Wednesday, March 30, 2005

Minimum wage impact

This is a great post on what options a camp site operator has in the face of higher minimum wages. (via Political Calculations.) It's well worth reading, and illustrates how higher prices squeeze out low productivity employees, substitute capital for, raise costs for (poor) consumers, and the law of unintended consequences. Well worth reading.

Judges and the Culture War

In this somewhat hysterical piece on Slate, the author claims that because of the Terri Schiavo case, "The judiciary is fast becoming enemy No. 1 in the culture wars—and the side wearing the black robes is losing. The anguish over Mrs. Schiavo's nightmare is boosting a rising common culture of attacks on the independence and legitimacy of our courts."

Later in the article, the author cites Brown v. Board of Education, striking down laws banning interracial marriage in 1968, and striking down laws requiring Jehovah's Witnesses to recite the Pledge of Allegiance.

I have never heard of anything related to Jehovah's Witnesses, but there seems to be a big gap in all this pontificating -- Roe v Wade. To be perfectly honest, I don't have a side on pro-life/pro-choice. I think they both have good points and bad points. And while I know this has been argued to death in many fora, it is also clear to me why people would think that the US Constitution does not say anything, one way or another, on abortion. While this stands, the cause of stopping left-wing judges ruling the country by diktat will run on.

The article also talks about how the judiciary has angered the executive by limiting their ability to prosecute the War on Terror. I think that the judiciary, both in the US and abroad, has been shockingly simple minded when it comes to the this. The Geneva Convention are clear in both its language and logic: only lawful combatants get legal protection, so if you want protection, fight legally. Fighting legally saves civilian lives since it prohibits things like wearing civilian garb, mingling with civilians, hiding in places of worship, etc. If the terrorists choose to forgo legal protection for military advantage that's their decision, and that choice clearly places them outside the protection of courts. If you want to maximize lives saved in War, reducing the punishment for those who endanger (and therefore kill) innocent civilians is simply not the way to do it. The logic is not complicated, but I understand how the ick factor of detention without trial etc. strikes people as wrong, and judges need to balance ick with rationality. In this case they went with ick, and that result will be more civilian deaths.

Tuesday, March 29, 2005

Do away with SS entirely?

Arnold Kling points to a Barro article (pdf) where Barro says he was in favor of private accounts in social security, but no longer is:
I once thought personal accounts for Social Security were a good idea but have changed my mind. Personal accounts have some virtues, but the common arguments, both pro and con, are myths. Overall the accounts are a bad idea...

The strongest points for personal accounts... mean that, unlike the current program, the contributions are not a tax that discourages work.

Another myth is that these accounts enhance saving and economic growth. In fact, tinkering with Social Security won't have major effects on national saving, investment, or growth.

A SERIOUS ANALYSIS STARTS with asking why we have Social Security. If we were not so used to it, we would find it odd for the government to collect money from young workers and give it to the old (mostly workers' parents). One rationale is that the government should help people who lack discipline to save for old age. I have never embraced this paternalistic view. It's true that society will inevitably provide welfare to the needy elderly. Knowing this, some people will save too little and rely on public support when old. Thus, there is reason to require workers to save for retirement. How much depends on what is viewed as a minimal standard of living; suppose it is $1,000 per person per month. (Currently, a person with the median earnings history gets $1,200 from Social Security.)

Contributions that fund just the minimum cannot go into a meaningful personal account. People would opt for too much risk, knowing they would be bailed out if they fell short. Also, contributions that cover the minimum provide no individual return and, therefore, amount to a tax that discourages work.

Personal accounts have to supplement the minimum payout. But then why have a public program at all, rather than relying on individual choices on saving? I think there is no good reason to go beyond the minimum standard; that is why I view personal accounts as a mistake -- they enlarge a Social Security program that already promises too much.

I cannot reconcile Barro's view that taxes on wages discourage working (which they do, and which social security tax does) AND the position that private accounts (which are not a tax) would not reduce this discouragement and so encourage growth. I think moving all of SS into personal accounts would greatly reduce marginal taxes and therefore have a significant impact on productivity and growth. I also think the personal nature of personal accounts would encourage growth by inducing ppl to retire later.

If the reduction in marginal rates and the encouragement to work for longer are the greatest contribution of SS, why not eliminate it altogether and just have private savings? Barro would be OK with this, because he beleives that arguing that people do not save for retirement enough is paternalistic. He is correct, it is paternalistic, but you are still left with the fact that people do not save for retirement enough. I'm a big individual liberties kinda economist, but I think people make wrong decisions about saving and I think mandatory savings is a good idea.

Barro would also limit benefits to $1,200/month, which is the current average, but only for people who needed it.

The Reality-Based but otherworldly Brad DeLong mocks those who claim Social Security is a welfare program when it is clearly an insurance program. Last I checked old age was not a risk it was a certainty, so I don't see how any cash stream that kicks in when a sure thing happens and involves no risk pooling can possibly be called insurance. Ah, must be that Berkeley water. I do agree that it is not welfare though, since it takes from poor people (especially blacks) and gives to richer people. A program like Barro's -- means tested minimum payments for old people -- *would* be welfare, but even that I don't think would be insurance.

Monday, March 28, 2005

Local phone bill

My non-cellular phone bill this month was for $61.52. Of that, $32.83 was for DSL, and $28.69 was for local.

My local bill cost $19.84 for basic service, plus $8.85 for taxes and fees. That's 27% of the total bill.

How many minutes of local phone calls did I place last month? 10 minutes. So I am paying $2.87/minute for local calls.

I can't cancel local because then I won't get DSL. I can't change my local to metered service because then get charged payphone rates to make local calls, and it would only take one error to wipe out any savings.

Given that I know how much the unionized agents make at this particular local phone company, and how high regulation has made barriers to entry, I understand why they can get charge so much for their service.

Drucker on the 4 Economies

I don't understand this piece by Peter Drucker on the emerging "world economies". He seems confused between what an economy is vs a soceity, but people pay a lot of money to listen to him so maybe I am missing something. Now on to details:
There is no distance in this world economy [thanks to the Internet]. Everything is "local." The potential customers searching for a product do not know--and do not care--where the products come from. This does not eliminate or even curtail protectionism. But it changes it. Tariffs can still determine where a product or service has to be bought. But they are increasingly unable to protect the domestic producers' price.

One example: To get the industrial Midwest with its 140,000 steel workers to vote Republican in congressional elections, President Bush slapped a prohibitive tariff on imports of steel from Europe and Japan in 2001. He got what he wanted: a (bare) Republican majority in the Congress. But while the large steel users (such as automobile makers, railroads and building contractors) were forced by the tariff to buy domestic, they immediately set about cutting their use of steel so as not to spend more on it than they would have had to spend had they been able to buy the imports. Bush's tariff action thus only accelerated the long-term decline of the traditional midwestern steel producers and the jobs they generate. Tariffs, in other words, can still force users to buy domestic, but they are no longer capable of protecting the domestic producers' prices. Those are set through information and on the world-market level.
I don't get this. Tarrifs raised the price domestic steel consumers had to pay for their steel, and they responded by trying to find new ways to cut steel consumption. This requires neither the "information soceity" Drucker conjures up, nor does it require the Internet to "connect people in new, tribal information based nexi" (or whatever), it just requires a spot market in steel, which has been around forever. We slog on:
Sixty years ago, in the Bretton Woods meetings of 1944... established instead, the Bank for International Development (World Bank) and the International Monetary Fund (IMF). [They are]auxiliary rather than central--the former mainly financing development projects, the latter providing financial first aid to governments in distress. [In other words there is no Global Central Bank].

...[T]he Bretton Woods system worked for most of the half-century after World War II. And there was only one reason why it worked (however poorly): the commitment to it of the United States and the strength of the U.S. dollar as the world's key currency.

The dollar is still the world's key currency. But the Bretton Woods system is being killed by the U.S. government deficit, which is fast becoming the sinkhole of the world financial economy... The U.S. savings rate is barely high enough to finance the minimum capital needs of industry. It could, in all likelihood, be raised considerably by raising interest rates. But that is not only politically almost impossible; it would also require that a larger share of incomes go into savings rather than into consumption, with an inevitable collapse of an economy based on consumer spending and low interest rates, as for instance, the U.S. housing market.

The government deficit is therefore being financed almost in its entirety by foreign investments in the United States, mostly in government securities like short-term treasury notes and medium-term bonds. The Japanese are converting most, if not all, of their trade surplus with the United States into dollar-denominated U.S. government securities and have thus become the largest U.S. creditor.

...It certainly cannot be extended indefinitely, which, among other serious drawbacks, calls into question the long-term viability of the Bush Doctrine's goal of defending and extending the "zone of freedom" around the world.
What?! Firstly, IIRC, the US has run serious deficits in the past, so why this current deficit is an issue is unclear to me. Secondly, the US Fed has been raising interest rates precisely to pop the real estate bubble -- something Drucker both claims is politically impossible and warns against. Thirdly, the US economy is largely closed, only 10% exists as trade and most of that is with Canada and Mexico. If the Japanese and Chinese stop buying dollars, the dollar will fall but this will have almost no impact on the US since it does not import very much (nor does it export very much). Finally, how any of this impacts Bush spreading democracy through the Middle East at the point of a gun is beyond me. The title of this section was the "Global Oligopoly of Money". It should be "I do not understand how Money works, or really, what it is".

The fun is not over yet
Finally, the new multinationals are increasingly not domestic companies with foreign subsidiaries, but are more likely to be domestic companies with foreign partners. They are being built through alliances, know-how agreements, marketing agreements, joint research, joint management development programs and so on. They require very different management skills; they must persuade, not command. The typical old multinational began planning with the questions: "What do we want to achieve? What are our objectives?" The first question in the new multinational is likely to be: "What do our partners value? What do they want to achieve? What are their competencies?" And in turn: "What do they need to know about our values, our goals, our competencies?"
I have a different sent of questions: Why is Drucker conflating trade between two companies as a new kind of one-companyism? Is it because otherwise he cannot find anything new to say? Or does he simply not understand what constitutes the boundries of the firm? Perhaps he know of no business beyond retail and is therefore ignorant of the fact that companies do, occassionally, buy goods and services from each other?

Let's finish here. It's too early.

Thursday, March 24, 2005

Are all VCs this soft-headed?

My major exposure to venture capitalists was in NY during the tech boom. Silicon Alley, as it was called then, was fun and stupid. I was not impressed by any VC I met there and I sort of assumed all the really good ones were out on the West Coast. I have no idea how fair this assessment is, and I certainly don't beleive that New York has a monopoly on softheaded VCs, but this post makes me wonder:
Anyway, "We" companies are built by and for a community of users. Everything (including profits) flows from this core value of serving the users. We companies and their profitability are incredibly sustainable.

"They" companies are traditional companies that seek to optimize profitability at the expense of everything else. These businsses are not sustainable and they tend to overreach and ultimately end up in a long and steady decline.

Microsoft is the poster child for a "they" company.

Craigs List is the poster child for a "we" company.

Apple used to be a "we" company. I love Apple as I've blogged about many times. I still do. But Apple is not a "we" company any more.

Apple survived the WinTel dominance in the PC business by becoming a "we" company. It focused on its base of devoted users and gave them better and better products. It created a community of users who are incredibly passionate about the company's products. It became the anti-Microsoft. And it has benefited greatly from that market position in recent years.
Are we living on the same planet? Look, I am a big Mac fan (currently own 2 macs, 3 iPods, 1 airport express, 1 airport hub) but I am also clear eyed enough not to confuse my own love of Macs for the crazy potted history outlined above.

Look, Apple's marketshare has been on the deline for years, and the current excitement around the iPod has not changed this. It survived by establishing a locked-in base of users and charging them full-whack from hardware that continued to slide further and further behind the price/performance offered by Intel. As Apple became more expensive and less relevant the only people who remained with the platform were the fanatics. You can call this "developing a devoted customer base" but I call it "driving away the sane".

Apple is certainly the anti-Microsoft, but I don't see this having much impact in the market. Apple's share price has done very well in recent years, but this is driven entirely by profits from the iPod, and I don't see how the iPod's popularity has anything to do with Microsoft hatred. (Even though I don't much like the Beast of Redmond myself).

I personally would not take any business or investment advice from someone who sees Microsoft's astounding growth and profit generation as "a long and steady decline" while Apple's reduction to a niche player on the verge of death who hit a home run with a fantastic mp3 player, as a company with "profitability [that is] incredibly sustainable."

Tuesday, March 22, 2005

Healthcare costs

Why does the US spend more on healthcare than other countries? 1) It pays doctors a lot more and 2) it does more high-tech procedures (like MRIs etc.) Read this excellent column by Arnold Kling.

Why are doctor's wages higher in the US than in other countries? You could blame the AMA for restricting spots, thus driving up price, but other countries have similar governance bodies that restrict entry. Is all the wage difference just coming from a single payer system? I wonder if doctors who agitate for socialized medicine (and many do) realize that most of the cost savings out there are from their paycheck.

Wednesday, March 16, 2005

Don't link to reports if you cannot do the math

Slate argues that Bush's mathematics on Social Security is wrong, and links to a report to prove their point. Unfortunately for Slate, the report supports Bush's position, not theirs. Moral: Don't link to reports that you think support your point if you cannot do math. Slate says:
Bush was encouraging a misconception. As Paul Krugman has explained, remaining life expectancy for a 65-year-old black man is 14.6 years, not two. It's true that black male life expectancy at birth is only 69, but black-white mortality differences trail off throughout life. (By the late stages, black men outlive white men of the same age.) So, while blacks are likely to spend fewer years taking money out, they're also likely to spend fewer years paying in.
The numbers do not support this. The relevant life expectancy to look at is from age 20 to 65. People start paying into social security at around age 20, and start withdrawing from it at around 65.

According to the CDC report Slate points to, black men in the 19-20 age cohort can expect to live for 51.4 more years and white men can expect to live for 57 years. That gives 20 year old white men a life expectancy of 77, and 20 year old black men have a life expectancy of 71.4. If social security kicks in at 65, both white and black men have been paying into the system for 45 years, but whites withdraw for 12 years and blacks withdraw for 6.4 years. To me, this means that social security is twice as good a deal for white men than for black men.

Moreover, black men in the 64-65 age cohort can expect to live 15.2 more years and white men can expect to live for 17.3 more years. This means that white men get to draw social security for 2 years more than black men.

I interpret this as meaning that once black men get to age 20 and start to pay into social security 1) they are more likely than white men to die before reaching retirement age meaning they do not get to withdraw anything, and 2) even if the black man manages to reach retirement age (65), they should still expect to draw benefits for 2 years less.

Social security is a bad deal for black men. I understand that Democrats like to think of themselves as being champions of black people, but their decision to oppose social security reform genuinely puts them at odds with their black constituency. I bet you that the author did not even bother reading the report before pointing to it.

The Slate aritcle gets its second argument wrong as well. It says
So, here's the situation. In an op-ed written in Spanish and not made available in English on any federal Web site, the administration argues that Latinos, who live longer than whites do, should support Bush's reform plan because upon retirement they rely disproportionately on Social Security. Meanwhile, in forums and private meetings aimed at blacks, the administration argues that blacks, who upon retirement rely disproportionately on Social Security, should support Bush's reform plan because they don't live as long as whites do.
The reality is that social security is not a particularly good deal for anyone from an investment perspective (although I do like the forced savings and annuities aspect of it). Blacks don't even get 100% of this bad deal, they get 80%. So when Bush says that Latinos, who rely more on social security are getting a bad deal, he's right. When he says that blacks are getting an even worse deal, he's right there too.


Unfortunately I never studied with Steve Levitt when I was at Chicago, but I follow his work and am looking forward to this new book outlining his research.

Among other things, Levitt was involved in research that demonstrated 1) black families often give their children names unique to black people and 2) employers discriminate against resumes featuring black names.

Let's take the second finding first. This behavior could be outright racism, in which case the employer is not considering black people for employment because they are black (at a loss to the business, I might add). It also suggests further discrimination all the way up the hiring process. Alternatively, this behavior could be efficient because names carry information resumes do not, and the information carried by a name is pertinent to whether or not someone could be a good employee. I would add that a company might rationally avoid hiring a black person for fear of wrongful termination suits in case that person didn't work out. A perverse example of well-meaning legislation gone wrong.

As intriguing is why parents give their children names that will handicap them later in life. They may be consuming pride (yes, my daughter will earn less but she will be proud of her heritage with this name), it may be ignorance (I didn't know it would make a difference), it may be wishful thinking (this will no longer happen when she grows up), or it may be efficient (she will be discriminated elsewhere, so why bother picking a name I don't like as much). At any rate, it seems that black folks who pick black names are more likely to
have been born to a teenage mother and 9 percentage points more likely to have been born out-of-wedlock than a Black woman living in the same zip code with the same age and education, but carrying a name that is equally common among White and Blacks. The woman with a Black name is also more likely to have been born in a Black neighborhood and to herself be unmarried.
I believe that conscientiousness, not intelligence or creativity, is a more important and desirable trait in an employee. You don't have to be Einstein or Picasso, you just have to show up for work on time and do what you're supposed to do to be a good employee. Perhaps a black name signals lower conscientiousness? Or maybe employers are just being out-and-out racist. (via Marginal Revolution)

Tuesday, March 15, 2005

"Transition cost"

Here is yet another excellent post detailing why there is no transition cost in moving social security from a pay-as-you-go scheme to an individual account scheme. The financing cost of funding the shortfall that already exists will be an interesting test of market efficient--does the bond market think the US will renege on its pension obligations, or will it be taken by surprise when (if) the US doesn't.

If interest rates rise dramatically on the back of large government borrowing to finance the SS shortfall today (instead of financing it later), then I guess the bet was that the US would renege on its pension obligations. If interest rates don't rise much, then the cost of financing the shortfall was already factored in.

Why libertarian friends make me uncomfortable

I have a libertarian buddy who is one of the more rational, clear-thinking, and honest people I have met. He keeps his word. He speaks his mind. He is always always reasonable.

I don't trust him.

The reason is outlined in this post on why taboos are important as social coordinators: (via Stumbling Tongue)
The psychology of taboo is not completely irrational. In maintaining our most precious relationships, it is not enough to say and do the right thing. We have to show that our heart is in the right place and that we don't weigh the costs and benefits of selling out those who trust us. If someone offers to buy your child or your spouse or your vote, the appropriate response is not to think it over or to ask how much. The appropriate response is to refuse even to consider the possibility. Anything less emphatic would betray the awful truth that you don't understand what it means to be a genuine parent or spouse or citizen.
This guy legitimately is my friend but I feel, perhaps unfairly, that he's a calculating friend and will stop being my friend if the price is right. Of course, anyone would probably stop being my friend if the price is right, but being open, reasoned and calculating about it somehow makes it worse.

Too funny

I'm not sure if you've seen the show, but I think Borat is hysterical. Poor Kazakhstan.

Monday, March 14, 2005

Worst website ever

I just used what had to be the worst intranet HR website ever. The point of the site was to peruse and apply for internal positions. You fill out a form detailing what jobs you were interested in, and what your geographic preferences are.

"USA" does not appear in the first list of country options, but such hopping job markets such as Kyrgistan etc. do. You do not enter a state preference by typing in MA, you must type in "Massachussets".

When the jobs finally do appear, clicking on any of the titles to learn about the job takes you to a new page (which is fine) but also erases all the preferences you just spent 15 minutes typing in. If you want to apply for that job, or look at another one, you must enter all your information in again. Pathetic.

Finally, once you are ready to apply, you get a message saying that "you don't have an approved availability date" and must get that first. Clearly no one has thought hard about how job applications actually happen, or they have thought hard but decided that the traditional, backdoor channels are preferrable to a clearinghouse on the intranet.

Minimum wage and tips

Waiterrant argues, reasonably, that recent legislation to eliminate the mandatory $3.85 that folks who work on tips get, is mean and a bad idea. As he acknowledges, the $3.85/hour is a small fraction of this total income, but his total income is small and he needs ever cent he can get.

I don't know the details of the legislation, but let's just say it was to eliminate any minimum wage requirements on employees who get money in tips. This to me sounds like eliminating the minimum wage, which I think is good because minimum wages price out the lowest skill workers, while transfering a small amount of money to high-skill minimum wage workers, also known as high-school students, who are not poor. Would repealing a minimum wage for waiters make their wages go down, or would restaurants ensure that a waiter's total compensation was roughly the same as before? I don't see how restaurants could avoid paying waiters more.

Hobbies make the man

I really like 2blowhards, and this latest post illustrates why. Michael is talking about how a hobby, something you do just for the sake of it, is critical for spiritual health. He talks about this father, who
[suddenly] had himself a hobby. Flying small planes transformed him, as well as his experience of life. My dad was no longer a half-happy, half-frustrated, confused-about-the-meaning-of-it-all guy. He was happy, period. He knew that, however the workweek went (and however much family cares weighed him down), for a few hours every weekend he'd be doing something that he was guaranteed to find satisfying.

A peculiar aspect of all this was that Dad had no special gift for flying. I think we may tend to assume too easily that we would -- no question -- really enjoy doing what we're most gifted for doing, if only we had the right chance. But perhaps no such automatic relationship exists between "what we're good at" and "what we enjoy."
I think the observation "what we are good at" is not neccessarily "what we enjoy" is an accurate one. I don't think people enjoy things they are actively bad at, but I do think acknowledging your mediocrity frees you to just enjoy the thing and not worry about how you're doing compared to others. Another acute observation:
Many of the career-class people I've known seem less happy and more neurotic than the middle-class people I grew up with. For one thing, they're such self-entitled achievers that they seem incapable of doing anything for its own sweet sake. Everything they do seems meant to contribute to the larger project of showing the world what special people they are. Yet what a price they pay. When I went to the 25th reunion of the middle-class public school kids I grew up with, they were a cheery, welcoming group, looking forward to whatever adventures the rest of life has in store for us. When I attended the 25th reunion of the high-powered prep-school class I graduated with, most of my classmates looked rumpled, defeated, played-out. They may make ten times the income my public-school buds do; they may not be strangers to Gstaad and Cabo. But they looked like they'd peaked long ago -- in some Harvard seminar, probably. They looked like their lives had all been downhill ever since.
Maybe the causality is the other way around -- driven, competitive people get higher paying jobs, but being driven and competitive is not the way to happiness. It's worth bearing this in mind if a driven, competitive person moans about what a rat-race the world is--the problem is not the world, it's them.

Friday, March 11, 2005

Regulating Bloggers

Two big cases going on around regulating bloggers. The first has to do with whether or not blogging is covered by campaign finance laws. In particular, since contributions to political campaigns are monitored, regulated, and tallied, blogs supporting or attacking a political party should fall under whatever regulations McCain-Feingold cooked up since their articles may be construed as a contribution.

The second is Apple suing Thinksecret for the names of the Apple employees that leaked trade secrets to the publication.

Firstly, it is pretty clear that blogs that behave as a clearinghouse for information supporting a particular candidate are essentially PACs and should be treated and regulated as such. My own take on politics and money is weird and quixotic -- I think the entire government should be put up for auction and there should be a very strict definitions and enforcement for the "takings" clause in the Fifth amendment. A far more natural and sympathetic position is to believe that money corrupts the political process and the two ought to be kept as far apart as possible. Since labor and money are close substitutes, this also means that volunteer advocacy--the sort done by bloggers and cabals financed by rich foreign speculators--should be regulated the same way as cash donations, no matter how unworkable that may end up being. I beleive that pretty much all campaign finance reform is powered by this animus.

The second is that it's not clear that the journalistic privilege of protecting one's sources should be extended to anyone. (I don't know how strong this protection is for recognized journalists). I like the ThinkSecret case because it's more about trade secrets than anything actually life threatening, and hopefully that means the resulting decisions will be narrow and rational. Life works best when freedom is matched with consequences, and in the online punditry world right now that link is very weak indeed.

Healthcare Reform

Some people suggest that Social Security should not be reformed until Medicare is fixed. Medicare, after all, is slated to become a much bigger cost than Social Security. I don't think much of this position because perfection should not be the enemy of the good, and because health care reform is genuinely much harder than retirement reform.

The problem with social security is very simple: rising life expectancy and lower fertility is changing the ratio of people paying into the system vs. people taking out of the system. Since the government operates on a cash accounting basis, this will swing the fiscal budget into deficit. If the government used more standard accounting, the fiscal budget would already be deep in the red, and it would be interesting to see if that would make the debate more rational (since the facts would be easier to understand). At any rate the options are pretty clear, you can cut benefits, raise taxes, borrow, or cut other government spending, or some combination of all 4. In my humble opinion, the best option by far is to cut benefits by raising the retirement age. Since people are healthier than before, and the work they do is less physically demanding, they should be expected to work longer. [Note: I believe the AARP has come out firmly against raising the retirement age by even 1 year.]

Healthcare reform is much more complicated because people are fundamentally extremely addled when it comes to thinking about taking care of themselves and rationing healthcare. If healthcare in the US is further socialized, it will reduce the incentive to develop new treatments and ultimately acts as a transfer of healthcare from future generations to current old people. This is not obviously equitable to me.

Let me give you an example: my wife works in an ER in South Boston and a good percentage of her patients are junk patients. A woman came in at 3 in the morning with a toothache. It turns out that she never cleans her teeth which means that her mouth is a mess of abscesses. A guy walks in at 5 in the morning with a cold. Has he been to CVS and bought DayQuil? No. Has he taken any over-the-counter medication to treat his symptoms? No. So my wife tells him to buy some asprin and leave.

The point is that while the two individuals described above are poor, they could certainly afford the $5 or less it takes to buy a toothbrush, toothpaste, and packet of panadol. Going to a crowded ER and using up a doctor's time to have this sort of nonsense treated is an extremely high cost way to deliver healthcare. But since ERs are required to treat anyone who walks in for free, they have to spend time telling people to clean their teeth and take DayQuil. There is a significant population out there that simply takes no responsibility for their own health. The bad consequences of this are mostly born by them (rotting teeth, spending 8 hours in a waiting room before being given an asprin), but some of them are born by the medical system as well. The issue is that there really is no way to deny treatment to folks like these that sits well with everybody. Doctors are aghast at saying no to anyone because their business is to treat people who are sick. I don't think anyone doesn't want poor people to have access to good healthcare. But people really need to clean their own teeth, and go to CVS when they get a cold. Spend a little time trying to crack this problem and Social Security reform starts looking more and more attractive.

Wednesday, March 02, 2005

Missing the point even more

I wonder if Brad even recognizes how ridiculous he seems when arguing that Democrats have anything approaching an idea, never mind consensus, on social security reform. This is his characterizaton of the Democrat position:
1. Social Security should be preserved--not phased out, as the Bush plan's "price indexation" formula does.
2. Social Security's long-run funding hole should not be closed by benefit cuts alone, but by a mixture of steps that reduce costs and increase revenues.
3. Private accounts to make it easier for America's non-rich to build their retirement savings are a wonderful idea if properly implemented and if proposed as an add on to rather than a carve out from Social Security.
Firstly, Brad argues that the program should both be preserved and that it should be funded through some benefits cuts and tax increases. While I understand how tax increases preserve the program (at the cost of the broader economy) I don't understand how benefits cuts "preserve" anything. If we cut benefits by 99% is the program "preserved"? If we cut benefits by raising the retirement age, is it "preserved"? If we means test, is it "preserved"?

The issue of how to cut benefits and "preserve" the program seems central to the whole debate, but the Democrat position on where that line should be drawn does not exist. Bush is unclear on this himself, but to date he seems to suggest that he would cut benefits by the amount you re-direct to private accounts, which seems OK to me.

Brad's argument on "private accounts, if done right, as an addition, are fine" is OK, but what does "done right" mean? From Republicans, I hear it would be based on what government employees have now. From Democrats I hear... deafining silence.

I beleive that Democrat obstructionism is more a feature of them being currently out of power than the idea that "the Left is out of ideas". I think, given the intensity of emotion against Bush on the Left (as Brad himself demonstrates a few lines down), it's easier and more pleasant for them to chant "not in my name" than actually come up with real alternatives. Given Brad's description of the Democrat position, it does not seem like they actually know what an "alternative" looks like any more. This is unfortunate.