Questions and Observations

Free Markets, Free People

Eternal Truths?

In 1942 a Presbyterian minister named William J. H. Boetcker issued these 10 statements (they’ve at times been incorrectly attributed to Lincoln):

1. You cannot bring about prosperity by discouraging thrift.
2. You cannot strengthen the weak by weakening the strong
3. You cannot help the poor man by destroying the rich.
4. You cannot further the brotherhood of man by inciting class hatred.
5. You cannot build character and courage by taking away man’s initiative and independence.
6. You cannot help small men by tearing down big men.
7. You cannot lift the wage earner by pulling down the wage payer.
8. You cannot keep out of trouble by spending more than your income.
9. You cannot establish security on borrowed money.
10 You cannot help men permanently by doing for them what they will not do for themselves.

Those all seem pretty self evident don’t they? Yet we seem to be engaged, at very high levels of government, in going against every one of them and thinking (at least among those pushing the agenda) we can succeed in making life better.

~McQ

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Health Care – “The Public Plan”

Ezra Klein discusses what has commonly become known as the “public plan” in the emerging “health care reform” legislation. Put simply it is “public insurance” which is supposed to compete with the private insurance industry and, as Paul Krugman claims, keep them “honest”.

Klein lays out the various flavors being floated out there concerning this option:

• The “Trigger” Plan: Olympia Snowe is pushing this compromise, as are some conservative Democrats. The basic idea is that the public plan would act as an invisible threat: It would be “triggered” into existence if the private insurance market was unable to offer, say, enough options in a particular region, or enough cost control. In addition, the public plan would only come into existence in this or that region, or this or that state. It would be effectively useless as an insurer. It could potentially have some competitive effect in that private insurers would still work to avoid its existence. Some have argued, however, that the conditions being mentioned in the “trigger” proposals have already been met.

• The Weak Public Plan: This is what people are talking about when they refer to a “level-playing field.” This incarnation of the public plan — first proposed by Len Nichols at the New America Foundation and later echoed by Peter Harbage and Karen Davenport at the Center for American Progress — would have no special advantages over private insurers. It couldn’t use the low rates that Medicare sets or access taxpayer subsidies. It couldn’t force its way into networks. It would simply be another insurer, albeit with different incentives than traditional insurers.

• The Strong Public Plan: This would be like Medicare for the rest of us. It could throw the federal government’s weight around. It could negotiate deep discounts with providers. It could muscle its way into networks. Outside groups like the Commonwealth Fund estimate that it would save the average consumer 20 percent to 30 percent. That would give it a massive competitive advantage over private insurers, and would probably result in tens of millions of Americans dropping their current coverage and entering the public plan to save money. A variant of this was in the draft of Ted Kennedy’s bill that was leaked last week.

While Blue Dog Democrats have come out in favor of the “trigger” option, liberals such as Klein and Krugman prefer the “Strong Public Plan” for the reasons stated (massive dropping of private insurance for “public” (i.e. government) insurance). And there’s a reason they both prefer that – they see it as a backdoor way to move health insurance to a single payer system.

And that is a distinct possibility with both the “strong public plan”. In fact it is a design feature. The “competition” touted would most likely be in name only as Greg Mankiw explains (quoting Krugman to set up his explanation):

What’s still not settled, however, is whether regulation will be supplemented by competition, in the form of a public plan that Americans can buy into as an alternative to private insurance.Now nobody is proposing that Americans be forced to get their insurance from the government. The “public option,” if it materializes, will be just that — an option Americans can choose. And the reason for providing this option was clearly laid out in Mr. Obama’s letter: It will give Americans “a better range of choices, make the health care market more competitive, and keep the insurance companies honest.”

It seems to me that this passage, like most discussion of the issue, leaves out the answer to the key question: Would the public plan have access to taxpayer funds unavailable to private plans?

If the answer is yes, then the public plan would not offer honest competition to private plans. The taxpayer subsidies would tilt the playing field in favor of the public plan. In this case, the whole idea of a public option seems to be a disingenuous route toward a single-payer system, which many on the left favor but recognize is a political nonstarter.

If the answer is no, then the public plan would need to stand on its own financially and, in essence, would be a private nonprofit plan. But then what’s the point? If advocates of a public plan want to start a nonprofit company offering health insurance on better terms than existing insurance companies, nothing is stopping them from doing so right now. There is free entry into the market for health insurance. If a public plan without taxpayer support would succeed, so would a nonprofit insurance company. The fundamental viability of the enterprise does not depend on whether the employees are called “nonprofit administrators” or “civil servants.”

The bottom line: If the goal is honest competition in the provision of health insurance, the public option cannot do much good but can potentially do much harm.

That is a critical point in this debate – there isn’t an insurer out there that has as deep pockets as the US Treasury. If there is public money backing the public option, then the talk of “competition” is a sham. It is being used to placate and fool those who oppose a government takeover of insurance, the result which would surely happen if what Mankiw’s concerns are true. And if you follow the reasoning process that Mankiw has laid out above, it should be pretty darn obvious what the intent of this “public plan” really is, all the happy talk Klein and Krugman throw out there notwithstanding.

Last, but not least, while the “strong public plan” is an obvious short-cut to single-payer government run health care, the other two plans simply delay that same eventual outcome for a while. While there are certainly reforms that could be made in the insurance industry and health care generally, anyone who believes that government can do it a) better and b) more efficiently has simply not been paying attention to the shape government finances are in right now or how large the deficit has grown as it has mismanaged its entitlement empire to this point.

~McQ

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Part 3: Whelan Figures It Out …

And apologizes to Publius for doing something he shouldn’t have done and can’t undo:

On reflection, I now realize that, completely apart from any debate over our respective rights and completely apart from our competing views on the merits of pseudonymous blogging, I have been uncharitable in my conduct towards the blogger who has used the pseudonym Publius. Earlier this evening, I sent him an e-mail setting forth my apology for my uncharitable conduct. As I stated in that e-mail, I realize that, unfortunately, it is impossible for me to undo my ill-considered disclosure of his identity. For that reason, I recognize that Publius may understandably regard my apology as inadequate.

Publius responds:

Ed Whelan has written both publicly and privately and apologized. I know it was not an easy thing to do, and it is of course accepted. I therefore consider the matter done, and don’t intend on writing about it anymore.

Hat tip to Whelan for apologizing and making it public. That took some courage.  And to Publius for the gracious acceptance. Lesson?

You don’t get to decide whether or not the privacy concerns of another are legitimate (unless very specific types of exceptions are extant – “shouting fire in the theater” type) – that’s why we talk about privacy rights. It appears Whelan has finally figured that out.

~McQ

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SCOTUS Temporarily Halts Chrysler Sale To Fiat

And Ruth Bader Ginsberg granted the halt (I wonder if she issued the stay on empathetic grounds or legal grounds?).

The “greedy speculators” who requested the stay were somewhat happy:

Indiana Treasurer Richard Mourdock said the ruling was a small victory for Indiana pensioners, who brought the request for an injunction for fear of losing their stake.

But, like I said, this is a very temporary stay:

In order for the stay to have a more lasting effect, five justices need to sign on it. That has not happened, or at least not yet. The court may yet deny the emergency request or grant it and await arguments about why it should actually hear an appeal.

However, that should be more than enough time for the usual suspects to demonize the firemen, police officers, teachers and blue collar workers greedy speculators and their desire to destroy the UAW auto industry for their pension funds 20 pieces of silver.

In fact, it has already begun:

Rep. Gary Peters, D-Mich., whose congressional district is home to Chrysler world headquarters, said the state of Indiana pension funds’ attempt to stop the sale is an effort to prevent a swift emergence from bankruptcy in the name of a small sum.

Indiana’s pension funds would lose $4.8 million if Chrysler is allowed to emerge from bankruptcy, Peters said, while the state will lose more than $20.7 million in tax revenue if Chrysler is liquidated, as well as incur tens of millions in lost revenue, expenses and new unemployment claims.

“Other stakeholders, including other secured lenders and Chrysler’s autoworkers, accepted shared sacrifice because they recognized their interest was better served keeping Chrysler alive rather than forcing liquidation. Why the officials who decided to take their objections all the way to the Supreme Court can’t recognize this is beyond me,” Peters said.

IOW, Michigan’s greed is much more acceptable than is Indiana’s. And besides, the powers to be have already made up their mind that the “greedy speculators” in Indiana should just shut up and accept the rape of their pension funds because the interests of others are “better served” if they get screwed vs. Michigan.

Nice.

~McQ

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Economy: GOP Now More Trusted Than Dems

This is just funny. And fickle. But apparently watching what has gone on in the last few months, if you believe Rasmussen, has caused the GOP to suddenly again be the most trusted of the 2 parties when it comes to economics:

Voters now trust Republicans more than Democrats on six out of 10 key issues, including the top issue of the economy.

The latest Rasmussen Reports national telephone survey finds that 45% now trust the GOP more to handle economic issues, while 39% trust Democrats more.

This is the first time in over two years of polling that the GOP has held the advantage on this issue.

Of course we’ll see how much weight this carries in 2010. However I’d be in that 6% not documented who don’t trust either of them.

~McQ

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Whelan/Publius – Round 2

I enjoy analyzing arguments. Not two people shouting at each other mind you, but arguments people make to support their positions.

Yesterday I posted about Ed Whelan of NRO outing Publius of Obsidian Wings (no, I’m not going to use Publius’s name). I found it to be a very juvenile reaction to what appeared to me a fairly typical blog war – someone wrote something, another disagreed, and they went back and forth hammering each other’s arguments. But in terms of provocation that might warrant what Whelan did, I found nothing.

Simon Owens, at Bloggasm, contacted each of the parties involved and talked to them about what had happened. If you’ve read each of their blog posts, the reasons given are mostly a recapitulation of those. However there were some other interesting arguments used, one of which I found very wanting.

Ed Whelan:

Whelan even objected to the term “outed,” which has been used by many (including me) to describe what he had done to Blevins. “I think the word ‘outed’ confuses understanding here. I think people are drawing on the ugliness of identifying that someone is homosexual. In this context, to say I outed publius, well publius doesn’t exist. I identified who’s hiding behind publius. I think to identify someone who is blogging behind a pseudonym is very different than exposing some private aspect of a person’s life. I think that the term outing confuses things.”

I don’t think it confuses anyone but Ed Whelan. He claims that publius didn’t exist.  But neither did the person pretending to be straight. In the case of the homosexual, both personalities may have had the same name, but one of them certainly doesn’t exist in reality.  It is a pseudo-personality. Outing is a completely apropos description of what Whelan did and nonsense such as this argument is just epic rationalization in an attempt to justify the unjustifiable.

Publius makes the argument that he’s not really anonymous, but is instead an established personality with a reputation. And the reputation, achieved while writing under that name and on that blog is of value to him and something he doesn’t take lightly.

“It’s one thing for an anonymous commenter to come in and just be a flame thrower, but what I do is I write pseudonymously, and I have a reputation of my own. It’s an online reputation. It’s a reputation that I care about, that I’ve invested a lot in, and I don’t want to be embarrassed in the blogosphere. I try to think through my arguments. To say there’s no real world effect, I don’t agree with that, because if I write something stupid, I’m going to get called out for that. In fact, I have written stupid things and I got called out and it affected my reputation. So I do have some reputational incentives to be honest, to be respectful in all these things.”

Given that, the arguments on both sides should have been dealt with on their merits and nothing else.

Whelan opines:

“A law professor should especially be held to minimal standards, and I was surprised that this guy was a law professor given the poor legal understanding of his posts. Let me be clear, I have no objection to bloggers who want to hide behind pseudonyms, but if someone is hiding behind a pseudonym to take cheap shots at me, I don’t think I owe him any favors.”

And outing him did what to enhance Whelan’s arguments or counter those of Publius?

Zip. Zero. Nada. Nothing.

The fact that Whelan’s outing of Publius added nothing of weight to his arguments nor took away from those of Publius smacks of petty vindictiveness. He knew he could hurt Publius by doing something to him that Publius had carefully avoided over the years. In a word it was petty. Juvenile. Something a 10 year old would do.

The more I read Whelan the less I care for him. He may be a heck of a bright guy intellectually, but socially and ethically he’s still in grade school.

~McQ

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SCOTUS Says “No” To “Don’t Ask Don’t Tell” Challenge

The court chose not to hear the suit which challenged it, brought by an Army CPT, preferring, instead, to let the Obama administration deal with the subject. CPT Pietrangelo was originally 1 of 12 petitioners challenging DADT in court. Their case was dismissed by the 1st Circuit, but unlike the other 11 who chose to not appeal and let the Obama administration handle it, Pietrangelo appealed to SCOTUS. The result is as reported in the lede.

However, here’s the confusing part:

In opposing Supreme Court review of the Pietrangelo case, opponents of “don’t ask, don’t tell” have noted that Obama pledged during his presidential election campaign to end the policy. They say he appears to proceeding carefully to end the ban by first asking the Pentagon to study the implications and report its recommendations.

Why? Why is he “proceeding carefully”? One would assume that when someone declares he is going to end a policy, he has already gathered the information and done the studies necessary to understand the implications of changing such a policy might have before he declared he’d do it, right? [For the record I have no problem with trashing DADT.]

Oh wait, this is the same guy who declared he’d close Gitmo and end the Iraq war immediately after taking office, do away with FISA and hold the telcoms responsible, and have nothing to do with jailing bad guys indefinitely if they merely posed a threat to the US isn’t it?

Uh, nevermind.

~McQ

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Socialism? Why Not Call A Spade A Spade?

One of the things we talked about on the podcast this week is how, in the broadest sense, socialism is a growing phenomenon in our country. As I mentioned, while government may not actually own the means of production, if its regulations are such that they dictate how a company must operate, then government exercises de facto ownership.

What is happening in the financial sector right now serves as a perfect example.

The Obama administration plans to require banks and corporations that have received two rounds of federal bailouts to submit any major executive pay changes for approval by a new federal official who will monitor pay, according to two government officials.

[…]

Others, which are being described as broad principles, would set standards that the government would like the entire financial industry to observe as they compensate their highest-paid executives, though it is not clear how regulators will enforce them.

So regulators will have the final say on compensation. That, of course, is an ownership function. The de facto owner then is who?

Moving on:

In a sign of how eager corporations are to escape government diktats on pay, nine of the nation’s biggest banks are likely to repay bailout money as quickly as by the end of this month. The administration is expected to grant its approval this week.

Goldman Sachs, JPMorgan Chase and a handful of others have worked to rid themselves of their ties to government in order to shed restrictions on pay that they say put them at a competitive disadvantage.

But under the administration’s new plans, even companies that repay the taxpayer money will not escape some form of oversight on their compensation structure.

The set of broad pay principles being drafted by the Treasury Department would authorize regulators to tell a bank to alter its compensation arrangements if they are found to encourage too much risk-taking. It is not clear how the government will define too much risk.

Part two – no matter whether you pay the money back in full with whatever interest is owed, the government retains the right to dictate your compensation structure based in some arbitrary metric of “too much risk”, to be determined only by them.

They will apply to a broad swath of financial companies, even the United States operations of foreign banks, as well as private companies like hedge funds and private equity firms.

“This is the government trying to tell the TARP banks not to worry, because everyone else’s compensation will be monitored too,” said Gustavo Dolfino, president of the WhiteRock Group, a financial recruiter, of the industrywide principles. “We’re in a world of TARP and non-TARP.”

Clear enough? For those that like to quibble about the meaning of socialism and parse words, I’m eager to hear your spin on this. But, in light of the plan above you’d better be damned good at deploying the rhetorical smoke and mirrors if you plan to call this anything but a manifestation of the “s” word.

~McQ

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Throwing the BS Flag (Update)

The usual suspects have blamed the usual suspects in the GM bailout:

Austan Goolsbee, a senior economic adviser to President Obama, said the administration’s options were sharply limited by President Bush’s handling of the auto industry, and accused the prior administration of running out the clock.

“They shook up the can. They opened the can and handed [it] to us in our laps,” Goolsbee said on Fox News Sunday.

“When George Bush put money into General Motors, almost explicitly with the purpose — how many dollars do they need to stay alive until January 20th, 2009, there was no commitment to restructuring, to making these viable enterprises of any kind,” said Goolsbee, who serves as staff director and chief economist of the Obama’s Economic Recovery Advisory Board.

All of that is probably true, but the BS flag is thrown at the implication that the Bush administration left them with few options such that it had to funnel more and more bailout money into GM.

There was a clear second option – back off, tell GM that bankruptcy and restructuring are the best option and let the system take care of it. But they didn’t. They made the case that GM was “too big to fail” and that the “downstream impact” in terms of unemployment was unacceptable.

The continued bailout had two outcomes that the Obama administration wanted but won’t admit. One – they got a majority equity stake in the company. And they manipulated the bankruptcy proceedings to preserve that majority.

Secondly, it saved the jobs of a favored special interest group, the UAW, until such a time they too could be handed an equity stake in the “new” company through the manipulated process.

Without the Bush administration’s bailout, none of that would have been possible. And, of course, previous to taking office, Obama had lauded the handling of the GM problem.

So the Goolsbee blame shifting is more than nonsense, it’s nonsense on stilts.

UPDATE: Keith Hennesy, a member of the Bush administration who dealt directly with this subject and the incoming Obama administration throws a very detailed BS flag of his own.  [HT: Rick Caird]

~McQ

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Podcast for 07 Jun 09

In this podcast, Bruce, Michael, and Dale discuss the Obama “Muslim” speech, and the socialization of the economy.

The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.

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