December 2009

Iran’s government corruption is willingly ruining its human capital. The US should give visas to all of those students- I imagine they would be valuable assets in future negotiations with the Middle East. It would also send a message about how we view their treatment of their citizens.


So much for my plan to get buff like Arnold and learn telekinesis.

Results of the Tiger Woods scandal.

Good article from that echoes my sentiments about health care reform. The first paragraph puts it quite nicely.

The push to reform the system is going in exactly the wrong direction. Instead of minimizing patient involvement in payment for treatment, Washington should be seeking to increase patients’ role.

Today’s WSJ online reports on the ruling of the US trade commission that subsidized steel from China is an unfair competitor to US steel, and will likely result in tariffs on that steel in the future. Once again the government is failing to understand the necessity of free trade. China is artificially changing the price of steel for its companies, so the government thinks that the best strategy is to artificially raise it back to its original level. Why not just allow the US population to buy the steel at lower cost when it is being supplied that way? China thinks it is gaining by doing this (even though we can be pretty confident they are not), and if we simply buy the steel from it we save ourselves a lot of money, not to mention the resources that currently are being used to produce steel here that can be diverted elsewhere. China is paying to allow us to get steel at a lower price. Why would we turn that down?

Economist Alan Viard talks about the high-income surtax in the House health care bill. I completely agree with his analysis. Any tax takes a toll on savings and therefore investment, and since the wealthy do by far the majority of the saving this type of tax is extremely distorting on investment and thus GDP growth. One particular excerpt I especially like:

Third, the proposed surtax reflects an unsustainable approach to tax and fiscal policy. As commentators across the political spectrum have recognized, the existing fiscal imbalance cannot be addressed without imposing sacrifices on a broad segment of the population. Any new spending programs, such as those in H.R. 3962, will impose additional burdens. By linking these programs to a tax imposed on only 0.3 percent of the population, the bill obscures that fiscal reality. If the programs in H.R. 3962 are worthwhile, they are worth paying for in an open and broad-based manner.

This is what I have been saying for some time. If giving so many more Americans health insurance is a worthy goal, there will have to be sacrifices in the form of higher costs or lower quality care. I think either of those things are too harmful to justify this, since we are only talking about giving people insurance, not care, not to mention all of the perverse incentives.

My sample column for The State Press, ASU’s student paper:

Well, I think I hear the fat lady. With the Democrats poised to seal health care reform on Christmas Eve, this seems a good time to consider why this bill is a huge step in the wrong direction for the United States. What could I be talking about? The Obama administration has assured us that the government can reverse its record of being inefficient compared to the private market and provide insurance for more people. Let’s see if they come through.

Remember that the objective of this legislation was to reduce health care costs. The Congressional Budget Office, though, has estimated that the reform will cost $871 billion over the next decade, without the perverse incentives I will talk about. So the lowest possible cost to taxpayers of a bill that was supposed to lower costs is almost $900 billion.

But we’ll get better care for that money, right? The media is always telling us that our health care system is much worse than other countries’, citing life expectancy. But an August 2008 study in the Lancet Oncology Journal shows that the US has higher cancer survival rates and longer life expectancy after detection in similar stages than European countries, a clear indicator of good care. Studies on other serious illnesses are underway and suggest the same results. Considering the higher incidence of obesity and smoking in the United States, the life expectancy rankings are, not surprisingly, skewed. Moving toward government-run health care will start to erode our success in these areas.

In addition to weakening our treatments, the money we spend on health care will not be as effective. Proponents talk about how involving government will lower costs, citing a lower percentage of Medicare costs for administrative expenses. But this, too, is misleading. Medicare serves an elderly population that has very high average costs; the administrative costs per recipient were 25% higher for Medicare than private insurers from 2000-2005, according to Susan Fu from the Center for Medicare and Medicaid Services, and considering Medicare spends almost nothing preventing fraud (and is exploited for $60 billion a year) this is especially striking. So for customers of health services, it seems that the quality of care for serious illnesses will decrease and the amount of money needed to accomplish those procedures will increase, not to mention costing the already-overburdened government almost $900 billion. Now that sounds more like bureaucracy to me.

And what about the insurance companies and doctors? Well, with the government’s expanded program regulating prices to keep them low, there will be lower wages. This leads to the shortage of doctors that results in waiting times in Canada and elsewhere. Insurance companies will suffer as well because of the bill. Restrictions on excluding certain high risk people and requirements to cover procedures that are sometimes unnecessary will cause insurance companies to raise rates to maintain margins, causing fewer people to buy insurance, lowering profits and raising costs. Now is the time to ask: is this really what we want?

First, we have to remember that the objective of this legislation was to reduce health care costs. The Congressional Budget Office, though, has estimated that the reform will cost $871 billion over the next decade, and that is without all of the perverse incentives which I will talk about next. This means that the lowest possible cost to taxpayers of a bill that was supposed to lower costs is almost $900 billion.

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