Together, We All Pay More For Healthcare

Health Care's Simple Economics
04/30/09 - by Donald J. Boudreaux, Chairman of the Economics Department at George Mason University.

Parable: "The ten of us went to dinner together. We agreed to split the bill. I ordered a bottle of wine, the Steak Grande, and the Fudge Remorse dessert. Eating as a group is quite expensive."

[edited] Consider Medicaid and Medicare, huge socialized health-care programs funded with tax dollars. Millions of Americans covered by them consume medical services without paying the full costs. The result is that these services are over-consumed.

Russell Roberts is my George Mason University colleague. He asks, if you go to dinner with a large group of strangers, and you know that the bill will be split evenly, will you order pricier dishes and drinks than if you were paying only for yourself?

The answer is surely "yes." Let's say that you'd be content to order the pork chop priced at $15, but would get even greater enjoyment from ordering the rack of lamb priced at $25. If you alone were responsible for your tab, you'd order the lamb only if it is worth to you at least the extra $10 that it costs. So suppose that you value the lamb by only $8 more than you value the pork chop. In that case, you'd order the pork chop. You wouldn't spend an extra $10 to get extra satisfaction worth only $8.

But if the bill is evenly shared among yourself and nine others, then if you order the lamb, your share of the higher bill will be only $1. That's $10 split evenly 10 ways. You'll order the lamb.

Such sharing of our medical-care bills takes place now on a massive scale. It is impossible to see how expanding this sharing will reduce the bill for each of us.

Fact Check on Obama

FACT CHECK: Obama disowns deficit he helped shape
04/29/09 - Associated Press by Calvin Woodward at KnoxNews.com

Calvin Woodward examines and criticizes Obama's statements. [edited]

Obama met citizens Wednesday at a high school in Arnold, MO in advance of his prime-time news conference. Both forums were a platform to review his progress at the 100-day mark and look ahead.

Here are Obama's claims. The analysis is in the linked article.

• I am not responsible for the huge budget deficit waiting for me on Day One.
• The Recovery Act has already saved or created over 150,000 jobs.
• This budget will strengthen our economy.

  - Investments in education will equip our workers with the right skills and training;

  - Investments in renewable energy will create millions of jobs and new industries;

  - Investments in health care will cut costs for families and businesses;

  - Savings will bring down our deficit.

• I inherited a $1.3 trillion deficit. That wasn't me. There is almost uniform consensus among economists that we are in the middle of the biggest financial crisis since the Great Depression. We had to do a stimulus package, and we had to do something about the banks. Those are one-time charges
• We know that the more we do to prevent disease, the more we can obtain serious savings down the road. If we make those investments, we will save huge amounts of money in the long term.
• We can support Social Security benefits by raising the cap on the payroll tax.
• I hope that by working in a bipartisan fashion, we are going to get a health care reform bill by the end of the year, and we'll make the kinds of investments that will make everybody healthier.

Why Test? You Are Already in the Hospital

The "Too Sick to be in the Hospital" Test
04/24/09 - Throckmorton's Other Signs by Throckmorton

Bureaucracies are amazing. They divide responsibility and ignore obvious problems to satisfy some grand plan.

It seems that Medicare wants to cut down on unneeded testing. The answer: Don't give the test at all if the patient is in the hospital. That will do it!

[edited] Medicare will not pay for a PET or CT scan unless it is done as an outpatient. If the patient is really sick from their cancer and is in the hospital, they can't have the test, even though it would help determine how best to treat them so that they can get better and leave the hospital!

Diagnosing people is expensive. If they are already very sick, just what is the point? (sarcasm warning)

All people and organizations seek income and avoid costs. Socialized or centralized healthcare is paid up-front and delivers services after the fact. How hard will a system work to earn the money that they have already been paid? This is something that everyone can understand in their gut. A customer is lost without competition for his dollar.

Begging for Medical Care
The bureaucracy sees you as a cost, especially if you have already paid.

A Quick Explanation for the Recession

An Explanation for the Great Recession
03/25/09 - The Angry Economist

Warning. You will need some self confidence to read this explanation. It is short and understandable. You may tend to believe complicated presentations that you don't understand. Really, if you don't understand something, they haven't explained it very well, or they are hiding their own ignorance.

[edited] Austrian Economists can explain this recession in the same way that all the other ones are explained:

[ Sorry, you will have to go to the original article to find out. ]

What is Krugman (the moron) telling us that we need to do? Spend, spend, spend, don't save!

Every REAL economist will tell you that's stupid. Everyone believes Krugman only because he got a Nobel Prize back before his brain failed.

+ + + + +

Cargo Cult Economics
Obama's economic team says "Spend, Spend, Spend". They claim that government spending multiplies wealth. Actually, private spending AND SAVING has the same effect in creating a vibrant economy. Savings don't sit around being lazy at the bank. They provide the means to build businesses, employ people, and buy commercial goods.

We Can't Stop Carbon Emissions

From Peter Huber's book "Bound to Burn"
04/21/09 - ChicagoBoyz by Jonathan

[edited] We rich people can’t make a lasting dent in emissions. We don’t control the global supply of carbon.

We can't stop 5 billion poor people from burning the couple of trillion tons of cheap carbon that they have within easy reach. The 80% of humanity in the developing world desperately need cheap energy, and that will drive global carbon emissions. If we are foolish enough, we can impose carbon controls on ourselves that will send jobs and industries to their shores, making them grow even faster, and their carbon emissions faster still.

Ten countries ruled by nasty people control 80% of the planet’s oil reserves, about 1 trillion barrels worth about $40 trillion. They can lift most of their oil for a cost under $10 a barrel. They will drill, pump, and find buyers. Oil is all they have.

The bad news is that we will have to adapt, if human production of CO₂ is a problem. We won't be able to stop it. The good news is that CO₂ is not a problem in the first place.

Dispelling the Global Warming Myth
The atmosphere warms and cools because of solar output, not carbon dioxide.

The Global Warming Hockey Stick Hoax
The data and computer models in support of global warming are poorly constructed and don't predict anything.

The Fake History of the Depression

The Fake History of the Depression
04/20/2009 - Mises Daily by Robert P. Murphy

His new book is "The Politically Incorrect Guide to the Great Depression and the New Deal".

[edited] Nobel laureates and presidential advisors proclaim that it was Herbert Hoover's free-market penny pinching that exacerbated the Depression. They say that the economy was saved only when FDR boldly ran up enormous deficits to fight the Nazis. But, this official history is utterly false.

Contrary to what you have heard, Hoover was a textbook Keynesian after the stock-market crash. He cut income tax rates for 1929 by one percentage point and increased federal spending by 42% from 1930 to 1932.

This enormous jump in spending occurred while tax receipts collapsed, due to the decline in economic activity and the price deflation of the early 1930s. This combination led to unprecedented peacetime deficits under the Hoover administration — something FDR railed against during the 1932 campaign!

Hoover spent $4.6 billion against only $2 billion in tax receipts. The 1932 deficit would translate into an astounding $3.3 trillion deficit in 2007 (instead of the actual deficit of $162 billion for that year). Hoover's 1932 deficit was 4% of GDP.

GDP is Gross Domestic Product, or total national income. The official government measures of rising GDP during the war years is misleading. Massive military spending was included in GDP, even though producing tanks is hardly the same measure of prosperity as producing consumer goods.

Normally, when the Fed prints money to buy massive quantities of goods (such as war supplies), the price level and cost of living goes through the roof. The price level is expressed as the CPI, the Consumer Price Index. The government applied price controls during the war. [ Price controls were either ineffective or produced shortages. -AG ]

Say that your salary goes up from $30,000 to $33,000, a 10% increase. But, the cost of what you buy goes up 10% also because of inflation. Your "inflation adjusted" income is still $30,000. The same applies to GDP, which is supposed to measure total income.

Statisticians would normally adjust for the price level to compute the "inflation adjusted" GDP. This adjustment couldn't occur, because the government made it illegal for the CPI to go through the roof. Official measures showing "real GDP" rising during World War II are as phony as the Soviet Union's announcements of industrial achievements.

+ + + + +

Building tanks and bombs doesn't make you rich. Building new infrastructure (bridges, roads, and railroads) only increases prosperity if it is highly useful. Just the building of the structures doesn't do a thing.

A Tested Stimulus Plan
The housing crisis is the result of our last stimulus plan. How do we like it?

Cargo Cult Economics
Spending and saving by individiuals is more "stimulative" than taxing and spending by government.

An Artwork Thought to Have Merit

Thought to Have Merit
06/20/06 - WSJ OpinionJournal by Lionel Shriver

An English sculptor loses his head.

[edited] "Exhibit 1201" is a large rectangular tablet of slate with a tiny barbell-shaped bit of boxwood on top. David Hensel created and submitted it to this year's summer show at London's Royal Academy of Arts. He must be pleased to have been selected from among some 9,000 applicants for the world's largest open-submission exhibit of contemporary art.

Nevertheless, he was bemused to discover that his sculpture had separated from its base in transit. Judging the two components as separate submissions, the Royal Academy had rejected his artwork proper, a finely wrought laughing head in jesmonite. Instead, they selected the support plinth, the bit of boxwood. Mr. Hensel: "It says something about the state of visual arts today." He didn't say what. He didn't need to.

A "support plinth" is a short piece of wood for supporting the sculpture from the back. This one was quite nice, in its own way. See the picture at the above link.