Monday, November 4, 2013

Obamacare and Star Trek

I am in the midst of a conversation with someone over my last posting.  The issue involves the tradeoffs in Obamacare.  A program such as Obamacare will involve a number of tradeoffs within society.  Some of us will pay more for our health services to enable others who do not have such services to finally access them.  Most of us would go further by supporting some types of tradeoffs in general to achieve the purposes of Obamacare.  Whether we accept the specific tradeoffs in the new law is another question and it is the subject of our current national debate.

Well, I don’t want to go into Obamacare as a whole.   Though I have my own opinions about the program, my concern was for one particular tradeoff that to me was unfair.  To support my side of the argument I call upon the wisdom of Star Trek.

In my last blog I noted the situation where an individual with cancer was loosing her insurance and there was no affordable replacement in the exchange.  Was this a fair tradeoff considering how Obamacare was now providing health insurance for other Americans who could not afford it in the past?   My position is no, but more on this at the end of this post.

Jeremy Bentham was a philosopher and social reformer who lived in England from 1748 to 1832.  He is credited as being the first to articulate the philosophy of utilitarianism.   We know this philosophy because most of us have watched Star Trek.  In the movie “Star Trek II: The Wrath of Kahn” Spock justifies his death to Kirk by saying that the needs of the many outweigh the needs of the one.  The plot continued into “Star Trek III: In Search of Spock” when Kirk found Spock’s body for the purpose of restoring to it Spock’s mind and soul.   Spock’s father pointed out to Kirk at the end of movie that the effort to save Spock cost Kirk his ship and his crew.  To this question Kirk responded that the needs of the one outweighed the needs of the many.  This was a true Jeremy Bentham debate.  (For more contemporary Star Trek fans, the debate is included with some interesting character twists in the most recent Star Trek movie “Star Trek Into Darkness.”)

And so we have the same debate here.  When does the need of the one outweigh the needs of the many?    I would say that no one who has a life threatening disease or condition should be put in a position of risk simply because this nation is changing its health care system.    I don’t think any American would want this. 

My previous post was about how the politics of the last two months are playing out.  It was not on the costs and benefits of Obamacare, or how such tradeoffs can be improved.  But if that is the subject, whatever modifications we make to the system should include carve outs for people who are now caught in terrifying circumstances such as the cancer survivor from my previous post.  Within the overall global tradeoffs of Obamacare there can and should be exceptions for cases like hers.   There should also be set asides and ombudsmen to help people in these situations.   Since the media has not mentioned such mechanisms, I can only conclude that someone forgot to put such protections into the law.   If they are not in the law, at a minimum, they should be in the law.

What I am trying to point out in these two posts on Obamacare is that our political debate both for and against the new law is not consistent with our national character.  Both actions of shutting down the Government, which was discussed in the previous post, and constructing a program that threatens the lives of even a few people run against some of the most fundamental principles of fairness that we were taught as children.

Sunday, November 3, 2013

Obamacare, Politics, and Horace Greeley

The nation has seen some incredibly dysfunctional politics on the left and the right over the last two months.  First there was the Republican shutdown and now we have a mess with the rollout of Obamacare.   Today’s RealClearPolitics website offers articles authored by William Saletan and Todd Purdum that discuss how President Obama can still win the Obamacare debate.  The idea is that because of the Republicans counter intelligent effort to shutdown the Government has put the Democrats in a better position to win the 2014 mid-term elections.  Well, let’s take a look at that.

First, let’s look at the Shutdown.  If you are a Democrat you should herald this as one of the most, oh, I can’t quite find a good term that captures the essence of that political action.  Words like bonehead, moronic, insane come to mind and they are just inadequate.  The Shutdown was never a good idea for three reasons.  First, it was never possible for the Shutdown to achieve its aims of dismantling Obamacare.  Since the first definition of politics is that it is the art of the possible, why engage in the impossible?  Second, we live in a democracy, and if you are a minority in a democracy, you have to compromise.  To tell your constituents that you don’t have to compromise to achieve your ends is, well, like leading lambs to slaughter.  All during the Shutdown I was reflecting on Alfred Lord Tennyson’s Charge of the Light Brigade, a poem about 600 soldiers who loyally gave up their lives in battle on the orders of misinformed superiors who foolishly did not know the battlefield.  The far right Republican leadership misspent the trust of their constituents and lost political capital in the process.  Finally, the Shutdown violated some of the most basic rules we learned in kindergarten about how to live in a sandbox.  Americans don’t like bullies in their sandbox.  Here was Ted Cruz acting like a bully trying to take over the sandbox, and Harry Reid threw him out: the duly elected bigger bully of the sandbox.  The great American center that believes in fair play doesn't appreciate these types of spectacles.   So, one would think that Democrats would be masters of the universe right about now due to the Republican implosion.  Yet, they are not.

The Obamacare rollout fiasco has hurt Democrats, and it is likely that it will hurt them more and more all the way up to the 2014 elections.  Where the Shutdown was a one-time thing, Obamacare will bring healthcare issue after healthcare issue into our political debate for the next year.   It will be a drip-drip-drip that politicians need to avoid in order to look competent and win re-election.  The real issue will not be the botched programming of a governmental website.  That will get fixed, eventually.  It will get fixed late, but it will get fixed.  Rather, the issue will be how Obamacare violates another basic tenet of American culture.

Within the American psyche is a fundamental belief that we can always have more.  The basic quote attributed to Horace Greely from the 1800’s “go west young man!” signifies that we, both individually and as a people, can go out and make more of ourselves for ourselves.  We can have more land or wealth, or whatever by going out and making more of ourselves to get it.  The idea that any resource is finite is against this cultural experience. 

I am old enough to remember the theme of the Kennedy administration, which charged us to explore “New Frontiers.”  And in accordance with that direction, President Kennedy challenged this nation to expand upward and put a man on the moon, a challenge that was fulfilled after his passing.  That was the last great expansionary effort by an American President.  After that came the Vietnam War, terrorism, and the Great Recession and the pathetic recovery following it.  Nationally, it now seems that we cannot expand and grow our way out of problems.  Rather, we have to settle and cope with them. 

Obamacare is a marker in our cultural experience.  It is a formal program that officially recognizes that a critical resource is finite and that some people have too much of it and others have too little.  Whereas our tax policies reallocate a growing resource, namely our income, Obamacare reallocates a finite resource, which is our healthcare.  As an impact of this reallocation, some people who are very sick will get seriously hurt when they loose their healthcare. 

In the last week there have been many stories about Americans who rely on their current health insurance to stay alive.  They usually have cancer and are affiliated with a PPO or other such health provider association.  Many of these PPO’s are based around a university medical center that is normally too expensive to be sponsored by any insurance plan on the new exchanges.  These PPOs and other similar plans are being cancelled because they do not meet the new criteria laid down by Obamacare.  I saw a story about a 52-year-old cancer survivor who needs maintenance treatments from a university hospital.  Her existing PPO plan is being cancelled and she cannot afford a new plan from the exchange.  Not only is the premium higher, but also the $12,000 deductible makes it impossible for her to afford the new plan.  Providing healthcare for her family and herself is now the major challenge in her life as she tries to figure out how to manage her life into a future that is suddenly very threatening. 

From a social programming standpoint, one can say that the healthcare of the cancer survivor is being reallocated to the poor who are now being admitted into Medicaid under the new law.  From an economic perspective, one can discuss the pools of the young insured healthy people paying for sick older people.  However these analyses breakdown because each of these people who have been critically hurt by the new law now have a face.  Each has a very personal story. 

All the Republicans have to do is put these people on television from time to time and remind us how we “reallocated” their healthcare instead of growing the healthcare resource for more of us to enjoy.  Then they will tie each of these stories to a Democratic Senator or Congressman who voted against the Shutdown and for Obamacare and the play will have come full circle.  The Democrats will say that using these people for political purposes is cynical, and to a degree they will be right.  But it is politics and the stories are personal.  They will sway the American voter.  At this moment, I would bet on the Republicans, but that bet assumes that the Republicans are smart, which, by itself, is a big assumption.

Wednesday, October 2, 2013

What the Heck is Going On?

If you are like most Americans you are probably wondering what the Republicans are doing by shutting down the Government.  I know I am.  There are a number of possible explanations. 

The most popular explanation that the media seems to offer is that the Tea Party demanded that their representatives force a shutdown on the Party.   Senators Cruz and Lee have been raising money on TV for months.  They have inflamed the base and the money has been coming in, and to complete the promise of stopping Obamacare Senator Marco Rubio joined these Senators in a Senate filibuster.  But the message has gotten away from these Senators and the Party as a whole.  They spent so much time focusing on defunding Obamacare, a goal that was impossible to achieve, that they sacrificed other goals that may have been attainable.  Had the Republicans focused the public on delaying the individual mandate for a year, or on ending the Congressional Staffer subsidy, then there might have been a victory by now.  Unfortunately, all the public knows is that the Republicans hate Obamacare.

I have a different take on these events, but to explain it requires some detail and some history.  It involves the overall budget process between the House and Senate.

When President Obama was elected the Democrats took control of both the House and the Senate.  They passed large budgets in 2009 and 2010.  They then lost control of the House of Representatives.  We have not had a formal budget in place since then.  The Government has been operating under a mechanism called a Continuing Resolution.  The technique continues funding the Government at the level of the last completed budget, which means that the Democratic budget is still the baseline budget.  The Republicans have been in control of the House for almost four years and they have not had much impact on the budget.  This is except to say that the use these CR’s has been the only opportunity for the Republicans to make their impact felt.  For the past four years the Republican House has passed budgets without the Senate passing theirs, except until this current year.  Previously the Senate did not pass a budget and has been subject to Republican ridicule.  This year the Senate did pass a budget, and they demanded a Conference Committee to resolve differences with the House budget.  The Republicans have yet to name their members. 

What does all of this mean?  The Democrats gain more by forcing the Republicans to the Conference Committee and they have more to lose if they work within a Continuing Resolution.  Democrats want to raise taxes and restore the budget cuts from the sequester cuts that were adopted in the last CR.   They cannot achieve these ends in the CR process.  Therefore, they won’t negotiate a CR in any form.   So, underneath all the shameful rhetoric is a simple game of wins and losses, and due to some Republican mismanagement, the Democrats are in control of this game.  When something like this shutdown comes along, it is good to look for the larger chess match that is going on.

Now, there are some people who deserve special mention for inflaming this situation.  The first is Senator Ted Cruz and his colleague Senator Mike Lee.  They promised their base that Obamacare could be defunded and we now know that it can’t.  In fact, many good conservatives with credentials that cannot be challenged told them so.  Just saying no does not work in this situation.  They led their base down the wrong path, and the rest of the Party is paying for it.  They played small ball and they lost. 

The next group that deserves mention is our national media.  The American public has been against Obamacare ever since it was first proposed.  A review of the average of polls on this subject shows that the American public has always been against Obamacare from anywhere from a 10 to 20 point margin.  This is a basic fact.  Our Government has forced a program on the American people that they never wanted and definitively do not want now.  Something is wrong when the will of the American people is repeatedly denied year after year.  The media is responsible because they do not report this fact.

The next person that deserves dishonorable mention is the Senate Majority Leader Harry Reid.  The Tea Party people are not anarchists and terrorists as he claims.  The Tea Party started when the Democratic controlled House members went back to their districts and found protest after protest, which they all ignored.  These protests were covered night after night on the Government’s very own C-SPAN television.  After being rebuffed as Obamacare was passed, a groundswell of people with no leadership from any party formed the Tea Party.  The result was the House was lost to the Republicans and has stayed in their control ever since.  The Tea Party is a product of Obamacare and they are a thorn in the side of Democrats.  They played by the rules in this situation, and they are not anarchists.  However, Harry Reid, who has thwarted the will of the American people year after year by forcing Obamacare on them in 2009 and defending it with procedural tactics ever since could be viewed as anti-democratic. 

Finally, some credit has to go to the President.  Now that he has the Republicans exactly where he wants them, he should weigh the continued effects of keeping the Government shut down against the political capital he gains as the shutdown continues.  I think he would find that the national interest should prevail.  It is time to throw the Republicans a bone and end this thing.  Give them a graceful way out.  President Kennedy did this with the Soviet Union Premier Khrushchev in the 1962 Cuban Missile Crisis.  But I fear that this is where President Kennedy and our current President differ. 

And people wonder why our Government is dysfunctional.   

Monday, September 2, 2013

A Distinct Photo of the President's Resolute Desk

I have to apologize to my followers for not posting anything in a long time.  I have buried myself in the study of economics and it is all I can think about lately.  However, something occurred that deserves discussion.  Therefore, I share the following with all of you.

There is a story about George W. Bush, the 43rd President of the United States of America.  Apparently he was visiting the home of his parents, George H. W. Bush, the 41st President, and Barbara Bush, when he put his feet on the furniture.  Of course, Barbara Bush called him on it by saying “George, get your feet off the furniture” to which George H. W. remarked, “You can’t talk to him that way.  He is the President of the United States”, at which Barbara replied “George knows better.” 

Barbara Bush’s influence with Presidents extends to Bill Clinton, the 42nd President.  He is quoted as saying that Barbara calls him son and that he has become the “black” sheep of the family.  Well, I wonder what Barbara would say about this.

There is a photo of the 44th President of the United States with his foot on the desk.  Actually, there are photos of many Presidents with their feet on Presidential desks.  There is one of George W. that Barbara may or may not have seen.  There is one of Barack Obama from his first term, and one of Gerald Ford, both of which I have seen.  However, there is a photo of the current President with his foot on the desk that is characteristically different from all others.

In each of the other Presidential feet on desk photos the back of the foot is actually touching the desk.  The back is sometimes covered by material from the trousers.  So, the inference is that no damage came to the desk itself.  The same cannot be said of the photo above.  Please note how the soul of the foot, the same soul that comes into contact with the ground and picks bits of stone and gravel, namely, things that are know to scratch furniture, is touching the top of the desk.  The photo also shows off the President’s flexibility and athleticism, which is quite good for a man of 52.  I have been doing yoga for years and I can’t do that.  

There is a great history of Presidential desks.  There are six of them in all.  The desk used by our current President and his two predecessors is known as the Resolute Desk due to the fact that it was created from wood salvaged from the HMS Resolute and given to President Rutherford B. Hayes by Queen Victoria in 1879.  President Franklin D. Roosevelt modified it by having a front panel installed to hide his leg braces.  After FDR, the desk languished in storage until Jacqueline Kennedy found it and had it restored and put in the Oval Office.  There is a heartwarming photo of John Jr. peaking out of the FDR panel as JFK was smiling down on him from his work above. 

And now we have a photo with the current President in a position that could potentially damage that desk.  All I can say is, President Obama, you need a mother.  Perhaps you can ask Bill if Barbara is available.

Thursday, February 21, 2013

President Obama and the Minimum Wage

Economic policy is not made only by economists.  It is made by a lot of people, many who lack economic knowledge and credentials.  Politicians often make economic policy, and despite their immense resources to get the best economic advice, they often make bad economic policy.  The rest of us make economic policy everyday as we buy and save, and when we buy, what we buy, and when we save, how we save.

For background, there are two basic types of governmental economic policy, namely fiscal and monetary.  Fiscal deals with the size of government, the size of the deficit, tax policy, transfer payments, and all sorts of minutia that deal with governmental programs and purchases that are usually wrapped up in governmental budgets.  Monetary policy deals with interest rates, bank reserves, governmental bonds and assets, and similar things. 

Our politicians deal with fiscal policy, and the Federal Reserve deals with monetary policy.  The Chairman, Presidents and the Governors of the Federal Reserve are supposed to be knowledgeable in economics.  The politicians? …. Not so much. 

One of the areas where our chief politician wants us to support him in revising economic policy is on the subject of minimum wage.  President Obama gave the State of the Union address, and in it he wanted the Congress to adopt policies that would lower unemployment and bring more manufacturing to the United States.  And then the President asked the Congress to raise the minimum wage.  

The problem is that in real life there are policy trade-offs and if we want to raise the minimum wage, we will have to compromise our goals of decreasing unemployment and expanding manufacturing.  Mike Konczal explained the relationshipwell.  When the minimum wage goes up, the costs of production goes up as well, which the entrepreneur will want to control by lowering overall employment.  So, unemployment will go up, not down, and manufacturing will not expand, at least not at the pace the President wants.  This is the equivalent in physics of, where, if I jump up, I expect to stay up without coming down.

Raising the minimum wage would have some negative effects on our economy that I do not think we want to experience.  It would encourage an increase in offshore manufacturing, and the President spent a lot of time in the State of the Union asking for policies that would repatriate manufacturing jobs to our shores.  It would hamper effects to decrease youth unemployment, notably black youth unemployment that is pegged at 37%.    It would also hamper efforts to increase hiring among recent college graduates who need more internships and entry-level job opportunities.

The President wants an intelligent jobs debate, but to suggest that trade-offs are not in the mix and that we can have all things economic is misleading.  

In all fairness, there is a blog entry in this series criticizing those on the right who advocate privatizing Social Security without adding to the nation’s debt.  Efforts to misrepresent economic thinking exist on both the left and the right.  Except in this case, it is the President of the United States who is supposed to educate us all and lift the quality of the debate by sticking to real economic possibilities.