Sunday, January 30, 2011

The Un-Exceptionalism of Kathleen Parker

Kathleen Parker has launched another insipid attack on President Obama - he doesn't use the word "exceptional" enough to satisfy her. No, not that he doesn't use it - she things he "studiously avoid[s]" using the word. Much like "the left" supposedly "demonizes" wealthy people by using words like "wealthy" to describe them, or her suggestion that use of the "passive voice" in a speech means that you're a passive person... let's just say "Mistakes were made" in that abysmal column.

This also reflects Parker's tiresome tendency to try to jump on a bandwagon that seems to have already passed her by. Perhaps she's simply trying to revive a tired, old attack. Perhaps she's just plain out of ideas, so she has to flip through her "2009 Washington Times Thought of the Day" calendar for inspiration. Yes, the roots of Parker's nonsense appear to lie in right-wing attacks that deliberately take out-of-context and distort a 2009 speech.
I believe in American exceptionalism, just as I suspect that the Brits believe in British exceptionalism and the Greeks believe in Greek exceptionalism. I'm enormously proud of my country and its role and history in the world. If you think about the site of this summit and what it means, I don't think America should be embarrassed to see evidence of the sacrifices of our troops, the enormous amount of resources that were put into Europe postwar, and our leadership in crafting an Alliance that ultimately led to the unification of Europe. We should take great pride in that.

And if you think of our current situation, the United States remains the largest economy in the world. We have unmatched military capability. And I think that we have a core set of values that are enshrined in our Constitution, in our body of law, in our democratic practices, in our belief in free speech and equality, that, though imperfect, are exceptional.

Now, the fact that I am very proud of my country and I think that we've got a whole lot to offer the world does not lessen my interest in recognizing the value and wonderful qualities of other countries, or recognizing that we're not always going to be right, or that other people may have good ideas, or that in order for us to work collectively, all parties have to compromise and that includes us.

And so I see no contradiction between believing that America has a continued extraordinary role in leading the world towards peace and prosperity and recognizing that that leadership is incumbent, depends on, our ability to create partnerships because we create partnerships because we can't solve these problems alone.
If we reject the conclusion that Parker is stupid, that leaves lazy, dishonest or some combination of the two. I'm putting my money on "some combination of the two". We don't have to question the dishonesty part - Parker devotes about a fifth of her column to regurgitating right-wing calumnies about that speech.

Parker actually gets worse from there:
On the right, the word "exceptional" - or "exceptionalism" - lately has become a litmus test for patriotism. It's the new flag lapel pin, the one-word pocket edition of the U.S. Constitution. To many on the left, it has become birther code for "he's not one of us."
By "on the right", she presumably means "with right-wing columnists who push the same nonsense I'm pushing" - there are plenty of examples of that. Beyond that it's not clear what she's talking about. She, of course, provides no context for or example of this supposed tendency of "the right". As for her comical assertion about "the left", that's pure fabrication. A hollow man. After all, it's easy to fabricate an opponent, put nonsense into his mouth, then say, "That position is nonsense." Identifying the actual positions of your opponents and responding to them honestly and substantively? Not something that Parker is particularly good at....

Parker knows the reality, which is that there are people on all points of the political spectrum who take knee-jerk exceptionalism with a grain of salt. Why? Because they know enough history to understand how exceptionalism can be abused by political parties to lead the nation into self-destructive actions and policies. Because they read Ozymandias in high school and understand that you can be pretty damn special at a particular point in time but fade into oblivion if you don't do the hard work necessary to maintain and build upon the things that make you special. This doesn't mean that they don't tear up when they hear the National Anthem or enjoy a good 4th of July parade. It means that they understand that there's more to being exceptional than saying "I'm exceptional". That's the sort of self-esteem exercise that, in any other context, conservatives are supposed to make fun of.

Parker's prevarications continue:
Between left and right, however, are those who merely want affirmation that all is right with the world. Most important, they want assurance that the president shares their values. So why won't Obama just deliver the one word that would prompt arias from his doubters?
Okay, we can start out with the statistics Parker presented earlier in her column - that 58% of Americans "think Obama believes that the 'U.S. has a unique character that makes it the greatest country in the world,'" while 37% do not. That figure suggests that, to the extent "independents" are involved, we're largely talking about people who already lean to the hard right or are Tea Party-style "independents" - Republicans + Right-Wing Independents = 37%. Parker's column (and those like it) is penned for a population of readers who uncritically accept attacks on the President and the political left.1 I suspect that, to Parker, the only thing that mattered out of the poll was the following "implication":
Given that Americans already believe that the U.S. is exceptional and that its status as the greatest nation in the world is at risk, Republican candidates' political challenges would be to convince voters that Obama's policies and actions on the world stage are to blame, and that he does not share their values on this issue.
Who cares about the truth, right?

Beyond that, as Parker is not stupid, she knows that the central thesis of her column depends on a false premise. Nobody was hovering over the State of the Union Address waiting to hear a specific, talismanic word drop from the President's lips. No, what Parker knows is that it's the media coverage of a State of the Union Address that shapes the public's reaction. By penning a column like this she all-but-admits that her goal is to advance the Republican Party's effort to make the speech a negative, and that when it comes to helping her Republican allies or attacking President Obama she has no scruples.2

Update: If you're not looking for a talismanic word, it's easy to find references to American exceptionalism in the President's speech.
1. It's a natural human tendency to be less critical of arguments with which you agree; this isn't unique to the right.

2. By my count, in his various State of the Union Addresses, G.W. referred to the United States by the talismanic word, "exceptional," a whopping zero times.

Chill Out to Lose Weight?

Oh, come on.
Now, in a provocative new paper, British researchers argue that rising indoor temperatures are contributing to obesity. The research team included scientists from several disciplines, including health psychologists, biologists and those who specialize in the effects of indoor environments....

The average temperature of living rooms in Britain, around 64.9 degrees Fahrenheit in 1978, had risen to 70.3 degrees by 2008. Bedrooms, kept at 59 degrees in 1978, were up to 65.3 by 1996, the last year figures were available.
Okay... I lived in England in the early 1970's and during the cooler parts of the year our house was a veritable refrigerator. So at night we curled up with hot water bottles at our feet under lots of warm blankets. The average room temperature was low because the house was heated with fireplaces, and sometimes it's better (and easier) to wear a sweater than to build a fire.

A more realistic perspective on this issue, and a perspective that reveals it as unrealistic, comes toward the end of the piece:
Dr. C. Ronald Kahn, a Harvard Medical School professor who does research on brown fat, says it might actually help with weight control over time, provided people stick with it.

“When we put people in a 60-degree room, they increase their energy expenditure by 100 or 200 calories a day if they’re in light clothing,” like hospital scrubs, he said. “They’re not shivering. They activate their brown fat.”
So there you have it. Cool your house down to sixty degrees and wear nothing but scrubs and the pounds will melt off - well, let's call it a slow melt. Act like a normal human being by dressing appropriately, putting on a sweater, wrapping up in a blanket or turning the thermostat back up and you won't. As the good doctor says, "most people won’t stay at that temperature for very long."

You can accomplish the same thing by walking 1 - 2 miles per day (at whatever speed you like), but you'll be comfortable. And in better shape.

Larry Summers and the Harvard C Students

They're probably his favorites:
The A, B and C alums at Harvard in fact could be broadly characterized thus, he said: The A students became academics, B students spent their time trying to get their children into the university as legacies, and the C students—the ones who had made the money—sat on the fund-raising committee.
I'm reminded of somebody else's observation:
“One of the speakers at my 25th reunion said that, according to a survey he had done of those attending, income was now precisely in inverse proportion to academic standing in the class, and that was partly because everyone in the lower third of the class had become a Wall Street millionaire.”

I reflected on my own college class, of roughly the same era. The top student had been appointed a federal appeals court judge — earning, by Wall Street standards, tip money. A lot of the people with similarly impressive academic records became professors. I could picture the future titans of Wall Street dozing in the back rows of some gut course like Geology 101, popularly known as Rocks for Jocks.
That article goes on to suggest that, as big bucks went to Wall Street jobs, so did the smart kids:
“When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. All our guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.”
But apparently it was the C students who gave most generously to Harvard during Summers' Presidency, and who paid him (a grown-up smart kid) millions to... I guess help them understand derivatives? Something like that.

Friday, January 28, 2011

Facebook Credits - Making It Easier to Buy Nothing of Value

It's great that Facebook is at the vanguard of American consumerism, creating a new artificial currency to help people buy "virtual goods" for the various games offered through its platform. It makes no sense, after all, to buy a fake tractor for your fake farm with real money - so it should not be a surprise that Facebook would have you first buy fake money and skim a 30% "service fee" on your purchases. Plus all the "Facebook credits" gift cards that go lost or unused? Pure profit. But don't fret too much - you can use fake Facebook money to buy other types of fake money for your favorite games:
Facebook says that Credits will be the exclusive way for users to get their ‘real money’ into a game, but developers are still allowed to keep their own in-game currencies (FarmBucks, FishPoints, whatever). For example, Zynga can charge you 90 Facebook Credits for 75 CityCash in CityVille.
Gotta love the exchange rates.

Fortune asks whether forcing its users to buy fake money to use on its apps could turn Facebook into the next PayPal. Nope.
Paying friends back online; buying goods from vendors; wiring money as soon as it's needed. That's PayPal, but there's no reason it can't become Facebook, and there's no reason Facebook, with its social features, wouldn't be a better at it.
Actually, there are very good reasons why you don't want your PayPal account to have "social features" any more than you want your checking account or credit card to have "social features". Heck - it's bad enough already when junior decides to use your credit card to pay for his fleet of fake tractors.

Also, if you're selling fake tractors, paying somebody 30% of your profit margin for the privilege of using their fake money isn't going to devastate your bottom line. But you simply cannot afford to do that with real goods and services. No merchant is going to say, "I can pay 1 - 3% in service fees to receive payment via PayPal or a credit card, or I can pay 30% to accept payment in 'Facebook Credits'... dang, how can I get my customers to pay with Facebook Credits?" Now, granted, Facebook may eventually start offering tiers - "If you're selling real goods, we'll charge you a 1 - 3% service fee; if you're selling virtual goods we'll charge you 30%" - but under the present scheme that idea has less appeal than Flooz. (I have a Flooz gift card somewhere, assuming it's not lost to the ages, a gift for which I'll always be grateful - after all, what choice do I have?)

Something else to remember: PayPal is designed to be very secure. Yes, it's possible for the security to be defeated, but I can't recall anything quite as embarrassing as this. It's one thing if the worst damage you can do when hacking somebody's account is post something embarrassing to their wall, send obnoxious messages to their friends and change their profile picture. It's another thing if you can start purchasing items with the account as if it's a credit card, or transfer credits to your buddies in Bangalore or Bulgaria.

As for the money you put into PayPal? Real money. The money people send you through PayPal? Real money. The money you take out of PayPal? Real money. Do you have $800 in your PayPal account? You can take it out. Do you own $800 worth of Facebook Credits? Um... enjoy buying those virtual tractors. Refunds? Try finding the word "refund" on their help page. And as for the glorious "social aspect" of Facebook, what if I want to transfer some of my credits to a friend? I don't see that, as of yet, transfers are supported. (But I can give my friends the opportunity to buy the same virtual tractor I just bought... at a discount. "I was just dumb enough to spend $5 on a virtual tractor - and now the same virtual tractor can be yours for only $4.50!"1)

I do agree with Fortune that it will be very good for Facebook if it can successfully impose its system of credits on app providers. They will be guaranteed their 30% cut, up front. Facebook users won't have to deal with multiple points of payment or "virtual currencies", and with their credits having universal value may be inspired to try more apps. But if I'm an app developer I have the opposite problem - I can't sell my own credits as easily (and won't reap the benefit of lost or unused gift cards), my users won't be locked into using their credits on my app (or family of apps), and it's more difficult for me to engage my users through other platforms that might in the short- or long-term be considerably more profitable for me than Facebook.
1. If you're reading this and you just paid $5 for a virtual tractor, um... present company excluded?

The Law Should Be Different For the Rich and Powerful

Tom Campbell, a Texas lawyer who once tried to unseat Tom DeLay in a Republican primary, engages in an interesting thought experiment, arguing that President Obama should pardon Tom DeLay. I have to assume that Campbell recognizes that there is no chance that DeLay will receive a pardon - a remedy normally not granted before a convicted criminal has completed his sentence and a subsequent five year waiting period, let alone where the offender displays no remorse and is openly contemptuous of the court and jury that convicted him. (Campbell argues that some of that scorn is deserved, but that's hardly the point.) Also, not even Lewis "Scooter" Libby received a pardon. It would take the right-wing noise machine all of two seconds to start bleating about how "Even President Obama understands that DeLay was railroaded by evil Democratic Party operatives."

Campbell attempts to draw a parallel between the odious Charles Rangel (or was I supposed to say "Charlie Rangel isn't a bad person?"), whose various ethical breaches earned him a stern, "You shouldn'ta oughta done that" from his colleagues in the House. A better comparison is to Dan Rostenkowski, who served time in prison and eventually got a pardon a few years before his waiting period would have been up. Or, if you're more charitable, to Scooter Libby whose commutation allowed him to avoid any chance of incarceration as he appealed his conviction.

Some of what Campbell writes is pretty typical of calls for leniency against middle class and white collar criminals - their peers often close circle. Campbell argues, "DeLay is not a bad man", which may be true but does not provide a basis for excusing somebody from a jail or prison sentence. It may not be fair to define a person by his worst acts and conduct, but that's what happens when you're tried for and convicted of a crime - your good acts are, at most, relevant to your sentence. I don't think Wesley Snipes is a "bad man", but off he went.

Another reason that people who are financially successful should avoid prison? Because "they've suffered enough" from their loss of prestige and position:
He has been punished enough. He lost his position as majority leader and his congressional seat. He lost his place on the national stage.
You think he deserves prison time? That's because only prison will "satisfy [your] vindictive desires". Never mind legislatively defined penalties, minimum sentences, sentencing guidelines, and how they impact others - if you argue that DeLay should be treated equally with other convicted offenders, and thus should be punished under laws and policies he helped fashion, it can only be because you're a big fat meanie. Meanwhile, the impact of incarceration on a "blue collar" criminal, or the ripple effects on his family? Who cares, right? DeLay is "one of us".

But really, a big part of the arguments in favor of people like Tom DeLay and Conrad Black is that they had teams of lawyers analyzing their moves and advising them how they could ostensibly push their conduct right up to the line of criminality without crossing it. I'm reminded of this every time we get a new essay from Conrad Black and his defenders - "Black looted his companies, fair and square." Yes, being rich and powerful enough to have your lawyers advise you as to how to legally siphon hundreds of millions or billions of dollars out of your company - and away from its shareholders - will make it much more difficult to identify a crime and to prosecute you. After all, if that weren't the case would you be spending millions of shareholder dollars on that advice in the first place? But at the end of the day what we're really talking about is a system in which the rich and powerful can game the system, loot their companies or the taxpayer, and walk away with billions - but if an ordinary person tries the same thing on a smaller scale, he'll probably be looking at jail or prison time. (But that's okay because he's probably a "bad person", right?)

Campbell offers an additional reason to pardon DeLay - he has powerful friends who might otherwise take revenge - "Prison will satisfy the vindictive desires of some but will trigger in others a desire for revenge". Aw heck, by that standard, let's just pardon everybody held at Guantanamo Bay.

Democracy Building According to Jackson Diehl

First, you replace the non-democratic government of the targeted nation with a... dictatorship. Ah, but not just any dictator. A benign dictator. A philosopher king, if you will. And then you charge him with keeping the peace while he assembles the nation's various political factions and they collectively write a constitution. And then they work together to engage the middle class such that, when the election occurs, it's the nation's wealthier members, manufacturers and merchants who choose the next government, not the unwashed masses. Seriously folks, this is the real Deihl:
"This administration has been at best lukewarm towards our cause of democracy," Saad Eddin Ibrahim, one of the most respected Egyptian opposition leaders, told me Thursday.

"Clinton's statement on Tuesday reflected what the policy has been for two years," Ibrahim said. "The second statement was a bit more balanced. But it is still not balanced enough for our taste. What we hope for is explicit support for the demands that are being put forward by the people in the streets."

Those demands are coherent and eminently reasonable: Mubarak should step down and be replaced by a transitional government, headed by ElBaradei and including representatives of all pro-democracy forces. That government could then spend six months to a year rewriting the constitution, allowing political parties to freely organize and preparing for genuinely democratic elections. Given time to establish themselves, secular forces backed by Egypt's growing middle class are likely to rise to the top in those elections - not the Islamists that Mubarak portrays as the only alternative.
I recognize that it takes valuable seconds to find demographic information on nations like Egypt, and that people like Diehl probably have better things to do with their time than to see if the facts support their arguments, but it seems worth asking: In what sort of democratic election will Egypt's middle class be able to define the outcome? Egypt has 9.7% unemployment (a long-term problem, with the official figure likely understating the reality), 20% of the population lives in poverty, and the population is 90% Muslim. Close to 30% of the adult population is illiterate - a 17% male illiteracy rate and a 40.6% female illiteracy rate. One third of the population is under the age of 14. The median age is 24. This may strike Diehl as odd, but those demographics do not suggest to me that a secular middle class will be able to control the reform process.

Diehl criticizes the Obama Administration for standing behind Mubarak instead of... I'm not sure what. I guess, telling him to resign and appoint a philosopher king as his successor.
Thus began what may be remembered as one of the most shortsighted and wrongheaded policies the United States has ever pursued in the Middle East. Admittedly, the bar is high. But the Obama administration's embrace of Mubarak, even as the octogenarian strongman refused to allow the emergence of a moderate, middle-class-based, pro-democracy opposition, has helped bring the United States' most important Arab ally to the brink of revolution.
There are two ways of looking at this, of course. Diehl's way, that within days Mubarak's regime will fall and a forward-looking, secular, democratic regime will take over, reform the nation of Egypt and uplift its people, and leave its people angry that the U.S. wasn't more supportive at the onset of their revolution. Or that the Mubarak regime will prove sufficiently stable to withstand the protests. But since Diehl is suggesting that Egyptians resent President Obama's supposed abandonment of the Bush-era "freedom agenda", it's worth stepping back a few years to see how Bush treated Egypt and Mubarak. And who better to give us that history than Jackson Diehl?
So Democrats have to start by "reclaiming our own ground," [Will] Marshall says. His book proposes two important ways to do that. First, Democrats can clean up the crimes perpetrated by the Bush administration at Guantanamo Bay, Abu Ghraib and the CIA's secret prisons, and restore America's reputation as the world's foremost defender of human rights. They can also end Bush's cynical policy of demanding democracy from enemy regimes such as Iran and Syria while tolerating the continued autocracy of such friends as Egypt and Saudi Arabia.
Were Diehl attempting to be fair, he would also acknowledge how the Bush Administration insisted upon elections for the Palestinian Authority then reacted in horror when the wrong party won. Diehl appears to share that sense of "democracy" - he doesn't want elections in Egypt now, implicitly acknowledging that Islamic factions would win an election. He wants the nation ruled by the benign dictator until secular parties "establish themselves" and we can be pretty sure that "secular forces backed by Egypt's growing middle class are likely to rise to the top in those elections". Should Diehl get his wish, one wonders... will Diehl call for elections if, six months or a year from now, it still looks like Islamic parties would prevail in an election? No, actually one doesn't. It looks like Diehl's "freedom agenda" is that of Bush: it only counts as freedom if the correct person or party comes out on top.

We can also play the game of "Which Secretary of State is Diehl attacking"?
But her aims are utterly different from those with which Bush began his second term - such as the "freedom agenda" he restated in Prague. Democracy promotion in the Middle East is out, replaced by a belated but intense effort to broker a peace deal between Israelis and Palestinians. Even more strikingly, the "regime change" strategy that once marked Bush administration policy toward North Korea has been dropped in favor of an all-out effort to negotiate a rapprochement with dictator Kim Jong Il.
Bland, carefully balanced statements were issued by second- and third-level spokesmen, while [she and the President] - who regularly ripped Israeli Prime Minister Binyamin Netanyahu - remained silent.
Condi vs. Hillary. Yes, that first comment was directed at Condoleezza Rice. Except when Rice walked away from the "freedom agenda" and embraced tyrants Diehl saw her moves as "bold new strategies" - "No wonder, perhaps, that the secretary hasn't bothered with directives about dissidents."

Diehl's primary mistake lies in his hallucinatory belief that the U.S. can control events in Egypt - or is it that he believes he can control the events through some form of extremely powerful wishful thinking: That the U.S. could do something that would inspire Mubarak to resign and appoint Mohamed ElBaradei to be his temporary successor. That the masses would accept Mohamed ElBaradei as the leader, and would accept his initiative to draft a constitution establishing Egypt as a secular democracy. That the various political factions involved would cooperate in creating such a constitution, and the factions Diehl wants to see marginalized or excluded from that process would acquiesce. That secular political parties would flourish - but perhaps just two or three of them, such that they could reasonably form a government. That the middle class would overwhelmingly and successfully elect a secular, democratic government. And that all of this could be achieved within six months. As Daniel Larison has observed,
The administration could tell Mubarak that. Instead of the increased criticism it has already promised, the administration could threaten Mubarak with its “wrath.” Would this entail merely the suspension of aid, or would it involve more serious penalties? In other words, what exactly should the administration be threatening to do to Mubarak and his allies if they do not comply? It’s all very well to bluster and make threats, but Mubarak knows that our government is not going to risk seriously undermining the current government. He will assume that the administration is bluffing and playing to its domestic audience, and he will probably be right. If the administration is not bluffing, it genuinely risks making the same mistake that Carter made in his handling of the Shah and domestic opposition to his regime.
Larison continues with an explanation of why it's unrealistic to expect the Muslim Brotherhood to remain on the sidelines. Larison predicts, quite reasonably,
By the end of the week, it looks as if the Brotherhood will have officially joined the protests as well. The protesters cannot be neatly separated into the “good” secular democrats here and the unacceptable Islamists over there. For that matter, there is as yet no evidence that any of the protesters object to the Brotherhood’s participation.
Larison relates the observation of Jonathan Wright that one of the reasons the Islamic Brotherhood has remained in the background is likely because its involvement "would frighten off some of the other groups" and that with its open involvement "the government will feel free to use much more brutal methods to disperse protesters". If Mubarak falls and a new government is to be peacefully formed, the Islamic Brotherhood will demand a seat at the table.

Thursday, January 27, 2011

"High Deductible, Low Benefit" Plans May Worsen Healthcare Costs

High deductible, low benefit "catastrophic" health insurance is urged as an alternative to comprehensive health insurance frequently pushed by the likes of Newt Gingrich. And yes, those plans have a track record of saving money for employers - which is certainly not to say that employee costs go down. I'll repeat myself, briefly:
right now insurance companies act as a gatekeeper. If their analysis shows that a particular procedure is unnecessary, or that a more cost-effective procedure will suffice, they'll refuse to pay for the more expensive or "unnecessary" test or procedure. Sure, the denials can be frustrating, even maddening, but they do hold down health care costs.

Consumers don't have the information, resources, or sophistication to make a similar evaluation of a doctor's recommendation. They may not even have a chance to reflect on whether they should agree to an expensive procedure at an emergency room, let alone inquire and evaluate alternatives, assuming they're even in a state of mind to do so.
There's also the associated issue of health savings accounts - you're supposed to be able to pay for the coverage for which you're uninsured out of your savings. Let's say you're a young, healthy person but crash your motorcycle, fall on your leg the wrong way while sliding home in a softball game, or simply have your feet go out from under you on an icy driveway. You suffer a fractured ankle that requires an open reduction and fixation. Let's say the bills come in at $10,000 and you're responsible for the first $4,000. What are the odds that you have sufficient health savings to pay your share of the cost? Now what if it's a cancer diagnosis and we're talking a six figure medical bill?

It's a bit annoying that the right-wing acts as an echo chamber to this type of proposal, rather than taking a serious look at the problems of the proposal and how they might be corrected. I recognize that if we're talking Newt Gingrich, the problems become features - he seems to want people (other than himself) to go without adequate health coverage. But there are people covering these issues from a Republican standpoint who are approaching the issue in good faith, and it would be nice if they would spend some time thinking about this type of claim instead of mindlessly repeating it.

Ross Douthat recently wrote,
...Obamacare entrenches the very model of health care financingthat drove costs sky-high to begin with — a model in which every insurance plan has to be comprehensive, every significant payment is made by a third party, and consumers have no idea what their treatments actually cost.

* * *

To address the first problem, Republicans should work to deregulate the new health care exchanges, so that high-deductible, catastrophic coverage can be purchased as easily as comprehensive plans.
Presumably Douthat is talking about the health insurance exchanges, which are intended to offer coverage comparable in its scope to that which might be obtained through an employer-sponsored plan. If you're under thirty or if you will otherwise be exempt from the requirement to purchase coverage because the premium exceeds 8% of your income, even if you're buying through an exchange you will be able to purchase a Gingrich-style catastrophic coverage plan. No matter what your age or income you remain eligible to purchase such a plan, just not necessarily through an exchange.

The idea that insurance purchased through an exchange will leave consumers unaware of the actual cost of their care? It's nonsense, and there's really no excuse for a New York Times columnist to distort basic facts. The exchanges will allow people to purchase comprehensive insurance at the "Bronze," "Silver," "Gold" and "Platinum" levels, respectively offering benefits equivalent to 60%, 70%, 80% and 90% of the full actuarial value of plan benefits. In other words, people will be able to purchase plans that include significant copayments and coinsurance, and will pay a substantial premium if they wish to reduce their out-of-pocket costs.

My concerns have focused on these plans as an ineffectual cost-shift - it seems reasonable to expect that they'll reduce the health insurance costs of employers by shifting that cost (and often more) onto the employees. So far, not a problem for Gingrich and friends. But Atul Gawande's recent coverage of "Super-Utilizers", the small percentage of patients who consume the lion's share of medical services, suggests that the exchanges probably have it right. That is, if you start insuring higher risk individuals through catastrophic plans, you can end up increasing the cost of medical care even to the employer.
[Researcher Nathan Gunn] told me about an analysis he had recently done for a big information-technology company on the East Coast. It provided health benefits to seven thousand employees and family members, and had forty million dollars in “spend.” The firm had already raised the employees’ insurance co-payments considerably, hoping to give employees a reason to think twice about unnecessary medical visits, tests, and procedures—make them have some “skin in the game,” as they say. Indeed, almost every category of costly medical care went down: doctor visits, emergency-room and hospital visits, drug prescriptions. Yet employee health costs continued to rise—climbing almost ten per cent each year. The company was baffled.

Gunn’s team took a look at the hot spots. The outliers, it turned out, were predominantly early retirees. Most had multiple chronic conditions—in particular, coronary-artery disease, asthma, and complex mental illness. One had badly worsening heart disease and diabetes, and medical bills over two years in excess of eighty thousand dollars. The man, dealing with higher co-payments on a fixed income, had cut back to filling only half his medication prescriptions for his high cholesterol and diabetes. He made few doctor visits. He avoided the E.R.—until a heart attack necessitated emergency surgery and left him disabled with chronic heart failure.

The higher co-payments had backfired, Gunn said. While medical costs for most employees flattened out, those for early retirees jumped seventeen per cent. The sickest patients became much more expensive because they put off care and prevention until it was too late.
Keep in mind that when we're talking about people buying through the exchanges, we're talking about people who won't be getting good health insurance through their employers. So we're really talking about workers in lower paid, more marginal positions of employment. If our goal is to shift those people into healthier lifestyles, get them to manage their medical conditions (such as diabetes and hypertension) properly, and to avoid having them become high-cost patients, pushing them toward insurance plans that are "cheaper" up front but force them to choose between their medications or to forego the care they need to manage their health conditions is likely, in many cases, to backfire. And what happens to that population when they become too sick to work? They end up on SSI, SSDI and Medicaid. Ouch?

Part of the goal of healthcare reform is to emphasize cost reduction through preventive care. Gawande's column suggests that, to the extent that savings can be realized, the government can expect an enormous push-back by the industries that are presently reaping huge profits from the status quo. But even in a small picture sense, a lack of primary care can result in significant expense, a twenty-five year old who had run up more than $50,000 in medical bills over ten months:
She suffered from terrible migraines. She took her medicine, but it wasn’t working. When the headaches got bad, she’d go to the emergency room or to urgent care. The doctors would do CT and MRI scans, satisfy themselves that she didn’t have a brain tumor or an aneurysm, give her a narcotic injection to stop the headache temporarily, maybe renew her imipramine prescription, and send her home, only to have her return a couple of weeks later and see whoever the next doctor on duty was. She wasn’t getting what she needed for adequate migraine care — a primary physician taking her in hand, trying different medications in a systematic way, and figuring out how to better keep her headaches at bay.
Can we count on doctors to be part of the solution instead of part of the problem? Although the doctor covered in the article was encountering some resistance in trying to create a positive customer service model in medical practice, one focused on saying "yes" instead of "no", and to reduce costs through increased quality of care instead of through rationing, but I expect that most doctors will get on board if presented with evidence that overcomes their skepticism about the feasibility and scalability of reform. However, some won't. As with any profession, some health professionals seem far more concerned about their profits than their patients' needs. Gawande offers some anecdotes:
Fernandopulle told me about a woman who had seen a cardiologist for chest pain two decades ago, when she was in her twenties. It was the result of a temporary, inflammatory condition, but he continued to have her see him for an examination and an electrocardiogram every three months, and a cardiac ultrasound every year. The results were always normal. After the clinic doctors advised her to stop, the cardiologist called her at home to say that her health was at risk if she didn’t keep seeing him. She went back.

The clinic encountered similar troubles with some of the doctors who saw its hospitalized patients. One group of hospital-based internists was excellent, and coördinated its care plans with the clinic. But the others refused, resulting in longer stays and higher costs (and a fee for every visit, while the better group happened to be the only salaried one). When Fernandopulle arranged to direct the patients to the preferred doctors, the others retaliated, trolling the emergency department and persuading the patients to choose them instead.

“‘Rogues,’ we call them,” Fernandopulle said. He and his colleagues tried warning the patients about the rogue doctors and contacting the E.R. staff to make sure they knew which doctors were preferred. “One time, we literally pinned a note to a patient, like he was Paddington Bear,” he said. They’ve ended up going to the hospital, and changing the doctors themselves when they have to. As the saying goes, one man’s cost is another man’s income.
These anecdotes highlight the aforementioned need for a gatekeeper, so that a patient can make an informed decision when a doctor declares, "If you don't have this expensive medical test you could die." A patient with catastrophic coverage could see her savings depleted by a single visit with such a physician, and be left unable to pay her share of the cost of medical care she actually needs.

Wednesday, January 26, 2011

Lessons from the Palestinian Papers

Negotiator Saeb Erekat explains that... No, it's easier to show you. Here's the new training film for Palestinian negotiators: Negotiation 101, How to Negotiate With Your Children.

Tuesday, January 25, 2011

The GOP's Eventual Nominee

Richard Cohen offers his take on the list of Republicans who may enter the race to be the party's 2012 presidential nominee. He doesn't find them to be a particularly impressive group. And in fairness to Cohen, they're not. But let's not have any premature triumphalism. The first impression may be of tortoises entering a race with a hare, but....

If you can recall Bill Clinton's climb to the nomination, back in 1992, going into the race he was far from an obvious choice. People had fun talking about what a weak field of candidates the Democrats had. "Paul TaxOnGas. Tsongas. TaxOnGas. Get it?" Hey - I said they had fun, not that they were funny...

During that race an acquaintance who, as I come to think of it, reminds me of Richard Cohen (or perhaps it's the other way around) would triumphantly throw his support being a particular candidate and, invariably, that candidate would be the next to drop out. Now to be fair, I don't think he ever got behind Laughlin, but seriously - his instincts were that good. Throughout that time he would repeat whatever scurrilous rumors were circulating about Bill and Hillary Clinton, whom he denounced as totally unfit for office. Until Bill was the last man standing and the tone of his comments changed to, "He comes pretty close to walking on water." Clinton, of course, won the nomination he wasn't supposed to win, then the presidential election he wasn't supposed to win, and the rest is history.

I personally hope that lots of people join the Republican race, even those from the lunatic fringe, simply for the amusement value. I'll be happy to suggest campaign theme songs.... Tim Pawlenty? Plenty, Pawlenty, get it? (Dang, now you're going to think I made up that TaxOnGas joke.) Seriously, let's have Darrell Issa enter the race and offer some, dare I say, fiery oratory. He could strut onto the debate stage fighter style, in gym shorts and a robe to the chorus of Fire Water Burn - and he has the street cred to pull it off!

Yes, I want the Republicans to "bring on the crazy" for my personal amusement, but at the some time I'm not going to sell the process short. At this point we don't even know who's running.

Employers Aren't Going to Stop Offering Health Insurance

One of the fears that certain critics of the Affordable Care Act are trying to hype is the idea that employers will stop offering health insurance, preferring instead to pay a penalty and to have their employees obtain insurance through the exchanges. First, let's remember that except as a result of contract, companies are under no present obligation to provide health insurance to their employees. Most companies that do offer insurance recognize that providing comprehensive health coverage helps them attract and retain talent. If a company with talented workers says, "We're dumping you into the exchange; we're not interested in providing you with better coverage than you can obtain there," their competitors will see opportunity. Further, employers get a tax break for offering health insurance and the "cost savings" of ending employer-sponsored coverage would have to take into consideration the associated loss of that tax break.

I grant, there are employers who have lower-wage employees, and who struggle to provide something approximating decent health insurance, and those employers may find that it makes no sense to try to offer insurance when their employees can get better coverage at a lower cost through the exchanges. But we're talking about the bottom end of the job market. Further, there is no reason those workers will have to purchase insurance through the exchanges - they will remain able to purchase insurance privately, and some may prefer to purchase high-deductible, low coverage insurance, the type of (largely non-) coverage that critics of healthcare reform seem eager to foist off on everybody but themselves.

Let's recognize also that we're dealing with a slippery slope argument. With due respect to arguments about what could happen, the slippery slope can be applied to any situation. The big question is what will happen and, as previously noted, there's no reason to expect a significant change in the status quo. If change comes it will be for a different reason - that continued inflation in the cost of health insurance renders it increasingly unaffordable as an employee benefit. If that happens, and although we're still dealing with a hypothetical future there actually is evidence that healthcare inflation could bring about this result, it should be noted that under Canada's single payer plan, many employers offer supplemental health insurance as an employee benefit - perhaps then the "free market" solution that will save private insurance will turn out to be single payer?

Also, many of the critics raising this fear are from the same crowd that crows against employer-sponsored health insurance. They argue that we would be better off if we obtained health insurance on our own, rather than through work - and there's merit to that argument. It becomes easier to switch jobs and to be self-employed. Coming from those people, it's difficult to believe that this argument is anything more than a dig at people who like their current health insurance - another version of "You'll lose your present coverage, and the government is going to decide what insurance you get," despite the ACA's being fashioned as much as possible to allow people to keep their present coverage.

Ross Douthat isn't content with the first slipperly slope, so he suggests that at the bottom of the first slide there could be another: that employers' "offloading their employees into the new health care exchanges" will "swiftly overwhelm[] the federal budget." Even if you accept the first slippery slope, what evidence is there for the second? Many of the workers who would be attracted to the exchanges would receive little to no subsidy. For every worker who obtained insurance through an exchange to replace an employer-sponsored plan, the cost of any subsidy would be offset at least in part by the loss of the employer's tax deduction from providing insurance and, for many employers, additional penalties.

Further, if you look around the developed world it will take you all of ten seconds to discover that there are nations that offer single payer health insurance, or where everybody obtains their coverage through the rough equivalent of the proposed insurance exchanges. For the most part they pay considerably less per citizen for health care than we pay in the United States, and obtain similar to better overall results. Finally, we already have single payer for one of the highest risk, most expensive populations in the nation - the elderly - and while I grant we have to take a hard look at long-term Medicare costs the continued stability of that program belies Douthat's conceit that insuring a population that is younger and, on the whole, considerably healthier will somehow break the bank. Finally, if the exchanges were such a threat to the status quo and to the profits of the nation's largest insurance companies, you might expect that the insurance industry would be speaking out on the issue - the major insurers uniformly silent.

So please, let's avoid the slippery slope and appeals to fear.

Why Waiting Periods Can't Substitute for a Health Insurance Mandate

One of the arguments raised in relation to the mandate is that, rather than requiring people to obtain insurance, we could resolve the problem of free riders by limiting when people would be able to obtain insurance if they had a pre-existing medical condition. For example, Ross Douthat recently suggested that people should only be allowed to obtain insurance without regard to their pre-existing conditions during enrollment periods held every two years. I'll assume this rule would not apply if you had continuous coverage - for example, if you were on your parents' health insurance, you could transition to a different carrier without waiting for an enrollment period.

There is an inherent arbitrariness to the concept of enrollment periods, in that somebody who chose not to acquire health insurance and discovered a potentially expensive health condition a few weeks before the enrollment period would face little or no penalty, while a person who discovered the problem or was catastrophically injured after the enrollment period would be penalized for close to two years. But let's say, for now, that the arbitrariness doesn't matter - that the average period of non-insurance would be about a year. Will that fix the problem? Nope.

First, even if we assume that the population that will choose not to carry insurance will be almost entirely young and healthy, the fact remains that some young, healthy people will develop acute or chronic medical conditions that are very expensive to treat or manage. Just as presently occurs, many of these people will not be able to pay for some (or perhaps any) of their medical treatment. Some subset of that population will undertreat their conditions, potentially resulting in the deterioration of their conditions as well as acute phases that require emergency treatment and hospitalization - costs that won't be covered by insurance. Recall, that one of the goals of this reform is to avoid the over-utilization of emergency medical services, and to reduce the cost to hospitals associated with the treatment of uninsured patients. Also, patients with chronic medical conditions usually don't get either good continuity of care or good management of their conditions through emergency departments. They're more likely to keep cycling through emergency rooms until they either qualify to obtain insurance or end up on Medicaid.

Young people are also at risk of catastrophic injury. A serious car accident can easily result in acute medical care costs in the six figures, followed by the cost of rehabilitation. The acute portion, again, will trigger EMTALA - the patient will be taken to an emergency room and the hospital will be legally obligated to treat the patient and stabilize his condition. If we attempt to punish the patient by providing inadequate follow-up care or rehabilitation, we risk transforming that healthy younger worker into somebody who is partially or fully disabled at significant cost to society. Further, their medical bills remain unpaid.

Although the libertarian will argue that an individual is entitled to take the risk, that only holds true if the individual can't pass the cost of a bad gamble onto the rest of society. As the system is structured - and nobody is suggesting the repeal of EMTALA - the individual will pass those costs on to the rest of us and it's thus fair to ask that he obtain at least catastrophic coverage - and that's actually all that the Affordable Care Act requires.

Second, some of the people who decide that they "can't afford" health insurance will not be young or healthy. They will be people who already have health conditions or are at high risk for developing them. Over the year or two during which they're ineligible to insure, their conditions may deteriorate. Diabetes could go out of control, leading to the need for more expensive management, or even serious complications such as limb loss, vision loss or kidney failure. Hypertension, already too often untreated in parts of our nation's population, can develop into congestive heart failure. Part of the concept of the ACA's reforms is to get early diagnosis and better management of chronic health conditions. By allowing people who misjudge the seriousness of their condition, something that's pretty common for people in the early stages of a chronic health problem, to go uninsured, we lose that benefit and are likely to end up paying significant future medical costs that could have been reduced or avoided with proper early care. Again, some of these people will become disabled, potentially increasing Social Security costs, Medicaid costs and reducing their productivity.

Third, the insurance companies are going to balk at the idea that the population of younger, healthier workers will potentially be able to avoid purchasing insurance. If it needs to be explained, insurance works by pooling risk. You need lower-cost patients in the system for insurance to be able to pay for the care of higher-cost patients. The assumption behind the waiting period seems to be that medical costs are roughly equal from person to person, and that even if people who don't buy insurance are a bit more profitable the insurance company can make up for that by... picking up the cost of their care after the waiting period, when they may be even sicker. The fact is, a small portion of medical patients comprise the majority of costs to the system. The uncontrolled diabetic who keeps presenting at the emergency room, the car accident patient, the cancer patient.... Insurance companies need a lot of healthy participants in the pool to reasonably distribute the cost of those patients medical costs in a given year are into the six figure range.

Fourth, if we create this waiting period we also create what amounts to a look-back period of up to two years during which we can expect insurance companies to try to claim fraud by a recipient of insurance in order to deny coverage or revoke the policy.
Under the current system, something as relatively simple as seasonal sneezing can jeopardize your financial security, HHS argues, citing a 2001 study for the Kaiser Family Foundation.

“Even when offering coverage, insurers can exclude whole categories of illnesses related to a preexisting condition. For example, someone with a preexisting condition of hay fever could have any respiratory system disease – such as bronchitis or pneumonia – excluded from coverage,” HHS said.
Part of the goal of this reform is to end those games, but it it quite likely that insurance companies looking at a new enrollee whose medical costs are going to be in the five to six figure range will continue to try to revoke coverage once the "enrollment period" loophole is created.

And that's off the top of my head.

I do sympathize with the notion that this is a novel form of taxation by the federal government. I've argued for years that there are better approaches than an individual mandate, albeit the best being to simply impose a tax balanced by some form of tax credit to be used toward the purchase of insurance - you don't want to buy insurance, fine, but you don't get the tax credit. A big part of the problem here is that nobody wanted to be honest about what was going on - "How do we pass a tax without calling it a tax". But let's try to find workable solutions to the idea. If you're going to require insurance companies to cover pre-existing conditions, something Douthat concedes that many Republicans support and that it appears he personally supports, "enrollment periods" not only won't be effective, they will undermine many of the cost-saving aspects of the Act.

Sunday, January 23, 2011

Is the WSJ Trying to Make Walter Williams Look Bad?

I recognize that the 'weekend interview' of Walter Williams is intended to be hagiographic, but instead of presenting a credible portrait of Williams the author reduces him to a caricature, spewing platitudinous statements, preaching to the choir, and pointing to their applause as proof of his authority.

Let me start by stating that there are plenty of good reasons to criticize the modern welfare state. You cannot look at the consequences of well-meaning welfare policies implemented in the early 20th century, and their explosion as part of President Johnson's "War on Poverty", without recognizing that those policies have contributed to a "culture of poverty" in parts of the country. But it should also be remembered that other conservative bugbears, such as "the explosion of divorces" and "the sexual revolution," have been held out by others on the political right as the root cause of the problems of the inner cities. The "war on drugs" has long been argued to be a root cause by the political left, although that argument is increasingly bipartisan. My point being, it is simplistic to point to one factor and say, "Because this correlates with another problem I have identified, that's the cause". Even if you can only identify one cause, correlation does not automatically translate into causation. When multiple, significant factors are at play, it's quite possible that your "leading factor" identified solely by correlation is, even if not a non-factor, a lot less important than you believe.

It's also important to recall that, while good intentions do not justify bad results, each of the changes in society that can be argued to contribute to a culture of poverty have both good and bad elements. You can cry, "It's horrible that welfare creates a culture of dependency," but most welfare recipients are in it for the short-term. They're dealing with a crisis, such as a divorce, and their benefits help them get through that rough patch. Before you cry that the bathwater is so bad that we must throw out the baby, you need to acknowledge the presence of the baby and, if your argument is based upon economics, demonstrate how it would be economically better to let families in crisis flounder as opposed to providing the short-term assistance that appears very helpful in getting them back on their feet.

And then, when you turn to the inner cities, you have to examine the costs and benefits of your action. If you're for cutting off all welfare, or setting a firm caps on public assistance - a limit on benefits, whether in terms of dollar value or how long you qualify to receive benefits - you need to consider whether you're going to make the problem better or worse. Will we end up with our inner cities turning into libertarian paradises, or will we see roaming gangs of street kids robbing tourists, women with babies pandhandling, increased rates of theft and robbery - the type of thing we associate with dysfunctional cities in the developing world? (Let's also remember, the libertarian paradise is a purely utopian construct. None has ever existed, and there's no reason to believe that one will ever exist.)

If you're arguing from an economic standpoint, you must decide if you're going to argue in the short-term or the long-term. In the short-term will the costs resulting from cutting off public assistance in the inner cities increase or decrease cost to society? Even if you're content to have regions with concentrated poverty (and they're not just inner cities) become the equivalent of the Bangalore slums, or believe it's better to have kids spend their days roaming landfills and picking through the garbage for anything of value, you will have expenses associated with law enforcement, prisons, disease, and the fact that you're writing off additional generations of children to abject poverty.

If you take a long-term view you need to propose a solution that will address the long-term: It's no longer a matter of simply cutting off public assistance, but fashioning a program that will help transition those in the cycle of poverty into a population of working Americans. So are you going to create programs to break the cycle of poverty, and in comparative terms what will those programs cost? Because as much as people like Williams like to sneer, "Liberal programs caused all of this," when it comes to implementing a meaningful reform that will cost money, his side of the aisle that is consistently obstructionist. There's also going to be an element of experimentation and wishful thinking in whatever you propose as a solution - there's little that can't be improved with the benefit of 20:20 hindsight.

On the most recent Real Time, Rachel Maddow and Steve Moore had an exchange in which Rachel Maddow (with some support from David Stockman, Director of the OMB from 1981-1985 under Ronald Reagan) was arguing in favor of replacing various subsidies for the poor, many of which favor various lobbies, with straight cash aid. Moore blurted out that, instead of cash aid, we should "give them jobs". It seems from his politics that Moore would oppose a stimulus program for the inner cities, and would oppose any form of "make work" program, and he did not propose any job skills programs or other initiatives that might prepare a population of barely employable people for a modern workplace. If his retort was not intended as a disingenuous platitude - an effort to shut down the debate as opposed to providing an alternative approach - surely he has some ideas as to where those jobs will come from. Given the state of the economy he has the nation's ear - it's difficult to imagine that any politically conservative idea for job creation would not be welcomed. So, why are we waiting?

It would be interesting to hear the response of Walter Williams to such a simple reform as replacing all present public assistance with cash aid. The aid could still be delivered via the equivalent of a debit card, recipients could be given online management tools (and, to the extent necessary, access to public terminals and technical assistance for the use of those tools) to budget, directly pay rent, create a reserve for emergencies, and otherwise manage their finances. It actually sounds like a great exercise in personal responsibility and accountability. I expect Williams would state that such an experiment would only work if there were consequences - blow the rent money on a big screen TV, clothes, drugs, or anything else and, if you can't work something out with your landlord or find a non-governmental source for a bail-out, you get evicted. It seems like a pretty simple way to diminish the overhead in managing numerous welfare programs while creating immediate and obvious lessons for the community as to what happens if you don't learn how to manage your money.

And now, let's turn to the WSJ column on Williams. I searched for reaction to the article and, although I found countless examples of bloggers uncritically applauding its wisdom, the phenomenon appeared to be almost exclusively one of white right-wingers making statements to the effect of, "This guy just affirmed all of my prejudices - he's brilliant!". (Scroll down that page for Obama in "Joker" facepaint, labeled "socialist", or for commentary with a level of insight comparable to that photograph.) This seems to be alright with Williams, who is quoted,
"When I fill in for Rush [Limbaugh], I get emails from blacks who say they agree with what I'm saying. And there are a lot of white people questioning ideas on race, too. There's less white guilt out there. It's progress."
How, from a logical standpoint, is it significant that black members his audience agree with what he says? When you preach to the chorus, you should expect that they'll sing your praises. As for his implication that any white person who disagrees with him is motivated by guilt, there's not even a whit of logic involved. If you interpret it as a dog whistle it makes sense - and that interpretation would be consistent with how the aforementioned right-wing bloggers seem to be reacting to the 'interview'.

It's worth also taking a look at Williams' claims in terms of his own background. From looking at a review of his biography, his parents were divorced, he pretty much ran wild until he was drafted into the military, and more or less personified the culture he claims did not exist during his childhood but emerged in later years:
During Reconstruction and up until the 1940s, 75% to 85% of black children lived in two-parent families. Today, more than 70% of black children are born to single women. "The welfare state has done to black Americans what slavery couldn't do, what Jim Crow couldn't do, what the harshest racism couldn't do," Mr. Williams says. "And that is to destroy the black family."
Given the realities of Williams' own childhood family, how is that even possible? Or could it be that some of the factors that contributed to the breakdown of families, and irresponsible, criminal behavior by a subset of inner city youth, were already in place before the start of the War on Poverty? If we are to acknowledge the reality that divorce, single parenthood, youth crime, youthful disinterest in school, and the like already existed, it seems more appropriate to argue that policies implemented in the War on Poverty contributed to or accelerated the problems previously exemplified by Williams' own family, but it can't be said to have created them.

Williams also glosses right over something no libertarian should be able to miss, the rise of the black middle class and the availability of housing options outside of the inner cities. I'm reminded of arguments I've heard from others that, back in the "good old days", celebrities and professionals lived shoulder-to-shoulder with the inner city poor. Would Williams argue that the provisions of the 1964 Civil Rights Act that eliminated housing discrimination were an unjust infringement on the rights of landlords and sellers, and thus helped contribute to the decline of the inner cities? Or would he argue that restrictive covenants and discrimination by landlords were infringements on the liberties of African Americans and were properly struck down to advance equality in the marketplace? The former argument is consistent with his broader idea that evil liberals ruined the inner city - but why do I doubt that Williams' own home is in an inner city neighborhood?

On the other hand, if he accepts the end of housing discrimination as a "good thing", he needs to consider how the emigration of successful people and working families from the inner city created the present culture. When he points to the inner cities, is he seeing how those families were destroyed or is he seeing how, when those families move out, a disproportionate number of families like his own were left behind. (Not his current family unit, of course, but the broken home of his childhood.)

You have to love statements like this:
But Walter Williams was a libertarian before it was cool.
Sorry, but being a libertarian still isn't "cool". Or this:
"I think it's important for people to understand the ideas of scarcity and decision-making in everyday life so that they won't be ripped off by politicians," he says. "Politicians exploit economic illiteracy."
That statement presupposes that politicians are economically literate. Starting with the last guy the Republicans ran for President, where can I find evidence of that? Heck, looking at the position most economists took going into (and in no small part coming out of) the housing bubble, a strong case can be made that most economists don't understand economics.

The economic argument presented in the 'interview' as how Williams would balance the budget doesn't exactly distinguish Williams from his lesser-known peers:
"We need a constitutional amendment that limits the amount of money the government can spend," he says. "Let's say 18% of GDP to start. The benefit of a spending limitation amendment is that you're going to force Congress to trade off against the various spending constituencies. Somebody says, 'I want you to spend $10 billion on this,' and the congressman can respond, 'My hands are tied, so you have to show me where I can cut $10 billion first.'"
First, why should we "say 18% of GDP"? Why not 12%, 20%, 50%? Is there more to the foundation of William's economic proposal than "pick a card, any card?" And if the number is to be selected more scientifically than Williams' statement suggests, what method does he propose for its selection? What economic model is he asserting?

Second, doesn't this model make the mistake of confusing a nation's debt with household debt? Doesn't it ignore the economic consensus that deficit spending can be good during periods of recession? How about borrowing to invest in infrastructure development - never appropriate? And truly, what about a major recession like the one we just experienced. What is the mechanism by which we would slash government budgets, departments and jobs so as to stay within a fixed 18%? And wouldn't that cure be worse than the disease? Wouldn't we end up deepening the recession and perhaps creating a downward spiral?

Third, if we're not going to apply a firm 18% in the event of an economic crisis or other emergency, what measure do we employ to ensure that we're not always claimed by Congress to be in the midst of an economic crisis or national emergency. "I was going to stay within 18% this year but, darn it, I thought that there were Cuban soldiers in Grenada so I had to invade" - national emergency? "We're in a Global War on Terror, with no end in sight" - war without end? How long and cumbersome will Williams' "18% solution" Amendment be, such that it neither forces economic crisis after economic crisis nor allows for the easy circumvention of the cap it imposes?

Fourth, even if we have a working "cap", how do we avoid other circumventions. This Congress cannot borrow the $100 billion it wants to spend on something, so it budgets $20 billion per year over the next five years. In subsequent years, Congress must either reduce the budget to accommodate the spending decisions of a prior Congress, default, or spend beyond the cap. Or, rather than giving direct subsidies, Congress offers loan guarantees or loans to be forgiven in the future, not only effectively subsidizing the loan cost and interest rate but creating a risk of default to be absorbed by the taxpayer, or an obligation upon which future Congresses must again either pay or default.

Fifth, when there have been other "cap" proposals the concern has been raised, with some validity, that the "cap" will become a "minimum". An example that comes to mind is the idea of limiting CEO salary - every CEO's salary would be raised, opponents argued, to the level of the cap. In hindsight you could point out that in the absence of a cap those salaries have skyrocketed well past the proposed limits, but I do suspect that the critics would have been proved correct. And also that companies would find other ways to compensate CEO's beyond their capped incomes, just as many CEO's presently enjoy incredible perquisites that aren't technically part of their compensation packages.

Williams is an economist - he has to be able to conceive of dozens, if not hundreds, of ways Congress could circumvent his cap. The original Constitution is about 4400 words. By way of comparison, to be effective, Williams' Amendment would likely make the Internal Revenue Code and Regulations seem concise.

Let's remember, the column at issue was not written by Williams. It was written by WSJ editor Jason L. Riley. I don't dismiss the possibility that there is a lot of thought and nuance in Williams' ideas that was lost in Riley's translation. But it amazes me how little thought the author of the 'interview' and his audience at large seems to give to the various claims, assertions and platitudes served up in the column.

Friday, January 21, 2011

The Hiring Is Happening.... Overseas

BusinessWeek offers an analysis of "Why the Private Sector Still Isn't Hiring", claiming,
"I'm not going to bet on the economy," says Merchant, 47, Hope Global's CEO since 1999. "I'm not putting in people believing it's going to happen. It's got to happen first." Meantime, she's "taking care of the people who are here" by restoring a 5 percent pay cut and benefits such as paid holidays.

Merchant's attitude mirrors those of CEOs across the country. They want to make sure the economy is growing robustly before they commit to new hiring. Yet the economy won't achieve liftoff unless consumer demand picks up, and that won't happen until unemployment falls.
The article continues by discussing what it means for Hope Global to "not be hiring":
Hope's advantage is its ability to shift production to low-cost countries when price is a big issue. It does that now with the SUV cargo nets. Workers at the Rhode Island plant, who earn more than $11 per hour, produce the basic material, then send that to a plant in Leon, Mexico, where workers making about $3 an hour hand-weave the finishing touches. The nets are then sold to auto parts suppliers.

If Merchant hires this year, it will be largely at Hope Global's plants abroad. She added 20 workers in Mexico in December. If the economy picks up, she hopes to open a plant in Shanghai to make knitted steel that's used to reinforce the rubber seals of car doors and trunk.
In other words, her company is hiring - just not in the U.S. - and contrary to the article's thesis a strong rebound of the U.S. economy won't cause it to hire domestically but instead it will open a new plant in China.

That approach is far from a surprise in this era of globalization. She can produce products with a much higher margin in her foreign factories, and hopes to sell those products in the domestic market. If she's lucky, her products will find growth markets overseas, and she will be able to generate significant profits for her company even if the U.S. market remains stagnant. Her company may be small, but large companies think the same way. If their biggest opportunities for expansion and higher margin sales lie overseas, odds are that's where they'll do most of their hiring and expansion.

When to Push....

Following test scores suggesting strong academic performance by Chinese students in Shanghai, I've read any number of protests, "Our nation would do just fine in comparison to other developed nations if we don't include the poor kids." And I read at least one study that suggested otherwise - that between our nation's relatively cavalier attitude toward academic achievement and our assumption that smart kids can take care of themselves, we are lagging at the high end of the curve. Having seen with my own eyes how easy it is for kids to get through high school with next to no math or science, and get through an undergraduate program with even less, how can we pretend otherwise?

I have followed some of the recent furor over a Wall Street Journal article on "Tiger parenting", published under the inflammatory headline, "Why Chinese Mothers Are Superior", along with the responses of various Chinese parents and children who took issue with the depiction of Chinese parenting and the explanation that the WSJ pulled out some sensational portions of the book without presenting the evolution of it's author's views and parenting style. In short, the WSJ article suggested that if you chain your child to a desk to do homework, freeze out pretty much anything that could distract your child from homework, demand top performance in everything the child attempts, and don't hesitate to use brutal derision if your child is less than perfect, "you're doing it wrong".

Ruth Marcus wrote a column attempting to give some balance to the issue, acknowledging that the WSJ article omitted some important context, but also describing a counter-voice, a recent book suggesting that parents not push their kids and be accepting of imperfect grades. We compare this:
"I would do it all again with some adjustments," Chua told Diane Rehm. She's still proud of having rejected the birthday cards. She relates what I think is the saddest story in the book - about how her late mother-in-law begged in vain for a single day with each granddaughter - with no apparent regret: "I never had a full day for them to spare. The girls barely had time as it was to do their homework, speak Chinese with their tutor, and practice their instruments."
with this:
"One of the ways teens learn about the importance of hard work is by suffering the consequences of their procrastination and laziness," Mogel writes. "A wise parent will resist interfering with those natural consequences, even if it means allowing a child to take a lower-than-wished-for grade."

Parental pushiness is a Mogel no-no. "Let affirmation - 'Yes, a B-plus!' - stand happily alone," she advises. Mogel cautions against the "What about varsity?" school of parenting, constantly prodding children to achieve the next level.
That suggests an inconsistency in Mogel's views - you don't cheer a B-plus that results from "procrastination and laziness". You would cheer a B-plus that results from a reasonable effort by the child. I haven't read Mogel's book, but I expect that she draws a distinction.

Marcus suggests that it is an exercise in caution to intervene too much in a child's life - that doing so carries less risk than intervening too little. On the whole, that seems correct, although it's not something we can measure objectively. If you ask two parents of very similar teens to draw a set of lines the child is not to cross, you might find some very different ideas. Given that odds are both teens "will turn out okay". Parenting isn't a scientific process, despite what your kid tells you there's unlikely to be a moment of parenting when you actually ruin her life, and we give ourselves credit than we deserve for how well our kids turn out. (Faults? Those are the kid's fault, or that "bad influence" friend, or maybe the other parent's....)

I agree with Marcus that some parental pushing is appropriate. I'll take her at her word that Mogel suggests not pushing at all. But... if you have high expectations for yourself, odds are you'll end up pushing your child without saying a word. I agree on the whole with Marcus on praise - it should not be lavished on underachievement. You don't lavish praise on a B+ from a child who could easily have scored an A. But you also shouldn't withhold praise "absent exceptional performance". At various times I've heard "experts" describe how and when to give praise to young children, elevating it to something of a pseudo-science. "Don't tell the child that she's 'good' or 'bad'. Praise or criticize the action, not the child." "Don't simply say, 'I like that painting you made,' identify what it is in the painting that you like."

But here's something interesting - self-esteem is negatively correlated to academic performance. You want your child to do well in school? Make sure she knows she's only as good as her grades. Make her terrified of coming home with a B+. Those kids pulling B's and C's or worse? Some of them are the happiest, most self-assured kids on the block. So yes, I can see how a certain style "Tiger Parenting" can help contribute to academic success, even as it's not a model I would personally follow and I'm skeptical of its long-term academic benefits. If the child wants an "A" because it makes him happy? Great. If the child wants an "A" to make you happy? Not as great. If the child wants an "A" because he's terrified of your reaction to anything less? Not a parenting style to which I aspire.

Our society has some difficult choices to make as we prepare for a future in which it appears that much of the so-called "working class", the nation's blue collar workers, can expect to earn at the lower middle class level, if that. We have to face the issue that not every person has the aptitude for or interest in college, and that we're doing our nation's colleges no favors by filling them up with kids who neither want to be there or lack interest in anything resembling academic rigor. We do even worse by ignoring the privilege that has helped people like Bill Gates (Lakeside School) or Mark Zuckerberg (Phillips Exeter Academy) succeed "despite being college drop-outs" - parental support for their interests, parents willing to pay for private tutors and elite schools to help their children achieve remarkable things within their areas of interest, and by the time they dropped out quite possibly a more complete education than is achieved by many graduates of lower and middle tier colleges. Sure, give everybody the opportunity for an education such that they can maximize their potential, but make sure that you're not doing so at the expense of identifying and fostering next generation of business and scientific innovators.

Push your child to do her best, and whatever your expectations or aspirations try to recognize that her best is good enough.

Reforming "Funny Money"

While listening to NPR, I heard about a series of Boston Globe articles on SSI for children, how the number of cases has exploded, and raising questions about both whether the current criteria for SSI eligibility are appropriate and the extent to which the system is abused by people looking for "no strings attached cash aid" to supplement their family's welfare benefits or modest earnings.

The interview took a "You may not be aware of this, but..." approach to the explosion of child recipients of SSI, but it's not exactly a closely held secret that many people who were removed from welfare rolls as a result of 1990's-era welfare reforms ended up on SSI. A lot of that transition was legitimate. But as with any system, some were quick to attempt to exploit the system.

I believe I first heard the term "funny money" in the early years of welfare reform from a classmate who had moved to a Bible Belt state, and who related that the term was being used by people who wanted their kids, whatever the reality, to be classified as disabled. That idea is more than a bit creepy - find a way to have your child classified as mentally ill (that's a lot easier to do, after all, than getting a classification of physical illness) so you can significantly boost your family's income. And it was not unusual for families who played this game to have multiple children, perhaps all of their children, collecting "funny money".

The Globe covers some of the consequences - parents who get upset when their children's mental health improves because it could mean losing the money, teenagers who are fully capable of working part-time jobs who are instead pressured to remain idle lest their employment result in a reduction or the end of their SSI checks. It's hard not to be judgmental. One article opens,
Geneva Fielding, a single mother since age 16, has struggled to raise her three energetic boys in the housing projects of Roxbury. Nothing has come easily, least of all money.

Even so, she resisted some years back when neighbors told her about a federal program called SSI that could pay her thousands of dollars a year. The benefit was a lot like welfare, better in many ways, but it came with a catch: To qualify, a child had to be disabled. And if the disability was mental or behavioral — something like ADHD — the child pretty much had to be taking psychotropic drugs.

Fielding never liked the sound of that. She had long believed too many children take such medications, and she avoided them, even as clinicians were putting names to her boys’ troubles: oppositional defiant disorder, depression, ADHD. But then, as bills mounted, friends nudged her about SSI: "Go try."

Eventually she did, putting in applications for her two older sons. Neither was on medications; both were rejected. Then last year, school officials persuaded her to let her 10-year-old try a drug for his impulsiveness. Within weeks, his SSI application was approved.

"To get the check," Fielding, 34, has concluded with regret, "you’ve got to medicate the child."
That's a pretty sympathetic spin, but I'm not buying it. It didn't occur to Fielding that perhaps the reason her oldest two children didn't receive SSI was because they didn't have qualifying disabilities? That pushing them onto medications they don't need in order to try to get them on SSI would represent bad parenting?

I would propose a simple reform: instead of issuing a "one size fits all" check, the Social Security Administration should assess how much money a typical family might be expected to spend, above and beyond its normal budget, for the condition at issue, while otherwise maintaining Medicaid eligibility rules such that medical costs aren't an issue. Then, rather than issuing $700 checks, they could issue payments that range from quite small (e.g., for the toddlers who are now being pushed into the system over "delayed speech" who will often already be eligible for a free and full set of services through the public schools) while being able to offer more significant benefits to families that are dealing with disabilities that have more substantial costs attached or require a parent to become a full-time caregiver. For some disabilities (e.g, delayed speech) there should be an automatic sunset date for benefits at which time, absent a new diagnosis, benefits will end. Such modifications will not only better direct financial help where it is most needed, it will significantly reduce the financial incentive to push normal kids into the disability system.
When little Alfonso tried a full sentence it came out in a swirl of sounds, often followed by a major league tantrum when he realized he was not understood. And so his mother, Roxanne Roman, was not surprised when the 18-month-old was diagnosed by a specialist with speech delay.

It came as a shock, however, when she learned from relatives that Alfonso’s problem might qualify him for thousands of dollars in yearly disability payments through the federal Supplemental Security Income program. For Roman, pregnant with her second child at age 17 and living at her mother’s, the extra income was attractive. She wanted to rent her own place.

Within three months, the boy’s application was approved. Alfonso receives $700 in monthly cash benefits, plus free government-paid medical coverage. Roman said her relatives told her she can pretty much count on the disability checks for Alfonso, now 5, to keep arriving in the mailbox for the rest of his childhood.

"They don’t ask many questions about the child once you’re approved," Roman said.
Some questions are well overdue.

I understand the argument that a lot of the families who game the system are living well below the poverty line. It was suggested on the radio program that the average family that gets a SSI check for a child doubles its income based upon that check - that is, if there even is a wage earner in the family we're talking part-time, minimum wage work. But I can't see the abuse of the disability system to be justified by the inadequacy of other aspects of the social safety net. Leaving the taxpayer aside, it's unfair to families who are trying to live within the rules, it sets a terrible example for other families, and it isn't healthy for the children. And, of course, it opens up the entire welfare system to attack as overly generous and beset with fraud and abuse. (Unless you truly believe that proponents of welfare reform care, please don't tell me that such an attack would be misleading and unfair. Do I need to remind you about Cadillac-driving welfare queens?)

Wednesday, January 19, 2011

Equal Health Care For All?

Two legs good, four legs bad? Not if Rep. Dave Reichert has his way:
I was cosponsor of legislation that required all members of Congress to be a part of the public option if it were to pass. the Democrats on the Ways and Means Committee voted that down. So, I want equal health care opportunities for all Americans.
What wonderful news for Rep. Darrell Issa and Rep. Jack Kingston, who apparently have yet to find a third person to join them in their quest to give all Americans the opportunity to buy into the federal health insurance plan.

C'mon guys, what are you waiting for. Now's your moment to live up to your words and bring us equal opportunity in health insurance. You might want to act soon, lest your inaction give rise to the impression that you are capable of delivering nothing more than political grandstanding.

Tuesday, January 18, 2011

The Republicans Should Have Passed the DREAM Act

Adam Serwer shares the glorious words of John Cornyn to the latino community - a "who are you going to believe, me or your lyin' eyes" attempt to blame the Democrats for the absence of an immigration reform bill. Well then, with the Republicans controlling Congress, their bill will be coming along any day now... right?

Serwer is correct that the Dems share responsibility for the fact that no immigration reform bill passed. That's perhaps not surprising given the state of the economy and the high levels of anti-immigrant sentiment in large parts of the country, but I'm not one to take the approach of, "It's okay for our elected officials to punt if they fear that doing what's best for the country might harm them in the next election." Cornyn wants it both ways - he is happy to undermine immigration reform, but wants to hold himself out as its champion to factions that support reform. (So again, where's Cornyn's bill?)

When the DREAM Act came up for a vote in the Senate, a handful of Republicans would have been able to make the difference. They then would be able to claim that the passage of what appears to be the most popular (and perhaps, by national measures, the only popular) measure of immigration reform to have passed as a bipartisan measure. After all, if immigration reform cannot pass when it includes the DREAM Act, what are the odds that the next immigration bill would pass if it were off the table? Talk about having your cake and eating it, too.