Published on 18 Feb 2017
Catherine had great ambitions to reform Russia according to her own highest ideals, but she soon found that the reality of governance made those ideals difficult to achieve. She also found herself tangled in war, rebellion, and (scandalously) smallpox.
March 18, 2017
Catherine the Great – IV: Reforms, Rebellion, and Greatness – Extra History
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March 16, 2017
Words & Numbers: Blocked by a State’s Wall of Taxes
Published on 15 Mar 2017
This week, James & Antony discuss the case of Connecticut’s budget shortfall. The state hopes to solve their financial problems by raiding the retirement accounts of previous Connecticut government employees who have moved out of the state, and take 30% of those savings. This plan would hurt retirees, break promises, and trap many people in the state based on a policy that may be illegal.
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March 14, 2017
“Most policy ideas are bad” (especially in US healthcare)
Megan McArdle says that the best plan the Republicans could come up with to deal with Obamacare is to do nothing, at least in the short-term:
For a policy columnist, “Don’t do that” is the easiest column to write. Most policy ideas are bad. If you simply blindly oppose everything that anyone ever puts forward, you’ll end up being right most of the time.
However, that’s not very useful for politicians. If they just sit around Congress playing tiddlywinks all day, voters will get cranky. Congress is supposed to do things. So, having spent a few days saying unkind things about the Republican health-care plan, it probably behooves me to state what I think they should do.
Well, boy, that’s a hard question. Here’s the thing: For all the unkind words I’ve said, I get the forces that have brought Republicans to this point. As I wrote Thursday, Democrats built a shoddy and unworkable structure out of the political equivalent of concrete: nearly impossible to repair or renovate, and darned expensive to demolish. The task is made even harder by the fact that Democrats currently control just enough votes in the Senate to keep Republicans from passing any sort of clean, comprehensive bill.
[…]
What would I do in this situation? Well, the first thing I’d do is accept, deep in my heart, that there are no great outcomes possible at this point. The second thing I’d do is remember that nothing is always a policy option: If you can’t do something better than the status quo, don’t do anything. It’s what I said to Democrats in 2009, and it’s what I’m saying to Republicans now.
So what would I do to minimize the damage, within the constraints of political reality? Well, I foresee two potential futures for the current status quo. One, the exchanges where individuals buy policies could fail, leaving people unable to buy insurance. Or two, the exchanges don’t fail, and we’re left with an unsatisfactory but still operational system.
In either case, the Republicans’ best option is to wait. Why? Because what they can do now — hastily, without touching the underlying regulations that have destabilized the individual market — is worse than either of those outcomes. The partial-reform structure they think they’ll be able to get through the Senate is likely to make the problems in the individual market worse, not better. And the fact that they’ve tinkered with the program means that Republicans will take 100 percent of the blame.
She also re-iterates her own ideal solution (which she admits wouldn’t fly with the American public):
Longtime readers of my column know that my pet proposal is a radical overhaul of the whole system in which we zero out all the existing subsidies and just have the government pick up 100 percent of the tab for medical expenses that exceed 15 or 20 percent of a family’s adjusted gross income: basically, a single-payer catastrophic-care system for expenses that no one can realistically save for. Let people buy insurance for expenses below that, or, if it’s not too expensive taxwise, let people set aside more money tax-free in Health Savings Accounts. And make some more generous provisions for people closer to the poverty line, such as prefunding Health Savings Accounts for them. That’s the whole program. It fits on a postcard, though the finer details — like which cancer treatments we’re actually willing to pay for — obviously aren’t.
However, this is completely politically infeasible, because voters don’t want genuine insurance, by which I mean a pool that provides financial assistance for genuinely unforeseeable and unmanageable expenses. Voters want comprehensive coverage that kicks in at close to the first dollar of spending, no restrictions on treatments or their ability to see a doctor, nice American-style facilities, and so forth. They are also fond of their health-care professionals and do not wish to see provider incomes slashed and hospitals closed, nor do they want their taxes to go up, or to pay 10 percent of their annual income in premiums. This conflicting set of deeply held views is one major reason that Obamacare — and American health-care policy more generally — has the problems it does.
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March 13, 2017
“It’s not really a debate over Obamacare, it’s a debate over Medicaid”
Robert Tracinski explains why the Republicans are having such a hard time with their oft-promised “repeal” of Obamacare:
House Republicans have released their proposed measure to “repeal and replace” Obamacare, and the whole enterprise is already losing steam right out of the gate. The measure is too small and incremental, less a repeal of Obamacare and more of a repair of it, keeping numerous basic features intact.
If you want to know why Republicans have bogged down, notice one peculiar thing about the Obamacare debate so far. It’s not really a debate over Obamacare, it’s a debate over Medicaid. That’s because Obamacare mostly turned out to be a big expansion of Medicaid. The health insurance exchanges that were supposed to provide affordable private health insurance (under a government aegis) never really delivered. They were launched in a state of chaos and incompetence, and ended up mostly offering plans that are expensive yet still have high deductibles. Rather than massively expanding the number of people with private insurance, a lot of the effect of Obamacare was to wreck people’s existing health care plans and push them into new exchange plans.
Ah, but what about all those people the Democrats are claiming were newly covered under Obamacare? A lot of them — up to two-thirds, by some estimates — are people who were made newly eligible for a government health-care entitlement, Medicaid. But shoving people onto Medicaid is not exactly a great achievement, since it is widely acknowledged to be a lousy program.
Conservative health care wonk Avik Roy explains why: “[T]he program’s dysfunctional 1965 design makes it impossible for states to manage their Medicaid budgets without ratcheting down what they pay doctors to care for Medicaid enrollees. That, in turn, has led many doctors to stop accepting Medicaid patients, such that Medicaid enrollees don’t get the care they need.” Partly as a result, a test in Oregon found no difference in health outcomes between those with access to Medicaid and those without.
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March 11, 2017
The EFF’s guide to digital privacy at US border crossings
The Electronic Frontier Foundation (EFF) provides a quick overview of your rights when entering the United States:
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March 10, 2017
The two Elon Musks – the savvy businessman and the crony capitalist
In The Federalist, Eric Peters describes the ways Elon Musk and his SpaceX crew manage to profit from government subsidies in the process of putting their Falcon rockets into space:
Image from SpaceX website.
Today, the National Aeronautics and Space Administration specializes in putting taxpayer dollars into the pockets of crony capitalist chieftains such as Elon Musk, whose SpaceX operation manages to get NASA to pay him to use its launch pads and other infrastructure — all provided at taxpayer expense. He also doesn’t cut NASA in when he uses its facilities — our facilities — to launch rockets carrying private cargo, meaning he effectively gets paid for it twice.
That’s once in the check he gets from the private business whose cargo his rocket is carrying; then again in the de facto subsidy he gets for the free use of NASA’s equipment at the Kennedy Space Center in Florida. Why isn’t Elon paying the freight, as opposed to blowing it up?
Incidentally, that happens a lot. Over the past five years alone, SpaceX has lost the same number of rockets as NASA did space shuttles over the 30 years it operated them. And the shuttle wasn’t a money-making machine for politically connected crony capitalists such as Musk. Taxpayers funded it, but no private citizens got a check from taxpayers.
The shuttle even made some money for taxpayers. Private businesses paid NASA to carry satellites into orbit, recovering some of the cost of building that infrastructure. The shuttle also did things useful for the public, like put the Hubble telescope in orbit. It has given humanity an unprecedented view of the universe, and not on pay-per-view.
I read a biography of Elon Musk soon after it was published … and it did a good job of pushing a more sympathetic view of its subject than the linked article above.
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March 6, 2017
QotD: Organic food “standards”
In December 1997 when USDA proposed standards for organic agricultural production, the original version was rejected by the organic enthusiasts, largely because it would have permitted the use of organisms modified with modern genetic engineering techniques (“GMOs”) – which would have been quite sensible in the view of the scientific community. In the end, modern genetic engineering, which employs highly precise and predictable techniques, was prohibited, while genetic modification with older, far less precise, less predictable and less effective techniques were waived through.
The resulting organic “standards,” which are based on a kind of “nature good, technology evil” ethic, arbitrarily define which pesticides are acceptable, but allow “deviations” if based on “need.” Synthetic chemical pesticides are generally prohibited, although there is a lengthy list of exceptions listed in the Organic Foods Production Act – while most “natural” ones are permitted. Thus, advocates of organic agriculture might be described as “pragmatic fanatics.” (Along those lines, the application as fertilizer of pathogen-laden animal manures, as compost, to the foods we eat is not only allowed, but in organic dogma, is virtually sacred.)
What, then, is the purpose of organic standards? “Let me be clear about one thing,” Secretary of Agriculture Dan Glickman said when organic certification was being considered, “the organic label is a marketing tool. It is not a statement about food safety. Nor is ‘organic’ a value judgment about nutrition or quality.”
Organic standards are wholly arbitrary, owing more to the dogma of an atavistic religious cult than to science or common sense. And whatever their merit, as a December 2014 report in the Wall Street Journal described, the standards are not being enforced very effectively: An investigation by the newspaper of USDA inspection records since 2005 found that 38 of the 81 certifying agents – entities accredited by USDA to inspect and certify organic farms and suppliers — “failed on at least one occasion to uphold basic Agriculture Department standards.” More specifically, “40% of these 81 certifiers have been flagged by the USDA for conducting incomplete inspections; 16% of certifiers failed to cite organic farms’ potential use of banned pesticides and antibiotics; and 5% failed to prevent potential commingling of organic and nonorganic products.”
[…]
The bottom line is that buying “certified organic” products doesn’t guarantee that they will be free of genetically engineered ingredients. Even so, buying organic should please those consumers who think that paying a big premium for something means that it’s sure to be better. We hope that at least they get the benefit of the “placebo effect.”
Henry I. Miller and Drew L. Kershen, “Fanaticism, Pragmatism and Organic Agriculture”, Forbes, 2015-07-08.
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March 5, 2017
The political Trojan Horse of “Pigouvian taxes”
Warren Meyer used to be quite positive about the introduction of Pigouvian taxes, but recently his opinion has changed:
Here is the Wikipedia definition of a Pigovian tax:
A Pigovian tax (also spelled Pigouvian tax) is a tax levied on any market activity that generates negative externalities (costs not internalized in the market price). The tax is intended to correct an inefficient market outcome, and does so by being set equal to the social cost of the negative externalities. In the presence of negative externalities, the social cost of a market activity is not covered by the private cost of the activity. In such a case, the market outcome is not efficient and may lead to over-consumption of the product. An often-cited example of such an externality is environmental pollution.
The Left often tries to justify new taxes based on their being Pigovian taxes. The classic example is a carbon tax — it is claimed there is a social cost to carbon-based fuel combustion (e.g. CO2 production and resulting global warming) that is not taken into account by market prices. By adding the tax, these other costs can be taken into account, likely raising the price of these fuels and thus both reducing their use and providing a higher price umbrella for alternatives.
For years, I accepted these arguments at face value. I might argue with them (for example, I think that the Left has tended to spot 10 of the last 2 true negative externalities), but I accepted that they really believed in the logic of the Pigovian tax. I am now becoming convinced that I was wrong, that the Left’s support of Pigovian taxes is frequently a front, a way of putting a more palatable face on what is really a naked grab for more taxpayer money by public officials.
Soon after discovering the concept of Pigouvian taxes, I suspected that — even if the economics were sound — no human government was going to implement such a tax in the pure form: there would always be “good reasons” to make the new tax non-revenue-neutral, because once a revenue stream has been established, it’s unlikely the government will actually shut it down afterwards. I have yet to be disappointed in this expectation.
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February 24, 2017
February 23, 2017
Words & Numbers: The CBO Can’t Count
Published on 22 Feb 2017
In this episode, Dr. Antony Davies, Professor of Economics of Duquesne University in Pittsburgh, and Dr. James R. Harrigan, Senior Research Fellow at Strata, in Logan, Utah discuss the way the Congressional Budget Office works, and outline its history of failure at accurately forecasting increases in the national debt.
Find out more about the CBO and debt projections here:
https://fee.org/articles/the-congressional-budget-office-cant-countand here:
http://www.huffingtonpost.com/entry/58a0810be4b0e172783a9daaPlus, check out this great 360 Video from Learn Liberty with Antony Daves that helps put the massive scale of the current US Federal debt into perspective: https://www.youtube.com/watch?v=ErUZjM16r1M
And track the National Debt in real time here:
http://www.usdebtclock.org/
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QotD: Government failure is baked-in
One can build a very good predictive model of government agency behavior if one assumes the main purpose of the agency is to maximize its budget and staff count. Yes, many in the organization are there because they support the agency’s public mission (e.g. protecting the environment at the EPA), but I can tell you from long experience that preservation of their staff and budget will almost always come ahead of their public mission if push comes to shove.
The way, then, to punish an agency is to take away some staff and budget. Nothing else will get their attention. Unfortunately, in most scandals where an agency proves itself to be incompetent or corrupt or both (e.g. IRS, the VA, more recently with OPM and their data breaches) the tendency is to believe the “fix” involves sending the agency more resources. Certainly the agency and its supporters will scream “lack of resources” as an excuse for any problem.
And that is how nearly every failing government agency is rewarded for their failure, rather than punished. Which is why our agencies fail so much.
Warren Meyer, “Congress Almost Always Rewards Failed Government Agencies. Here is Why”, Coyote Blog, 2015-06-17.
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February 21, 2017
QotD: Leaving the European Union
In the 25 years since I began writing seriously here about the European Union and what our membership of it has been doing to Britain, I have learnt (among much else) three things.
The first, which came quite early as I began to understand the real nature of the supranational system of government we now lived under, was that we should one day have to leave it.
A second, as I came to appreciate just how enmeshed we were becoming with that system of government, was that extricating ourselves from it would be far more fiendishly complicated than most people realised.
The third, as I listened and talked to politicians, was how astonishingly little they seemed really to know about how it worked. Having outsourced ever more of our lawmaking and policy to a higher power, it was as if our political class had switched off from ever really trying to understand it.
Christopher Booker, “Our politicians want to lead us out of the EU, but they don’t seem to have a clue how it works”, Telegraph, 2017-02-04.
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February 19, 2017
February 17, 2017
Industrial policy example – Kingston, Ontario
David Warren remembers when the government tampered with the free market to “save an industry” in Kingston:
Once upon a time, many years ago, I scrapped into one of these “no-brainer” political deals. The remains of the locomotive manufacturing business in Kingston, Ontario — whose century-old products I had glimpsed, still on the rails in India — were now on the block. A monster German corporation was offering to buy them, for the very purpose of competing, in Canada, with a (hugely subsidized, monopolist) Canadian corporation. The government stepped in, to “save” a Canadian industry, retroactively change the ground rules, and kick in more subsidies so that the Canadian monopolists, based in Montreal, could take over instead. This was accompanied by nationalist rhetoric, and Kingston was thrilled. Critics like me were unofficially deflected with bigoted anti-German blather held over from the last World War.
But I knew exactly what was going to happen. The local works, which would have been expanded by the foreign owner, were soon closed by the new Canadian owner, after studies had been commissioned to “prove” it was uneconomic. The latter’s last possible domestic competitor was thus snuffed out. The locals, whose lives had been for generations part of a proud Kingston enterprise, had been suckered. The politicians had told them it was little Canada versus big Germany. In reality, it was pretty little Kingston versus big ugly Montreal.
That is how the world works, with politics, so that whenever I hear of a big new national no-brainer scheme, my first thought is, which innocents are getting mooshed today?
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