May 2012

All you have to do is read British publications to see what the mess otherwise called the National Health Service.  Yet the NHS is a sacred cow on right and left.  The Institute of Economic Affairs has just published a new monograph which gives a flavor of the NHS’s many problems:

Politicians will go to any lengths to persuade the voting public that the National Health Service is safe in their hands. Alternative policy models cannot be placed before the electorate unless political parties take huge risks. Yet, at the same time, we see even a Labour government drawing private finance into the health service and giving patients rights to use the private sector.

This groundbreaking new study shows that, although politicians do not feel confident in proposing radical new models of healthcare, elite opinion in the media, in political circles, in academia and in policy think tanks has fallen out of love with the idea of a centrally planned health service provided and financed by government.

Elite opinion does not, as yet, warm to a free market in healthcare. Although aspects of a market-based system are accepted, ideas of ‘market failure’ loom large – especially amongst the political class. Nevertheless, the author shows how some groups of opinion formers are prepared to be more radical. These groups, she believes, may in time be effective in promoting a vision of a market in healthcare that is free from government interference and from the stifling power of government-granted professional monopolies.

Americans who believe that socializing health care is the wave of the future might want to have a read.

American politicians are busy talking about how to socialize the U.S. health care system.  But in Canada the father of the nationalized system is prepared to kill his child. 

David Gratzer writes in Investor’s Business Daily:

Back in the 1960s, Castonguay chaired a Canadian government committee studying health reform and recommended that his home province of Quebec — then the largest and most affluent in the country — adopt government-administered health care, covering all citizens through tax levies.

The government followed his advice, leading to his modern-day moniker: “the father of Quebec medicare.” Even this title seems modest; Castonguay’s work triggered a domino effect across the country, until eventually his ideas were implemented from coast to coast.

Four decades later, as the chairman of a government committee reviewing Quebec health care this year, Castonguay concluded that the system is in “crisis.”

“We thought we could resolve the system’s problems by rationing services or injecting massive amounts of new money into it,” says Castonguay. But now he prescribes a radical overhaul: “We are proposing to give a greater role to the private sector so that people can exercise freedom of choice.”

Castonguay advocates contracting out services to the private sector, going so far as suggesting that public hospitals rent space during off-hours to entrepreneurial doctors. He supports co-pays for patients who want to see physicians. Castonguay, the man who championed public health insurance in Canada, now urges for the legalization of private health insurance.

In America, these ideas may not sound shocking. But in Canada, where the private sector has been shunned for decades, these are extraordinary views, especially coming from Castonguay. It’s as if John Maynard Keynes, resting on his British death bed in 1946, had declared that his faith in government interventionism was misplaced.

What would drive a man like Castonguay to reconsider his long-held beliefs? Try a health care system so overburdened that hundreds of thousands in need of medical attention wait for care, any care; a system where people in towns like Norwalk, Ontario, participate in lotteries to win appointments with the local family doctor.

Americans might want to look before they leap into such a system!

Today, Bill Gates left Microsoft. As Cord Blomquist pointed out, Bill Gates has created more value for the world in his time at Microsoft than Mother Theresa:

Like it or not, it was Windows that provided the platform for much of the information revolution, which subsequently created a worldwide economic boom. We shouldn’t relegate this accomplishment to a mere footnote in Mr. Gates’ biography and it’s certainly worth considering the moral implications of that sort of wealth creation.

Donating his time and money to philanthropy is excellent as well, but let’s not ignore Gates’ less-charitable contributions to the world.

Richard “Dickie” Scruggs, the crooked trial lawyer who helped orchestrate multibillion dollar settlements between the States and the big tobacco companies, was sentenced today to five years in prison for conspiring to bribe a judge, plus a $250,000 fine.  We earlier discussed how consumers got ripped off by those settlements, how corrupt trial lawyers like Scruggs collectively received more than $15 billion (not million, billion) for helping to rip-off the public, and how states are misusing the money they collected under the settlements.

Airplanes emit greenhouse gases, so airlines–and ultimately passengers–are about to pay for the privilege of flight.

Reports the New York Times:

The European Union reached a landmark agreement Thursday to cap emissions from aircraft, raising the stakes in an increasingly ferocious battle with the United States over how to regulate global greenhouse gases.

In the first requirement of its kind, all airlines arriving or leaving from airports in the European Union would be required to buy pollution credits beginning in 2012, joining other industrial polluters that trade in the European emissions market. That includes non-European carriers like American Airlines and Singapore Airlines.

Including airlines in the system is the boldest move yet by Europe to stamp its environmental policies on the rest of the world.

For consumers, such rules could mean further fare increases in the wake of a steady rise in fuel surcharges imposed by airlines — a trend that looks set to continue.

“At the end of the day it’s the people who fly” who will pay more under the new system, warned Anthony Concil, a spokesman for the International Air Transport Association, the industry’s biggest lobbying group.

American officials warned that the requirements probably would be illegal under the convention governing international civil aviation.

“The mandatory application of the European Emissions Trading System to U.S. airlines and airlines of other non-European countries is, we think, both contrary to international law and ultimately unworkable,” said Robert Gianfranceschi, a spokesman at the United States Mission to the European Union in Brussels.

Although such taxes might be sold as for the public good, the burden inevitably falls on those of least means.  And government–politicians, bureaucrats, and lobbyists alike–are the big winners, milking the system for as much money and power as possible.

Ars reports that the Robert Wood Johnson Foundation is giving out grants as part of its new Games for Health program. Performing modern electronic surgery is often much playing a video game. And video games are taking off as fitness tools. Wii Fit was the #3 video game sold in the US last month, plus it sold over a million units in Japan in its first month there.

Just goes to show that video games won’t turn everyone into couch potatoes after all.

I had the pleasure of seeing distinguished trade economist Jagdish Bhagwati speak yesterday. He is promoting his new book, Termites in the Trading System: How Preferential Agreements Undermine Free Trade. Bhagwati’s insights are well worth sharing.

He attacked the current wave of bilateral Free Trade Agreements… on the grounds that they hurt free trade. Bhagwati, always a stickler for precision of language, thinks these FTAs are better called PTAs, or Preferential Trade Agreements. By only including a few countries, they are discriminatory by their very nature. True free trade does not discriminate.

The agreements are also too complicated. They contain provisions that have nothing to do with trade, such as labor and environmental standards. Trade-unrelated provisions can slow economic growth, and can intrude on nations’ sovereign right to make their own laws. They also turn international trade law into a complex thicket that is all but impossible to navigate; simplicity is beautiful.

Bhagwati’s preferred approach is to revive the Doha round, and to institute much broader, less discriminatory agreements like the Free Trade Area of the Americas (FTAA).

He also had a few things to say about the presidential candidates’ trade positions. In short, neither gets it. McCain is solidly pro-trade, but confused. He thinks PTAs are the same thing as free trade. Obama is harder to read. His heart seems to be in the right place, but he appears to have been captured by his party’s labor and environmental interests. Obama has to appeal to his base, so he says things he shouldn’t.

Bhagwati’s approach to trade is simple, principled, and refreshing. But I fear that he is letting the perfect be the enemy of the good. The Doha round is all but dead, despite a few recent stirrings. The FTAA is less than likely in the current political climate. PTAs are certainly not ideal, but they’re all we have right now. Some progress is better than none.