The difference between the Apollo mission and Health care

The article I've copied below by Jonah Goldberg articulates an idea I’ve had in my head but never seen fleshed out like this. 

Goldberg rightly derides Obama for using government "successes" (despite long odds) such as landing a man on the moon and tracking Osama bin Laden down as evidence to support the idea that government can accomplish so many other wonderful things in terms of improving the economy and society.    

What Obama doesn’t understand is that discrete “projects” like the Manhattan project or the Apollo mission or tracking OBL down and killing him are fundamentally different from projects that entail the continued management of sectors of the economy, which are dynamic complex systems like “green energy,” infrastructure, education, health care. 

Just because government managed a very complicated and incredibly sophisticated technology oriented project like landing a man on the moon doesn’t mean government can manage and engineer the outcomes of a complex system that must evolve and change over time.    

Landing a man of the moon requires incredibly sophisticated technology, but the project is NOT a complex system.  Complex systems can’t be pre-determined by human technology and intervention without the law of unintended consequences getting in the way.   Thus, getting OBL proves nothing about the government’s potential ability to successfully develop and manage and implement an efficient universal health care system.

Creating an efficient universal health care system via government mandate is something that is materially and fundamentally different from managing a complicated but discrete “project” that has a clear beginning and an end like landing a man on the moon or building an atomic bomb or getting OBL.

In fact, my research on complex systems suggests that it is IMPOSSIBLE for the government to successfully implement and manage a fiscally sustainable public monopoly over a large sector of economy such as health care. 

Thus, I agree with Goldberg that the Sputnik moment analogy Obama used in his state of the union address is completely bogus and erroneously applied as example of how the government can help win the future with enlighted government policies and "projects."  

 

Can Triumph Transfer? President Obama didn’t justify his policies by killing Osama bin Laden By Jonah Goldberg National Review Online Friday, May 13, 2011

After hearing the news that Osama bin Laden had been killed, who among us didn't joyfully shout, "Yes! This is a huge triumph for wind and solar energy!" Or "Wahoo! Now we can get immigration reform passed!" Personally, I would like to thank every member of SEAL Team 6 for taking such huge risks for high-speed rail and streamlining the bureaucratic regulations governing salmon fishing.

If you're confused, it's only because you haven't heard the White House explain the true significance of bin Laden's death.

According to an article in the Washington Post headlined "Bin Laden raid fits into Obama's 'big things' message," the White House believes taking out the world's most wanted terrorist is a boon for the entire Obama agenda.

The president says killing bin Laden proves that "as a nation there is nothing that we can't do" and reminds us "that America can do whatever we set our mind to."

Calling it one of the "most gutsiest calls of any president in recent memory," as Obama adviser John Brennan did, strains credulity almost as much as it rakes the ears of grammarians.

When asked what effect bin Laden's assassination will have on Obama's agenda, White House press secretary Jay Carney explained, "We obviously think that if there is a takeaway from it, it is the resolve that he has, the focus he brings to bear on long-term objectives, that he keeps pushing to get them done. When talking about immigration reform, he keeps pushing to get it done. And I think that that was reflected in his approach to dealing with Osama bin Laden."

Meanwhile, David Axelrod, Obama's former White House consigliere, now running the reelection effort, says that this was all a "reaffirmation of that American determination and American spirit — the ability to do the things that some people thought impossible. And that has value."

Quick question: Did anyone, anywhere, think that killing bin Laden was an "impossible" task?

Killing bin Laden was no small thing, and the heroics of the men (and dog) involved warrant unwavering praise. But it wasn't the moon landing.

But that's not what the White House wants you to believe. Indeed, for the last two years, the president has been beginning sentences, "If we can put a man on the moon . . . " to justify whatever he's talking about.

That is why Axelrod says, "If there's an enduring impact of [bin Laden's assassination], it will be a sense of what the president said in his State of the Union address."

Which brings us back to salmon regulations, immigration, high-speed rail, renewable energy, and other action items on Obama's "win the future" agenda laid out in January's address. Back then, Obama said we were in a "Sputnik moment," referring to the time when the Soviet Union's launch of a satellite inspired the Apollo space program and increased spending on scientific education and research.

So if I understand Axelrod correctly, killing bin Laden proves that "Yes We Can!" We can get all that "Sputnik moment" stuff done.

If all of this weren't so hilarious, it would be infuriating. Can you imagine if President Bush had said that the success of the surge in Iraq proved we really needed to privatize Social Security after all? What if John McCain had won in 2008 and ordered the killing of bin Laden? Would Senator Obama have rallied around his former opponent's agenda?

By all means, Obama deserves his fair share of credit for taking out bin Laden, though calling it one of the "most gutsiest calls of any president in recent memory," as Obama adviser John Brennan did, strains credulity almost as much as it rakes the ears of grammarians.

But the most bestest part, as Brennan might say, is the simple fact that the president doesn't know how we'll "win the future." In his Oval Office address on the Gulf oil spill, Obama explained that we don't know how we'll get where we need to go or what the destination will even look like.

But that's the genius of the Sputnik analogy. Since, as Obama explained, "we had no idea how we would beat (the Soviets) to the moon," it's okay that we don't know how to "win the future." And that in turn means that during the weakest recovery in half a century, we can blow billions on mythical green-energy jobs, push a government takeover of health care, encourage skyrocketing gas prices, impose crippling regulations and higher taxes, and make "investments" in white elephants and high-speed salmon.

Oh, it may not seem as if we're making progress on these fronts, but we are. You know how you can tell? Osama bin Laden is dead.

Jonah Goldberg is a visiting fellow at AEI.

(White House Photo/Pete Souza)

Dear John Letter #4. health care part 2.

I am not blaming Obama.  he is just taking a broken system and making it worse.

The bad policy that underpins the current health care crisis is a result of the accumulated BIPARTISAN public policy mistakes beginning in WWII when the Federal government put price controls on labor (as war time labor shortage and war spending put upward pressure on prices) and companies started to give “free” healthcare benefits to attract workers.  The federal government -- including many members of both major parties -- loved the idea of companies providing health insurance, so they incentivized this practice further by offering tax breaks to corporate provided health insurance. 

Why should companies offer health insurance???  It is a totally crazy system which worked when labor patterns were  much more stable in the 1950s and 1960s and 1970s. 

THE LAW OF UNINTENDED CONSEQUENCES STRIKES AGAIN

Price controls in WWII and the resulting (unintended) corporate response to offering free health insurance is the  policy screw up that is at bottom of current health care crisis because it has incentivized systematic over consumption of health care especially by the wealthy over 50 years.

over-consuption driven by subsidized corporate health insurance has meant a price inflation crisis in health care as demand outstrips supply. 

it really is that simple.  this isn't a market failure; it is government failure.

(corporations offer too much health insurance because  it is subsidized by the state: the result is a low deductible health insurance system that encourages over consumption of health services, which drives prices inexorably higher.  health insurance subsidies for top earners doesn't make sense, but it is politically difficult to eliminate them; remember obama tried to get rid of cadillac insurance but the unions blocked this!!)

WWII price controls are a great example of well intended public policy setting in train a series of negative unintended consequences that ends in total and utter disaster for society as a whole.  The current health care crisis can be traced to wage / price controls during WWII.

it is disingenuous to blame the private market for the healthcare crisis we face in this country.

What about Greed?

Is greed to blame for health care crisis?  In particular is the problem greedy insurance execs who don't care about patient health and only care about 'profits'?

humans are greedy.  that is a fact. 

businessmen are greedy and so are bureaucrats.   those are facts.   the system has to function well despite the underlying greed of human beings.  the only system that channels greed into productive ends is the market system because only the market faces competitive pressures.  if the government undermines competitive pressure or distorts the pressures -- as is the case with health care system -- then the market will never work. 

what makes you think bureaucrats won’t be just as greedy as insurance execs?  How do you hope to have a workable system that is turned over to greedy bureaucrats in BOTH PARTIES -- who have gamed the political system to avoid public accountability via redistricting???

I think only something like 5% of congressional seats are competitive in any election cycle.  THAT IS THE PROBLEM WE HAVE.

Greedy businessmen and evil free markets are easy whipping boys.  

John, what your world view entails is really a very simple trade off.  you want to trade a little bit of individual liberty for collective security provided by government.  as ben franklin says, anyone who makes that trade deserves neither liberty or security because to believe it is possible to have such a cake and eat it too outcome is utopian, wishful thinking.

Life isn’t fair and the government can't provide free lunches for society despite our most passionate and well intended hopes and utopian dreams. 

Dear John Letter #3. public vs private health care debate

Dear John

I’ll admit there are incredible inefficiencies in the current system.  Of course.  no denying it.  and you might be able to treat the inefficiencies you mention in your email with a single payer system.  Fine.   but you’ll get new inefficiencies when you implement your single payer system that will far outweigh the specific benefits from a single payer system you can identify right now.

It is also misleading to say the “private system” isn’t working.

We don’t have a private system. 

We have a  public / private system that is massively corrupted by public subsidies and further strained by a failing fully public system for old and underprivileged called medicare and Medicaid. 

John, you want to blame everything on a combination of demographics and greed.  You predict an “ageism” problem.  the problem isn’t ageism per se, it is a system that systematically shifts resources from the productive to the unproductive individuals that make up society.  That is a game the government plays. 

The GOVERNMENT creates such divisions as ageism by being in the game of choosing winners and losers.  Old people wouldn’t be in conflict with young if the government hadn’t designed the system to pit one group against the other.  

And old people would be a lot better off if we had a system where end payers paid health care costs directly and market pressures forced healthcare providers to keep prices low – FOR EVERYONE.

Obviously we would need an insurance component to the system, but the insurance would be for catastrophic needs only; not for day to day coverage and routine drug therapies.

The far right wing of GOP is responsible for end of life issues that keep old people alive when they are vegetables.    I think you’ve mentioned in past that something like 80% of healthcare costs are used up in last 3 months of people’s lives.  Let individuals decide when to pull the plug.  Crazy elements of religious right throw law suits at families who want to pull the plug.    Another example of GOP hypocrisy – if they want a free market for health care then let people make such decisions themselves.

Insurance companies are in the driver seat in current system not because insurance execs are greedy.    Insurance companies are in the driver seat because the system we have subsidizes medical insurance (via tax breaks for company sponsored insurance) and thus puts insurance companies in a position of maximum power in the system.    The government created the flawed system we have.    

The flawed system we have now isn’t a “market failure” or a failure of the private sector.    There is no such thing as a “private health care system” here in the US. 

I agree the current public/private system we have is screwed up, but it is not screwed up because of any inherent flaws in a private market for health care.  markets don’t “do” anything.  Markets are flawed in many ways, but government can’t fix these flaws without creating other worse flaws.  Any systemic flaws in the current system (i.e price inflation and fiscal unsustainability)is caused by government policy. 

You won’t fix the current system by getting rid of the private part of the current system.  You’ll fix the system if you get rid of the inefficiencies caused by public policy and crazy incentives injected in the system by public subsidies and Medicaid.

John, you want to give the government total control of the current system as if that will drive efficiency!!  Please explain exactly how a government monopoly will drive efficiency.  I know there are a laundry list of claimed efficiencies – like ending redundancies in payment system for all the diff insurance companies.  But, from a macro perspective, do you really believe that a public monopoly will be able to drive efficiencies over anything but the immediate short term??

Seriously john.  think about it.  do you really believe a public monopoly can sustain efficiency gains if it is not forced to be efficient based on competitive market pressures??   Forget it.  believing in public monopolies is a pie in the sky fantasy.

I know it sounds great to have one payer and you can envision all of these great “savings” but the problem with a one-payer system is the same as any utopian scheme.  It can’t work in the real world because any efficiency gains from one payer system will more than be offset by inefficiencies bred by an inherently corrupt government monopoly. 

Is that to say the market system will be perfect.  no of course not.  But first let’s disentangle the problems the market faces currently that are inherent flaws in the market and problems that are caused by public policy.  and then lets admit that the public sector isn’t going to be able to fix inherent market flaws with enlightened mandates and monopoly powers.  Anything the public sector does to fix one problem will trigger a train of unintended consequences that cause some other related set of problems … that will inevitably be blames on the so called market.

If one payer systems are so great, why don’t we have a one payer system for housing, finance, education, automobiles, etc, etc?  one payer systems ultimately prove unsustainable fiscally because there is no incentive in the system for continued efficiency gains in the system as a whole. 

All humans are greedy.   And businessmen are going to be greedy and maximize their rent seeking activities when they have a government facilitated “monopoly” like private insurance execs have;  John, what do you think will happen when we give the monopoly over to politicians???  All humans are greedy,  and bureaucrats will be just as corrupt as private insurance execs.  With a single payer system you will just exchange one set of corrupt execs for another set of corrupt bureaucrats.

The answer is competition.  Greed isn’t the problem.  the problem is government mandated monopolies that allow individuals to game the system without consequences.  If a company is filled with crooked employees, eventually it will go out of business.  If a government monopoly is filled with corrupt bureaucrats, which is will be eventually, because humans are greedy, then the system still stays in business and the tax payer gets screwed.    

That is what has happened with public education.  the unions (and Democratic party) hold the public education system hostage for their own selfish purposes.  tax payers get screwed.   The political elite and organized labor laugh all the way to the bank.

Dear John Letter #2: trickledown economics

PArt of my series of "Dear John" letters to my die-hard liberal friend...

Dear John,

I can agree with you that Republicans are often quite hypocritical for supporting so called “free markets.”   

Like I’ve said before, Republicans can’t talk credibly about free markets when they support a central bank dominated financial system that literally prints money to pay for a massive military industrial complex and military adventurism all over the world (and bails out politically connected financial institutions).

The Republicans do a disservice to markets when they promise that markets will work everything out or that there is such a thing as trickle down economics, when “we” have injected / infected the market system with easy money.  Markets can’t possibly work when they are distorted by unsound money.    The rich get richer and the poor get poorer in a system designed around a central bank.

When Republicans ask us to "trust" in the market, they set the market up to be the fall guy when things eventually come crashing down thanks to an inevitable easy money bubble fueled by the Federal Reserve, which is exactly what happened in 2006 - 2008.

Meantime, it is wrong for the GOP to use markets as a silver bullet solve-all for social problems.  Markets are inherently flawed.  We need to understand and articulate the inherent "micro" flaws in markets that paradoxically make them special and healthy and sustainable from a macro perspective.  Pollution, income inequality, and business cycles are just a few examples of what i would consider micro flaws / failures in markets that we can’t fix without undermining the underlying health of the larger economy.  

Try to get rid of income inequality or business cycles with enlightened public policy and I guarantee you will set the entire economy up for systemic failure.   There are no free lunches.  The macro sustainability of markets is in large part due to their inherent volatility and "unfairness."

all of this leads me to the Dems who are just as delusional -- if not more so -- when they promise government solutions to so called “market failures.”

The Dems never ever talk about trade offs.  They talk about market failures and win/win solutions provided by enlightened government policy interventions.  When anyone disagrees with a Democrat initiative, they’re assumed to be selfish or stupid.  Dems never talk about or acknowledge the unintended consequences or the unseen second order unpredictable results of their proposed win/win solutions.   

Very often in a complex system like a human economy, the result of an action is the exact opposite of the intended result!!!    for example, public schools are intended to help level the playing field in society, yet what they do is hold poor and middle class families hostage to a dysfunctional education system, which the rich (and politicians in Washington DC) can opt out of by sending their children to private schools, or by buying a house in a very wealthy neighborhood.

  

Trickle down economics is a straw-man.  Fine, let’s all agree that trickle down economics doesn’t work (especially when you have a system built on an easy money central bank).  But, what is the alternative?

Is there such a thing as trickle up economics?  the answer is NO.

Can you actually increase the welfare of a country or a household by providing direct cash aid?  What are the second order effects of that cash in the economy or to the household?  who gets the cash? What incentives or disincentives to work are created by the cash transfer?   Can you reduce income inequality with targeted public policy like highly graduated marginal tax rates?  Maybe … but, can you achieve your reduced income inequality goal without also causing harm to larger economy? the answer is no, you cannot have your cake and eat it too. 

You can’t raise marginal taxes on the rich without also setting in train a set of negative consequences that impairs the health of the overall economy.   the fastest way to income equality is total economic collapse like you see in North Korea or Soviet Union.  Dems would counter, well we don’t want perfect income equality, just more income equality or just less income inequality. 

Go ahead and try to reduce income inequality with high marginal tax rates.  The result will be lower growth and higher unemployment.   A good example of this is the US in the 1970s or modern France.    If you want to live with structural unemployment above 10%, then fine.  Lets at least admit the costs of using public policy to reduce income inequality.  While your at it, go ahead and raise the minimum wage. 

But be prepared to increase unemployment.  Economists can slice and dice the data to prove that raising the minimum wage doesn’t raise unemployment.  I don’t buy it. 

The fact is, any well intended public policy has a trade off component embedded in it.  sometimes the trade off is worth the cost.  I just don’t buy the win/win rhetoric of the Dems who promise free lunches and then when they don’t deliver, they blame the GOP for blocking them.

The problem with measuring the costs of public policy is that the second order effects are often hard to link to the initial policy.  So we implement one policy to fix one thing; the result is problems somewhere else, and we find ourselves in a never ending cycle of fixing problems caused by some previous policy measure.  Politicians point the finger at their political opponent or the market, and the finger rarely if ever gets pointed back at the politicians themselves.

You want universal health care?  then at least admit the tradeoffs.  There are always tradeoffs.  It is true that the US spends a greater share of GDP on health care for worse results than France or Canada.  But, that doesn’t mean if the government takes over in the US we can “save” money.  There are unique institutional reasons why we spend so much for health care in the US.  putting the government in charge will NOT magically reduce the percentage of GDP we spend on health care.    There are always tradeoffs.   

With Obamacare I can guarantee we will get some combination of low quality, doctor and service shortages, fiscal deficits and in the end we will get forced rationing.    The rich will always be able to opt out of the public system, and the poor will be stuck in a dysfunctional system.  Look at public education.  once the state takes over, the system is unionized and the unions (and politicians) game the system for their own selfish benefits.  That is reality.  The same will happen with obamacare. 

The text book solutions will never happen for government managed health care reform because politics intervene and neutralize the spending cuts while encouraging spending increases.  That’s exactly what we saw with Obamacare.

Like I’ve said, I can agree the GOP are often a bunch of power hungry hypocrites or well intended free market advocates who don’t understand how markets work or don’t want to admit that they can’t have their cake and eat it too (big defense spending and free markets). 

But the Dems are just as crazy when they claim their own version of promising the public we can all have our cake and eat it too; Dems promise to be able to fix this problem and that problem with public policy for a win/win for society.   I mean what fantasy land do we live in?  if the government could solve complex economic and social problems, then why are things so screwed up every where you look where government is in charge? 

That is not to say “markets” are perfect.  markets are inherently unfair and uneven and cyclical and unpredictable and will always result in structural income inequality.  There will be pollution and there will be oil spills and other problems. 

Markets aren’t perfect.  We need to get our arms around that simple fact.  The government can’t fix market failures because there is no such thing as market failure per se.  Markets have negative features just like any complex system.  

The earth system has what we call natural disasters.  These aren’t system failures.  An earthquake isn't an “earth system failure.”  Earthquakes are features of the dynamic complex system that play an essential role in the otherwise “healthy” functioning of the larger earth system.  Markets also have negative features that also play a crucial role in the otherwise healthy functioning of the larger economy and financial sector.  For example, human economies have cyclical booms and busts.   The busts weed out the weak firms and lay the foundation for the establishment of new ones. 

Let’s learn to adapt to the cycles rather than try to “fix” them with a central bank.

If you try to fix what you claim are market failures, you are trying to play God.  it is like trying to eliminate earthquakes or hurricanes.  Impossible. 

That is why all of this talk of fixing global warming is nonsense.  If global warming is a problem, the ultimate solution will be more market, not more top down directed human intervention, which will just trigger more cycles of negative unintended consequences.  More market means getting rid of central banks and governments encouraging easy money fueled growth at any cost, like we see all over the world.

Liberty Defined

Copied below are the first few paragraphs of a book review by Lew Rockwell on Ron Paul's new book "Liberty Defined."  The point Lew makes in these introductory remarks echoes a fundamental theme of this blog:  i.e. that the political left and right in America have become two sides of the same "big government" coin.   In very simple terms, this mean the left argues for more "butter" and the right argues for more "guns" -- and we get too much of both funded by an accomodative central bank.  Liberty suffers.   When liberty suffers, so too does the dynamism and energy underpinning a free and prosperous society.

Following is a great quote from the Amazon book review of "Liberty Defined" that encapsulates Ron Paul's liberty-centric world view:  "Dr. Paul writes that to believe in liberty is not to believe in any particular social and economic outcome. It is to trust in the spontaneous order that emerges when the state does not intervene in human volition and human cooperation. It permits people to work out their problems for themselves, build lives for themselves, take risks and accept responsibility for the results, and make their own decisions. It is the seed of America."

My research into the science of spontaneous order suggests that Ron Paul is exactly right. 

The further the state involves itself in determining political, economic and social outcomes, the less room there is for liberty / spontaneous order -- and everyone suffers, most of all the "little guy" who is ostensibly supposed to have the most to gain from government interventions of various shapes and sizes. 

It's Time to Rethink Everything

Mises Daily: Wednesday, April 06, 2011 by Llewellyn H. Rockwell Jr.

The worst effect of the state is intellectual. It puts our brains in a prison, simply by defining the terms in which we are permitted to think and speak. The one nonnegotiable point becomes the state itself. You are permitted to argue about what the state's priorities ought to be (bombs or butter), but not to question the fundamental model of a state-dominated society.

Believers in human liberty have played along with this game for too long. They've done this for decades. Sometimes they tack right and sometimes they tack left. What they should be doing is upending the game board itself. They need boldly to make that fundamental claim of the old liberal tradition, that society orders itself without the state. Liberty is the answer in every area of life.

This is precisely what Ron Paul does in his amazing book to be released April 19: Liberty Defined: 50 Essential Issues That Affect Our Freedompolicy." It is not a piece of legislation. It does not emerge from the political process. Precisely the opposite: liberty is the absence of all these things. It is what results in the absence of state interference. Liberty's only fundamental requirement is that the state let society alone to develop, grow, and prosper.

This point of view is hardly heard at all in the political debate today, which is otherwise hamstrung by partisan wrangling of what the state should be doing. By the time you finish the introduction to Ron Paul's book, you realize that you are going to be treated to a completely new and radical form of thinking about politics, one that reimagines the current world in the same way that Jefferson reimagined his world — and became the real father of this country.

for the full article go to this link:
http://mises.org/daily/5186/Its-Time-to-Rethink-Everything