be next, immediately.

The University of Phoenix Stadium in Glendale, Ariz., should lose the BCS National Championship Game scheduled to be played there next January unless Arizona legislators rescind soon and for good an anti-immigration law they just passed that gives police the right to stop and search for documents anyone police suspect of being in the country illegally.


The NFL should toss out a bid it received recently from Arizona to host the Super Bowl in 2015. The PGA Tour, which held two events in Arizona in February, should scratch any Arizona stops from its 2011 calendar to prove it is more inclusive than it appears.

And Major League Baseball -- out of respect to the 29 percent of its players, four managers, one general manager and one owner who are Hispanic or from Latin America -- should certainly heed the call of an embryonic protest movement in Arizona and pull its 2011 All-Star Game from the Diamondbacks' stadium in Phoenix.
I would love to see this. After all, organized sports aside, Arizona will now have a much bigger spectacle to deal with - the unfolding of chaos throughout the entire public safety system as it tries to simultaneously reign in the inevitable abuses of this new power, while scrambling to defend itself against lawsuits from angry citizens not happy the bill isn't ridding Arizona of illegal immigrants fast enough.

Tuesday, April 27, 2010

Economics in Two Charts

With the stock market back over 11,000, many folks are treating our economic problems as if they are now in the rear view mirror, and that while job growth and economic activity may remain sluggish, it is inevitable.

Let me say that I sure hope so. Let me also say that I frankly doubt it. Two charts from Nathan's Economic Edge help explain my lingering pessimism.

Chart One:

While the economic collapse of the last two years was predicated on several problems (Investment Banks, Fannie/Freddie, MBSs, CDOs, CDSs, etc.) well upstream of the American home buyer, the dominoes did not fall until people stopped being able to afford and/or re-finance their mortgages. For well over a year now, we have been in a payshock lull, but the latter half of this year and much of next year will present a tough challenge, as a great number of homeowners need to sell their homes, re-finance their mortgages, or suddenly start earning a lot more money in order for the country to avoid another shockwave of delinquencies and defaults. Are there enough buyers, is there enough liquidity in the mortgage market, and will the jobs come back in time?

If we look to what staved off Great Depression II in 2009 and 2010, it was debt. The U.S. Government took on record amounts of debt and bailed out corporations, homeowners, and the general economy with record amounts of federal stimulus spending. Yay, so the government and debt can save us again, right?

Chart Two:

For detailed discussion, debate, and variations of this chart, you can read this post on Economic Edge. The chart is not perfect, but the main conclusion that can reasonably be drawn remains. An increased debt load has diminishing returns.

In the short term, debt functions like money, as it can be used to buy stuff, bailout companies, hand out tax credits, whatever. This is why Keynesian economic theory advocates aggressive debt-spending in response to financial crisis, it is seen as an investment into the future, with the government being the investor of last resort. Monetarists also use debt as a positive tool, targeting interest rates on debt as a way to contract or expand economic activity and "regulate" the free market. (Think about that for a while.) That is why the monetarist response to financial difficulty is to lower interest rate, making debt cheaper. Both approaches were used very aggressively under both the Bush and Obama administration. However, both the Keynesian and Monetarist theories fail to account for the effect of both public and private debt in the long run. The chart above proposes that there are real diminishing returns on debt. This makes common sense, but has largely been ignored by modern economic theory. Instead of any reliable "multiplier effect" models, the chart posits that while in the past $1 of debt did indeed result in positive marginal productivity, the long trend line show diminishing returns. Furthermore, given our current debt load, any future debt spending may likely result in break even or even negative returns. We are potentially at the brink of debt saturation. And as the chart implies, a debt-saturated economy incurring additional debt would not stimulate any beneficial activity, and may even cause additional harm.

On the more hopeful side, and the title of this post aside, economics can not be reduced to two simple charts. There are countless factors that will determine the future of our incredibly complex economy. Still, it will be interesting to watch the mortgage market over the next two years. Not only would another round of bailouts and stimulus be politically difficult, they could also be economically crippling.

Tuesday, April 20, 2010

Regulation, Listening to Aristotle

We live in an age of regulation. But surprisingly, there are very few principles of regulation. As Karl Polyanyi said, “Laissez-faire was planned; planning was not.” Planning always seems to be something that arises ad hoc, to address a particular situation, but hangs on and acquires a life (and a bureaucracy) of its own, even after the situation changes. The result is that we are simultaneously over-regulated and under-regulated; we have thousands of pages of regulations that deal with situations that don’t require any, and no regulation in areas that need to be closely watched. The regs raise formidable barriers to competition, as the small businessman often finds that the cost and trouble of dealing with them is an insurmountable barrier to entering a given business. This leaves only the large players, for whom such regulation is a mere nuisance, a cost of doing business that brings a benefit of reduced competition. And since there are fewer competitors, they tend to be more politically powerful, and proceed to capture the very regulatory bodies that are intended to curb them. The government becomes, in effect, the protector of the oligarchs rather than their regulator.
Now, on to Aristotle:

Aristotle, and the Scholastics who adopted his approach to economics, were surprisingly sophisticated on these topics, while so many Prominent Economists are surprisingly naive. Indeed, Aristotle left us a principle of commerce that serves very well as a principle of regulation. This principle is the distinction he makes between natural and unnatural exchange. Modern commentators, who make no distinctions, have viewed this as a mere primitive hostility to business; actually, it was a shrewd appreciation of commerce. For Aristotle, natural exchange was that which was necessary for the provisioning of the family (the true meaning of economics.) Unnatural exchange that which had only money as it object.

The former is “natural” because it limits itself; that later unnatural because is has no natural limits. For example, a man wishing to buy bread for his family will buy only as much as he needs; this is a natural exchange. But a man wishing only to make money in the bread biz may wish to buy up all the bread and corner the market so as to raise prices and make a fortune on others’ necessities; this is an unnatural exchange. When applied to finance, a transaction is natural when it is when it is firmly and directly tied to the production of some actual product; it is unnatural the more abstract and derivative it becomes, and when its only object is to make money rather than profit from production. Thus, we may say that banks directly financing home purchases or construction are natural transactions, and less natural when they become “securitized,” bundled together and sold in packages to remote investors who will have no contact with the actual homes, banks, or borrowers. The situation becomes even more abstract when you speak of securitizing the securities (“CDO-Squared” or even “CDO-Cubed”) or with CDSs, which become pure speculative bets on the market. The more abstract the instrument, the more closely it should be scrutinized.

And yet, what we have is the exact opposite. Our regulatory system demands stay at home mothers must test their home-made baby bibs and hair bows for lead before sale, but leaves the massive and complex financial institutions that can imperil our economy and country to their own devices, allowing them to issue countless “Liar Loans” and NINJA loans (“No-income, no job or assets”), and limiting them only by their ability to "innovate" new abstract investments and speculative bets.

Somewhat related, somewhat unrelated - Simon Johnson of Baseline Scenario states in a separate post that "there are simply no social benefits to having banks with over $100 billion in total assets. Think clearly about this – and if you dispute this point, read 13 Bankers; it was written for you." I have not read the book, maybe because I am inclined to agree, but still thought it a challenging statement.

Tuesday, April 13, 2010

Gratitude and Grace

That is the title of a recent essay by writer and philosopher Roger Scruton. I enjoyed the entire piece, and hesitated to quote a stand-alone passage as the build-up and context are important, but will do so anyways (bold emphasis added by me):

The proper response to a gift, even a gift of charity, is gratitude. People who feel gratitude also wish to express it. The easiest way is to give in one's turn. By giving you pass on and amplify the goodwill that you received. Thus it is that, in America, where the tradition of giving is very much alive, and the state has not yet extinguished the desire or the need for it, people give to their old school, to their university, to the hospital that cured them, to the local rescue service that saved them, and to the veterans who fought for them. They give without seeking or expecting recognition, but simply because gratitude is expressed through giving.

However, the state is taking over many of the functions that were previously performed by charities -- not least education, health care, and the relief of poverty. And the state deals on impersonal and equal terms with its citizens. It has no favorites, and it is governed by the rules -- anything else is received by the citizens as an injustice. Hence charity is replaced by justice as the ruling principle upon which social benefits are distributed. But while charity deals in gifts, justice deals in rights. And when you receive what is yours by right you don't feel grateful. Hence people who receive their education and health care from the state are less inclined to give to schools and hospitals in their turn -- something that is borne out vividly by the figures concerning charitable giving. The spirit of gratitude retreats from the social experience, and in countries like France and Germany, where civil society is penetrated at every level by the state, people give little or nothing to charity, and regard gifts with suspicion, as attempts to privatize what should be a matter of public and impartial concern.

When gifts are replaced by rights, so is gratitude replaced by claims. And claims breed resentment. Since you are queuing on equal terms with the competition, you will begin to think of the special conditions that entitle you to a greater, a speedier, or a more effective share. You will be always one step from the official complaint, the court action, the press interview, and the snarling reproach against Them, the ones who owed you this right and also withheld it. That is the way European society is going, and American society may one day follow it. Agape, the contagious gentleness between people, survives only where there is a habit of giving. Take away gift, and agape gives way to the attitude that Nietzsche called ressentiment, the vigilant envy of others, and the desire to take from them what I  but not they have a right to.

Scruton is correct in may ways. I am in favor of private, interpersonal charity whenever possible, and certainly don't want to go the way of a European welfare state. My view is that we are to act and give first as individuals and families, and then through the communities and institutions we participate in visibly and regularly. Only as a last resort should charity be replaced with centralized government (tax, legal) policies.

Without a visible connection between the giver and the recipient, there is an incredibly important breakdown in human relationships. The giver loses the ability to see the benefits of their the gifts to others and also loses the ability to receive (perhaps selfish) satisfaction for their action. Likewise, the recipient loses the ability to see that their gifts come from the hands of fellow humans, the goodwill and/or sacrifice that entails, and the responsibility and "do right" action it inspires. Diminishing the tangible nature of charity and gratitude produce not only the mistrust and resentment the author outlines, but perhaps most importantly, personal accountability, which can give way to abuse and mismanagement not imaginable on a more personal scale.

Having voiced my agreement with Scruton's writing, I will now try to clarify my position and maybe make a case for the other side of the coin so to speak, lest I be confused for agreeing with everything his essay may imply.

Charity and grace are incredibly important because inequality is a part of the human condition, and countless individuals find themselves in tragic and unfortunate situations through no choice of their own, be it an earthquake, or cancer, or being born in a deplorable environment or to less than ideal parents. This is where the role of charity is so vital, as those more fortunate act out of empathy and concern for the well-being of others, and for their community/society/humanity as a whole, in order to give others the gift of hope, care, or opportunity.

On the flip side of the equation, there are many who find themselves the beneficiary of (at least relatively) wealthy families, advanced economic societies, social institutions, even abundant natural resources that they had no role in creating or determining. Of course, we all make choices as to how we respond and/or take advantage of the situations we find our selves in, but there is no denying that the "playing field" is anything but level. This is important in the Christian worldview, as we are instructed to recognize that all a person's circumstances, abilities, and possessions are gifts from God.

That brings me to my main "BUT" to Scrotun's essay. It is not a rebuttal, but a recognition of a point of tension that the author does not address.

Our society is not only filled with wide diversity and inequality, it is also inextricably interconnected. At least part of the pay Bank CEOs receive come from the overdraft fees of their poorest customers struggling to put food on their tables. At least part of the money made by the management and shareholders of energy companies come from cutting corners on things such as environmental and worker safety (see W. Virginia, water quality, and the recent mine accident). In these cases, it is the poor, the unfortunate, and the environment who are unwittingly or unwillingly the givers to the more privileged, and once again, due to the diminishment of interpersonal relationships, the result is same: ingratitude, entitlement, resentment, false claims, and lack of personal accountability.

Justice is very important.

Those with money and power have a much easier time in making their interests heard and acted upon than those on the opposite end of the socio-political spectrum. In this respect I disagree with the author that "the state deals on impersonal and equal terms with its citizens. It has no favorites, and it is governed by the rules." It is the role of justice, and this includes but is not limited to the government variety, to make account where trust, accountability, and reciprocity fail, especially with respect to those without the voice, means, or ability to do so for themselves.

Thursday, April 8, 2010

Color Me Surprised

Keith Olbermann does journalism. Really.

Visit for breaking news, world news, and news about the economy

Visit for breaking news, world news, and news about the economy

Unfortunately, the little watched Olbermann seems to be about the only mainstream television journalist shedding light on the horrible decision to allow the President to order the assassination of a United States Citizen. Justin Kuznicki of CATO notes that this goes directly against the grain of what America founders struggled to create, A Government of Laws, Not Men:

Consider today’s news:

The Obama administration has taken the extraordinary step of authorizing the targeted killing of an American citizen, the radical Muslim cleric Anwar al-Awlaki, who is believed to have shifted from encouraging attacks on the United States to directly participating in them, intelligence and counterterrorism officials said Tuesday.

Americans, this is what arbitrary government looks like. As a simple matter of fact, even George III was never this arbitrary. Even he didn’t make individual colonists’ lives depend merely on an act of his own will.

Indeed, if I wanted a perfect example of what a government of men, not laws, looked like, I could just glance at the newspapers today and see what our government is doing right at this moment.

Do not respond that this power will only be used wisely and sparingly. Doing so just admits my basic point, namely that we now depend purely on the wisdom and restraint of our individual leaders. We depend on their wisdom and restraint — to check their own worst impulses. All power, both for and against, is contained in one individual. No legal processes, and no guarantees, separate us from them. And the stakes are life or death.

Likewise, do not respond that this power will only be used against very bad people. Again, doing so just admits that we now depend on an unreviewable judgment of character, not on a legal system with formal procedures and safeguards. Even in the dark days of the Cold War — even during the Revolution itself — we never ceded so much power to so few.

Glenn Greenwald, perhaps the most civil liberties oriented journalist in our country, expounds on this decision in great detail at

Today, both The New York Times and The Washington Post confirm that the Obama White House has now expressly authorized the CIA to kill al-Alwaki no matter where he is found, no matter his distance from a battlefield. I wrote at length about the extreme dangers and lawlessness of allowing the Executive Branch the power to murder U.S. citizens far away from a battlefield (i.e., while they're sleeping, at home, with their children, etc.) and with no due process of any kind. I won't repeat those arguments -- they're here and here -- but I do want to highlight how unbelievably Orwellian and tyrannical this is in light of these new articles today.

No due process is accorded. No charges or trials are necessary. No evidence is offered, nor any opportunity for him to deny these accusations (which he has done vehemently through his family). None of that.

Instead, in Barack Obama's America, the way guilt is determined for American citizens -- and a death penalty imposed -- is that the President, like the King he thinks he is, secretly decrees someone's guilt as a Terrorist. He then dispatches his aides to run to America's newspapers -- cowardly hiding behind the shield of anonymity which they're granted -- to proclaim that the Guilty One shall be killed on sight because the Leader has decreed him to be a Terrorist.

Just to get a sense for how extreme this behavior is, consider -- as the NYT reported -- that not even George Bush targeted American citizens for this type of extra-judicial killing (though a 2002 drone attack in Yemen did result in the death of an American citizen). Even more strikingly, Antonin Scalia, in the 2004 case of Hamdi v. Rumsfeld, wrote an Opinion (joined by Justice Stevens) arguing that it was unconstitutional for the U.S. Government merely to imprison (let alone kill) American citizens as "enemy combatants"; instead, they argued, the Constitution required that Americans be charged with crimes (such as treason) and be given a trial before being punished. The full Hamdi Court held that at least some due process was required before Americans could be imprisoned as "enemy combatants." Yet now, Barack Obama is claiming the right not merely to imprison, but to assassinate far from any battlefield, American citizens with no due process of any kind. Even GOP Congressman Pete Hoekstra, when questioning Adm. Blair, recognized the severe dangers raised by this asserted power.

And what about all the progressives who screamed for years about the Bush administration's tyrannical treatment of Jose Padilla? Bush merely imprisoned Padilla for years without a trial. If that's a vicious, tyrannical assault on the Constitution -- and it was -- what should they be saying about the Nobel Peace Prize winner's assassination of American citizens without any due process?

Why are so few people worried about laws, checks & balances, due process, and all those other pesky principles that keep governments from descending into tyranny? Does the cult of personality towards Obama have no limits?

Friday, April 2, 2010

That Said...

Per yesterday's blurb, don't get me wrong, I enjoy economics, politics, college football, and all kinds of distractions. It is just a matter of perspective. I can not control society's economic and political activity, but I can control my own activity. Opining on the former should not get in the way of my personal responsibilities. Just a little personal reflection after getting a little too obsessed about things beyond my control.

The decisions made by those in power to affect societal change in these important areas have far ranging impacts, potentially including the relative choices, freedoms, and opportunities available to me and those I know and love. So the ramblings and rage will continue, and maybe it will help in some small degree, but I'll try to keep perspective and will be happy when comments veer to the topic of college football.

Speaking of happiness and college football, how many would rather have their team win the national championship than their candidate win political office?

Thursday, April 1, 2010

Taking Stock

No, this is not intended as an April Fool's post, although it very well may indict me as one. A brief rant on how I see it as of April 1, 2010:

The "science" of human politics (and economics for that matter) is a great temptation, since the idea that organizing people in a certain way can make life easier, more secure, more fair, or more personally satisfying is enticing. But while they can be an interesting and even useful topic of discussion, political theories (especially those that claim to be consistent or universal) lead to false visions of society. Actually, I like the analogy of a mirage, a vision supported by little other than hot air.

Human government takes this one step further by exercising its authority on the basis of those flawed political/economic theories. Particularly, the role of government has shifted quite a bit along the spectrum from an authority which governs the actions of the governed to an authority which acts on behalf of the governed. Collective government action is enticing for the same reasons that politics in general are, but it is another mirage, and a dangerous one. I hold that the increased collective action of government into society can negatively impact individual identity and action, both practically and spiritually.

Beyond the debate over public versus private action, and their relative efficiencies and strengths, consideration of the impact of policy on the individual, their purpose, responsibility, and even freedom, is to a regrettable degree neglected.

The right question to ask is not always what can government do, but what should government do?

Wednesday, March 31, 2010

How to spot a "true" Christian

According to Andrew Sullivan:

Christianity flees power as Jesus did; Christianism seeks it above everything else. And there is nothing more powerful than killing others, except for torturing them. Hence my distinction, which I make from no authority. I merely think that declaring a homeless, apolitical, non-violent hippie in first century Palestine as someone who would bless a twenty-first century terrorist militia in North America is a bit of a stretch.

I think it would be overly simplistic to call Jesus apolitical. No, Jesus did not work within the existing political parties of his day, but his message was radical and subversive to the cultural status quo , and that certainly had political ramifications. To paraphrase JH Yoder, proclaiming Christianity is in itself a political statement. That said, I do agree that it is (or should be) a political statement for peace, fleeing the "political establishment" and its control and violence.

Thursday, February 25, 2010

Being both independant and dependant

The UK Guardian has had a very interesting series on Citizen Ethics, complete with the pamphlet Citizen Ethics in a Time of Crisis. I find it fascinating that a leading UK paper is taking such a serious matter head on, and can only hope that one way or another people everywhere are awakened to pay greater attention to ethics and morality in our times. While I have not read the entire series, and have not agreed with everything that I have read, I wanted to provide a couple of excerpts from a recent article by Mark Vernon on the intertwined combination of both the individual and the social components of human identity:

"The nation's morals are like its teeth: the more decayed they are, the more it hurts to touch them." So noted George Bernard Shaw in an observation that still rings true: if the word "moral" feels painful, the word "virtue" makes most people wince. That's striking because virtues are merely the skills that enable us to flourish, if we have them. Courage and kindness, good judgment and justice: they promise life lived well. So whence the rot?

The root problem, I suspect, is that our current moral discourse lacks a compelling vision of what it is to be human. Ethics has ceased to be a source of inspiration, and instead feels like a burden – a limitation. This is because it's become what has been said of economics: a dismal science.

On the one hand is the ethics of calculation, the weighing up of one person's interests against another. It's ethics as a cost-benefit analysis, a process that hands it over to accountants. This utilitarianism is an honourable tradition: the original utilitarians argued that something is right because it increases human happiness. The problem is that they had a thin sense of what human happiness entails – certain material needs and a decent dose of quality pleasures. That struggles to articulate any richer vision of what humans might be; it fails to make any profound call on our nature. Today, pleasures abound, at least in the west, and it's an approach running out of steam. We sense there must be more. It can't say what.

Then, on the other hand, is the ethics of regulation. This is ethics as a series of responsibilities to which we're tied as a result of a contract we're locked into because we live with others. It risks handing ethics over to the lawyers, and has a view of life that is bureaucratic. It makes personal ethics feel like corporate compliance, a burden – perhaps a necessary one – but never a source of vitality because, again, it does not have the capacity to inspire. It doesn't ask what we can be, only addressing what we ought to do, and often ought not to do.

An obvious, invaluable strength of a democratic culture is that it allows everyone to pursue their interests relatively freely. And yet, as Alexis de Tocqueville noted, the democratic individual can easily fall into the delusion that they are rich enough and educated enough to supply their own needs. "Such folk owe no man anything and hardly expect anything from anyone," he writes in Democracy in America. "They form the habit of thinking of themselves in isolation and imagine that their whole destiny is in their own hands."

He'd spotted an old problem. Pericles, the great champion of democracy in ancient Athens, praised individual initiative, but also warned against the citizen who lives only for himself. He said that such individuals have no right to be part of the city-state upon which their flourishing depends. And he had a noun for such folk too, idiotes – from which we get a well-known English word.

In other words, the tensions inherent in the language of rights and democracy highlight something of great importance. To be human is to be, at once, independent and dependent. We can only become independent because of our dependency, and vice versa.

This integrative view finds support in other areas of research. A striking one is neuroscience. Iain McGilchrist, in The Master and his Emissary, explores how the two hemispheres of the brain see the world differently, one as if we are independent, self-attending creatures; the other as if we are dependent, other-seeking creatures. His point is not that one is better than the other, but that both are required, one for the other...
To paraphrase in my own word, humans with a strong sense of their full identity, both as individuals and as members of positive social structures, live richer, fuller, more purposeful (i.e. happy) lives.

Let me be clear. I believe strongly that positive participation (via empathy, generosity, friendship, kindness, etc.) in social structures are required for human happiness and overall flourishing. I also believe strongly that government can do very little, either by design or dictate, to organize positive social structures. Empathy, generosity, and love can only elevate both humans and humanity when practiced through choice. Positive social institutions (family, church, neighborhoods, communities, etc.) can only be successfully created through private initiative, and only with much effort. This makes it all the more important that people everywhere are awakened to their importance, and committed to their existence.

Tuesday, February 16, 2010

UPDATED - Health Care - Let's See What Sticks

Update - Having read the comments to my original post, as well as doing more thinking and research, I have changed my views slightly. First, the individual mandate may be too extreme. A better alternative may be to give credits to households that qualify for government assistance that could be used to buy catastrophic coverage in the private market. Second, my desire to create a national market for health insurance would be two-fold, to make insurance portable for people moving or purchasing across state lines, and to allow greater competition at a lower regulatory burden for insurance companies. The ideas of individual mandates and national insurance markets are attractive on many functional levels, but I certainly wouldn't want to proceed in an unconstitutional manner. Aside from changing my first three point, which were certainly the most controversial of the bunch, and tweaking a few words here and there, I still thing these actions would be in the right step of moving people into a new era of viewing health care as a budgeted expenditure, and empowering them to make better individual decisions on the private market.

OK, I have been backed into a corner and will go ahead and outline my basic ideas for health care reform. These are by no means original to me, I have just collected/plagiarized/adapted them from elsewhere. I will perhaps provide links to sources and statistics as requested, but I wanted to get this out there. To respond to the most recent criticisms leveled against me, I think you will see that I am not placing my trust in government for so large an enterprise as health care. I am asking for government to create a framework and get the heck out of the way so people and the private sector can take responsibility for their own health without the current set of government created problems.

The extent to which I am seeking government involvement is as follows:

1. Eliminate the restrictions on the interstate sale of health insurance. This is a removal of burdensome regulation. Encourage states to adopt a common set of standards for a basic level of catastrophic insurance that would be portable and could be purchased from any qualified insurance company.

2. Replace 50 sets of regulation with a single set. Encourage states to adopt common regulatory standards. Drastically reducing and untangling existing regulations can not really be seen as "additional" regulation, unless you mean addition (of value) through subtraction (of quantity).

The goals of items 1 & 2 would be a much cleaner and clearer framework for a national insurance market. Repealing state laws and regulations that currently prevent insurance companies from competing across state lines would result in a lower regulatory burden, increased market opportunities (good for insurers) and increased competition (good for consumers). If not dramatically lowering costs, it would likely stabilize costs while increasing options. (Side note - As I understand it, the Ryan plan does not address this issue.)

3. Once a national market is in place, mandate encourage the purchase of "Basic" catastrophic health insurance plans that all insurers could sell as a commodity and/or loss leader for purchasers of additional coverage.

This would (ideally) be a portable, stand alone line of coverage, and one could switch at any time to another carrier offering a better deal, but everyone would be required to have this basic coverage. PLEASE NOTE - I am not talking about health care coverage in the sense of paying for physicals, flu shots, and your typical medical expenses. This is insurance to cover the risk of an unanticipated medical event (severe trauma, emergency surgery, stroke, organ failure, stroke, cancer, coma, etc.) that would, without adequate coverage, likely lead to destroyed life savings, massive debt, and/or bankruptcy. Most Americans would carry multiple layers of coverage, with the “basic” level being mandated, and any additional layers remaining optional. (An imperfect analogy would be car insurance, where liability coverage is mandated, and GAP, uninsured motorist, comprehensive, and others are commonly purchased additional options)

As to what gets deemed catastrophic, I share JB's concern (in the comments of the previous post) that elected/lobbied politicians would be all to meddle to the point that everything could be viewed as potentially catastrophic, so keeping the scope of any mandated coverage limited to managing the risk of personal/household catastrophe is important. The idea is to treat catastrophic coverage as a math problem, targeting the premium payment on a percentage (around 5%) of personal/household income, and providing coverage for health costs above a defined percent (15-25%) of annual personal/household income.

Do I wish there was another way? Certainly. But, as researchers, think tanks and policy makers across the political spectrum have learned (although they refuse to agree on it), a mandate of some basic form of coverage seems to be the only way to reduce “free rider” or “wait until sick to purchase” abuses.

4. Either eliminate (my preference) all tax breaks/deductions that deal with health care and health insurance, or make the tax treatment and incentives the same for all, individuals and employers.

5. Allow employers and individuals to form their own risk pools as they see fit (business networks, church congregations, Facebook groups, neighborhoods, whatever).

6. For all “extended” health insurance, repeal government mandates regarding what insurance companies must cover. Allow market variety and competition to determine what level or premiums and co-payments people are willing to pay for routine and planned medical care.

We are now talking not only about “basic” insurance coverage, but also all the “extended” health insurance, discount plans, prescription plans and health benefits that everyone should be allowed to choose and purchase on the private market. We know that currently employer health benefits are fully tax deductible, but individual health insurance is not. Not only is this unfair, it creates a burden on both employers (administration, tax prep) and employees (health benefits often overriding other job concerns). Employers can continue to offer “extended” health perks as benefits, but would not have to remain the dominant source through which they are made available or affordable. People should be free to associate in any manner they wish in order to better negotiate for themselves.

7. Mandate that health care providers have pricing for all basic services and procedures in plain sight and available upon request.

8. Encourage Health Spending Accounts (HSAs) that allow people greater freedom to make their own decisions on health care.

Put the price mechanism back into the health care market! This is perhaps the greatest sign that the current health care market is completely broken. People, especially those without “extended’ health coverage, are smart enough to make better decisions on quality and cost. It is incredible to think how much less Americans would spend on health care if they only had the choice, yet so few actually know the itemized or total cost of their last doctor's visit. Hint, it was A LOT more than anyone’s co-payment.

9. Enact serious Medicare and Medicaid reform and/or dismantlement.

10. Provide a safety net to this new system for those that can not afford it.

It is my position that if steps 1-8 were in place, several things would happen naturally as a result of human choice and market forces. First, the current level of health care spending by Americans would stabilize/decline as a much greater level purchasing decisions (of both coverage planes and health care services) would be placed in their hands to self-ration based on need, value, and return on investment. Second, the cost of services and insurance coverage will stabilize/decline. Giving individuals the ability to shop online for the doctor in town with the lowest prices (#7), and among insurance companies from across the country with the best rates (#1&2) enhances competition and choices.

Restoring basic functions such as supply and demand and price competition to the heath care industry are critical not only because our society will benefit from fewer bankruptcies (currently over 50% of bankruptcies are prompted by medical costs), increased access to care and lower costs of those services, but because we need to avoid the coming apocalypse of insolvency for Medicare, Medicaid, and Social Security.

Estimates range widely, but just using middle of the road numbers, current spending on Medicare, Medicaid and SCHIP is about $700B. To get to JB’s statistic of the US Government paying for over 50% ($1.2T) of all US health care expenditures ($2.4T), you have to add the active duty military Medical Corps and the Veterans Administration, along with a few other smaller programs. An important purpose of any meaningful health care reform should be reduce the government’s overall expenditures. Logic dictates that if everyone in America had “basic” catastrophic coverage, purchased in the private market, that private insurance would cover a much greater percentage of higher cost health care than it does today, reducing the government’s role as payer of last (or first) resort. And with a more prominent role for HSAs, individuals could also purchase a greater share of routine health care on a more open, price-sensitive, market.

Still, there are those that can not afford even the “basic” coverage or have much left over to fund a HSA. So how do we get from here to there?

First, I would favor a government plan that subsidizes the purchase of the “basic” catastrophic coverage outlined above for those that can not afford it. Current catastrophic insurance plans run from $1,200 per person to $3,000 per family. Basically, under may plan, any household making less than $60k would be expected to pay 3-5% of their income with the government making up the difference to purchase a plan. Again, using round numbers (and from 2006), there are about 70 million households that make less then $60k, so the government would step in and make up the difference between each of these household’s 3-5% contribution and the amount needed to purchase a “basic” plan. The cost would be a estimated $105 billion dollars. This is not an insignificant amount, but the question is whether this would reduce the government’s current annual outlay by at least the same amount, and hopefully by much more, whether we use the $700B (w/o military and vets) or $1.2T (with both) number. If so, we have achieved a form of universal coverage for a break even cost or better. I don’t have the resources to run definitive numbers, but I find it impossible to believe that is all medical costs above 20% of every household’s personal income were absorbed by the private market, from age 0 to dead, that government expenditure wouldn’t go down at least 15%. I am hopeful the savings would be great enough that a drastic overhaul and/or dismantling of Medicare and Medicaid becomes more politically viable.

Second, in order to promote HSAs, I would like to consider in greater depth a possible government match of HSA contributions for low and middle income households that would function much the same way of a company-matched 401k. Just a thought. I would like to see the cost to benefits numbers on such a program. Whether we are talking a 10% match for everyone up to a certain amount, or a greater (up to 25%?) match for targeted incomes, I would like more research on ways to encourage savings.

Is this welfare and redistribution? Sure, but I dare say it is less welfare, less redistribution, and would be loads more effective than the current patchwork of bloated government programs we are currently wasting money on. Are there other steps that I think can and should be taken? Sure, but I don’t know enough to have a definitive opinion on them, and I think the steps above would be a good first start. That said, I’ll leave you with a couple more suggestions that get thrown around a lot that would likely be worth considering.

11. Encourage a greater number of medical schools and enrollments. (Break up the AMA monopoly?)

12. Look as reform medical malpractice and tort laws. (Negligence should come at a price, but where are the limits?)

Monday, February 15, 2010

Healthcare: Further Proof

As if it is needed, more news of the current state of the Republican Party. I heard this story on NPR on the way to work this morning:

For Republicans, the idea of requiring every American to have health insurance is one of the most abhorrent provisions of the Democrats' health overhaul bills.

"Congress has never crossed the line between regulating what people choose to do and ordering them to do it," said Sen. Orrin Hatch (R-UT). "The difference between regulating and requiring is liberty."

But Hatch's opposition is ironic, or some would say, politically motivated. The last time Congress debated a health overhaul, when Bill Clinton was president, Hatch and several other senators who now oppose the so-called individual mandate actually supported a bill that would have required it.

In fact, says Len Nichols of the New America Foundation, the individual mandate was originally a Republican idea. "It was invented by Mark Pauly to give to George Bush Sr. back in the day, as a competition to the employer mandate focus of the Democrats at the time."

The 'Free-Rider Effect'

Pauly, a conservative health economist at the University of Pennsylvania's Wharton School, says it wasn't just his idea. Back in the late 1980s — when Democrats were pushing not just a requirement for employers to provide insurance, but also the possibility of a government-sponsored single-payer system — "a group of economists and health policy people, market-oriented, sat down and said, 'Let's see if we can come up with a health reform proposal that would preserve a role for markets but would also achieve universal coverage.' "

The idea of the individual mandate was about the only logical way to get there, Pauly says. That's because even with the most generous subsidies or enticements, "there would always be some Evel Knievels of health insurance, who would decline coverage even if the subsidies were very generous, and even if they could afford it, quote unquote, so if you really wanted to close the gap, that's the step you'd have to take."

One reason the individual mandate appealed to conservatives is because it called for individual responsibility to address what economists call the "free-rider effect." That's the fact that if a person is in an accident or comes down with a dread disease, that person is going to get medical care, and someone is going to pay for it.

"We called this responsible national health insurance," says Pauly. "There was a kind of an ethical and moral support for the notion that people shouldn't be allowed to free-ride on the charity of fellow citizens."

Republican, Democratic Bills Strikingly Similar

So while President Clinton was pushing for employers to cover their workers in his 1993 bill, John Chafee of Rhode Island, along with 20 other GOP senators and Rep. Bill Thomas of California, introduced legislation that instead featured an individual mandate. Four of those Republican co-sponsors — Hatch, Charles Grassley of Iowa, Robert Bennett of Utah and Christopher Bond of Missouri — remain in the Senate today.

The GOP's 1993 measure included some features Republicans still want Democrats to consider, including damage award caps for medical malpractice lawsuits.

But the summary of the Republican bill from the Clinton era and the Democratic bills that passed the House and Senate over the past few months are startlingly alike.

Beyond the requirement that everyone have insurance, both call for purchasing pools and standardized insurance plans. Both call for a ban on insurers denying coverage or raising premiums because a person has been sick in the past. Both even call for increased federal research into the effectiveness of medical treatments — something else that used to have strong bipartisan support, but that Republicans have been backing away from recently.

'A Sad Testament'

Nichols, of the New America Foundation, says he's depressed that so many issues that used to be part of the Republican health agenda are now being rejected by Republican leaders and most of the rank and file. "I think it's a sad testament to the state of relations among the parties that they've gotten to this point," he said.

And how does economist Pauly feel about the GOP's retreat from the individual mandate they used to promote? "That's not something that makes me particularly happy," he says.

As Reagan, Buckley Jr., and countless others have said, I didn't leave the Republican Party, the Party left me. I have always been an independent, but used to default to the Party of self-responsibility, fiscal conservatism, entrepreneurship, humble foreign policy, and individual civil liberties. I have no use for a Party that has made golden calves of Medicare, unfunded spending, parasitical banks, war, torture, and Homeland Security. And those that would scream "Tea Party!" are even worse. The movement started by Ron Paul has quickly dissolved into a terrible combination of populism, anti-tax shrieking, and jingoism. Just look at the competition Paul himself is facing for re-election.

With respect to health-care, of course I would in theory always favor market solutions over government intervention. However, when the last century's most brilliant free-market advocates see a clear role for government in health care where profit motives and markets fail, and their arguments have stood the test of time, I am inclined to listen:

A more radical reform would, first, end both Medicare and Medicaid, at least for new entrants, and replace them by providing every family in the United States with catastrophic insurance (i.e., a major medical policy with a high deductible). Second, it would end tax exemption of employer-provided medical care. And, third, it would remove the restrictive regulations that are now imposed on medical insurance—hard to justify with universal catastrophic insurance.

Milton Friedman, Hoover Digest 2001


Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance – where, in short, we deal with genuinely insurable risks – the case for the state’s helping to organize a comprehensive system of social insurance is very strong

…Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make the provision for the consequences, such communal action should undoubtedly be taken.

Friedrich Hayek, The Road To Serfdom (Chapter 9)

Politics getting in the way of problem-solving, who could have guessed? If I were constitutional dictator, I would evoke the commerce clause to standardize health insurance regulations across all 50 states, the equal protection clause to end unequal advantages for employer-provided insurance, and the general welfare clause to provide/mandate catastrophic health insurance (with high-deductible) for everyone through competing private co-ops, non-profits, and for-profits.

Finally, as a society, we need to re-define the concept of health-care coverage and insurance. I am amazed that people complain of $20-25 co-pays while the national average monthly expenditures on coffee ($74), hair styling ($66), cable television ($60), and cell phones ($70) far surpass those co-pay expenses (take a look at this chart for how many things we spend more money on than health insurance). That, to me, is a problem of entitlement and priorities that government can not fix.

Thursday, January 21, 2010

Criminals and Civility

I stumbled on the Christianity, philosophy, and chess blog "you think, i thought, who confirm?" and specifically a post where author Luke Leong provides famous quotes on the philosophy of criminal law:

"The degree of civilisation in a society can be judged by entering its prisons." - Fyodor Dostoyevsky, The House of the Dead


"The quality of a criminal justice system is an important measure of the value of a political community. Apart from waging war, no decision made by the state is more significant than its judgment about what conduct should be proscribed and how severely to punish it." - Douglas Husak, Overcriminalisation: The Limits of the Criminal Law


The mood and temper of the public in regard to the treatment of crime and criminals is one of the most unfailing tests of the civilisation of any country.

A calm, dispassionate recognition of the right of the accused, and even of the convicted criminal - a constant heart-searching by all charged with the duty of punishment - a desire and eagerness to rehabilitate in the world of industry those who have paid their due in the hard coinage of punishment: tireless efforts towards the discovery of curative and regenerative processes: unfailing faith that there is a treasure, if you can only find it, in the heart of every man.

These are the symbols which, in the treatment of crime and criminal, mark and measure the stored-up strength of a nation and sign and proof of the living virtue in it.

- Winston Churchill, Speech in the House of Commons (1910)

Balancing the rights of the accused, the dignity of all individuals, a respect for the rule of law, and civil order has always been difficult, but in the hundred years since Churchill spoke those words, it is clear to me that America has drifted a bit too far down the "tough on crime" road. The Innocence Project would not be in such demand if juries (in representing and reflecting the nature of our society) were not so quick to replace the standard of "beyond a reasonable doubt" with "probably did something worth going to jail (or dying) for." Another example are the numerous variations of "three strikes and life" legislation that slams the door shut on rehabilitating and nurturing the heart of so many.

Wednesday, January 20, 2010

Becase whiteys pass and shoot three-pointers?

From NPR, I just had to post this:

This idea offends so many people on so many levels that I can't believe it will get anywhere:

A promoter says he's going to start up a whites-only professional basketball league with teams in 12 Southern cities.

And Don "Moose" Lewis says there's nothing hateful about the idea.

"I don't hate anyone of color," he told the Augusta Chronicle. "But people of white, American-born citizens are in the minority now. Here's a league for white players to play fundamental basketball, which they like."

Players would have to be "natural born United States citizens with both parents of Caucasian race."

Rick Chandler at NBC Sports' Out of Bounds blog says he "made a couple of calls to make sure this isn't some sort of prank, and sadly, it's indeed legit." Then, he adds:

OK global warming, we're pretty much done here. We thought we were making progress, but you can go ahead and cook us up. Just try and spare the dolphins; they're smart.

WJBF-TV in Augusta aired this report:

In idea so backwards and laughable that even ol' Augusta finds too objectionable - I didn't know that was possible. I kid, I kid, I grew up in Disgusta, it does have its advantages.

Thursday, January 7, 2010

Call the Po Po!

Leave it to the French government, which if it has its way, will make yelling at or insulting your spouse or roommate a crime:

A bill being put forward by Nicolas Sarkozy's government would make "psychological violence" between married or cohabiting couples a matter for state intervention. It's a puzzling and problematic idea, for all manner of reasons.

For starters, there's the question of defining an act of psychological violence: as it stands, the legislation would appear to cover everything from nagging, to false accusations of infidelity, to sustained campaigns of verbal abuse, to a failure to supply the correct answer to the question: "Does my bum look big in this?"
I will start this with a statement and disclaimer. I love my wife, and I don't know anyone that has a fundamentally stronger relationship than the Mrs. and I. We are happy as husband and wife, and are also great friends who deeply enjoy sharing life together. That, and the following few paragraphs are (kinda sorta) tongue in cheek.

Having said all that, I AM half-Italian. Multiplying the decibel level, turning red in the face, and waving my limbs violently is pretty much my genetically programmed default setting for having a discussion. Add to this the faulty on/off switch on my sarcastic remarks generator, and the result is a propensity for unfortunate missteps when it comes to domestic disputes.

Lest you call me a monster, let me assure you that I married the right woman, and Mrs. Hommes gives as good or better than she receives. I knew I had to find a strong woman that could keep me in my place, and apparently you have to be careful what you ask for, because I certainly got it and then some.

Overall we have a complimentary and functional, even if messy at times, communication style. By wearing our relationships on our sleeves, we always know where we stand with one another, nothing is ever left unsaid (good or bad), and we are quick to fix problems and not allow them to fester or grow. As we get mature together, we are mellowing out a bit and smoothing out more and more of the rough edges everyday, but let's just say we are both still glad we don't live in France!

Wednesday, January 6, 2010


Everyone on the internet seems to see in this film whatever they are looking for, be it religious, racial, economic, political, or cultural. I have not seen it, and really have not had the desire to go watch it up to this point, but at the same time, as was the case throughout my un-cool childhood (not that the situation is any different now), there is the fear of passing over this cultural phenomena, be it for better or worse, and then forever not understanding all future references.

So two questions: 1) Did I not just write one of the most convoluted sentences ever? and 2) Should I go see Avatar?

Tuesday, January 5, 2010

Big Business Hearts Big Government

Per the CATO blog:

The late George Stigler, winner of the Nobel Prize in economics, is famous in part because of his work on “regulatory capture,” which occurs when interest groups use the coercive power of government to thwart competition and undeservedly line their own pockets. A perfect (and distasteful) example of this can be found in today’s Washington Post, which reports that the IRS plans to impose new regulations dictating who can prepare tax returns. Not surprisingly, the new rules have the support of big tax preparation shops such as H&R Block and Jackson Hewitt, which see this as an opportunity to squeeze smaller competitors out of the market. The IRS and the big firms claim more regulations are needed to protect consumers from shoddy work, but this is the usual rationale for licensing laws and other government-imposed barriers to entry and the Institute for Justice has repeatedly shown such rules are designed to benefit insiders rather than consumers.
When governments and corporations proclaim they have come up with a win-win them, you can almost be certain the average citizen is the loser.

Human nature is the same whether we talk about governments, corporations, organizations, or individuals - even if one's optimal role, size and limitations could be known and defined, there remains the ever-present temptation to go a littler further, wield a bit more influence, gain a bit more control, tweak the rules in one's favor, and/or grow a little richer. When governments are not involved, and no laws are broken, we call this competition, which is great. When businesses lobby/buy the use of government force, however, we should call it for what it is, corruption.

I admit it, I laughed

Judging from the reaction across the internet, I was far from alone in noticing the cowbell girl during the halftime of the Tostitos Fiesta Bowl. But as SB Nation and EDSBS have since reported, the Boise State Cowbell girl is blind. So is it OK to still think this is hilarious?

Monday, January 4, 2010

Welcome to The Jungle

The more things change, the more they stay the same, or so Upton Sinclair would likely say were he still alive.

Mrs. Hommes thinks I am crazy for buying more expensive cuts of beef in order to grind my own meat at home to make hamburgers. Perhaps, but my defense is pretty straightforward: It's more fun, I don't eat burgers often enough for the extra cost to become an issue, the burgers taste better when the exact cuts and meat:fat ratios can be controlled, and most importantly, I don't have to eat the ammonia treated and e. coli tainted ground beef that corporate agribusiness produces:

Stephanie Smith, a children’s dance instructor, thought she had a stomach virus…

Then her diarrhea turned bloody. Her kidneys shut down. Seizures knocked her unconscious. The convulsions grew so relentless that doctors had to put her in a coma for nine weeks. When she emerged, she could no longer walk. The affliction had ravaged her nervous system and left her paralyzed.

Ms. Smith, 22, was found to have a severe form of food-borne illness caused by E. coli, which Minnesota officials traced to the hamburger that her mother had grilled for their Sunday dinner in early fall 2007…

The frozen hamburgers that the Smiths ate, which were made by the food giant Cargill, were labeled “American Chef’s Selection Angus Beef Patties.”….ingredients came from slaughterhouses in Nebraska, Texas and Uruguay, and from a South Dakota company that processes fatty trimmings and treats them with ammonia to kill bacteria.

So before you buy that next package of ground beef or box of frozen patties, be sure to ask yourself if you feel lucky.

As mentioned in the above linked Naked Capitalism blog post as well as the two New York Times articles, feces contamination is the culprit, so the amount of surface area exposed inside a meat processing facility is a key risk factor, and this risk must be multiplied by the number of animals and processing plants that make up the ground beef. A home grind drastically lowers the numbers on both sides of the equation, so it certainly reduces, if not completely eliminates, the chance of e. coli in my burgers.

For those that do not want to go through the added hassle of grinding their own beef, but don't necessarily like the idea of eating ammonia treated beef trimmings as part of their burgers, there are other steps that can be taken. The first is to find a trusty local butcher shop that buys whole sides of beef and grinds their own beef in the store. If this is not feasible, then buying a whole chuck or sirloin roast at your megamart and having the roast ground in the store is another option. Finally, many grocery chains, Publix included, will take the steaks, roasts, and other large cuts that are within a couple days of their "sell by" dates and grind them in the store, and sell them as "market" ground beef. This ground beef will NOT contain fat percentage markings, as the selections will vary daily and there is no in-store inspector. Still, if you ask the butcher, they can tell you when the meat was ground, and often tell you what cuts made up the bulk of the grind. If they talk, you will usually be happy to learn that the expensive and/or organic selections make up the bulk of the selection, as turnover rate tends to vary the most on these items. The cost is just as low or lower than the other ground beefs, and will contain no ammonium treated trimmings, and tastes very fresh as long as it used within a couple of days. With any option, the cleanliness of the grinding equipment should also be questions, but even Mrs. Hommes, who loves to accuse me of being a food snob (justifiably so in some cases), is willing to make a little extra effort to upgrade the selection of ground beef found in our frig.

Are the chances of being infected by e. coli incredibly small? Absolutely. Does that mean that meat producers are doing everything they can and should be doing considering the risks versus profits? Absolutely not.

Saturday, January 2, 2010

From the Reading Chair

In using the New Year's weekend to finally start my current reading assignment in earnest, I came across this rather interesting excerpt:

There came a time (Early Modern) when, apparently, life lost the ability to
arrange itself. It had to be arranged. Intellectuals took this as
their job. From, say, Machiavelli's time to our own this arrangement has been the
one great great gorgeous tantalizing misleading disastrous project.

- Humboldt's Gift, Saul Bellow