Alex Harris

The Great Health Care Reform Trilemma

by Alex Harris on August 21, 2009

in Healthcare

I recently posted on facebook about health care reform and trying to “have it all.” I’m no expert, but it seems to me that you can have two of the following three things:

1. Increased benefits

2. Reduced costs

3. More government involvement

The one you don’t pick will have to go way in the opposite direction.

So, if you want to get the government more involved and increase benefits, costs will necessarily skyrocket. Didn’t we learn this with Medicare Part D? Any arguments about providing more entitlements somehow reducing the total amount of entitlements just don’t work. Insurance produces moral hazard. People overconsume goods they get for free on the margin. That’s Econ 101. The Democrats may have realized this and so proposed various cost-cutting measures, like panels to determine who gets care and who doesn’t.

A bunch of nutters on the right got all up in arms about the panels. Why? Because they would reduce benefits. Of course if you want government-run health care, you’ll have to ration. But, my god, isn’t this better than government-run health care that doesn’t ration? Government entitlement programs have unfunded liabilities of $107 trillion, an order of manitude above what we weakly label the “national debt” and above GDP. Most of that is from Medicare. When we added another government health program, prescription drug coverage for Medicare, this figure rose by $16 trillion, greater than both debt and GDP. And you want to add on more government health care without any rationing to control cost? Seriously?

So, the “death panel” mongerers want #1 at any cost, though it sounds like some may (slightly) prefer #1 and #2. And the Dems want #3 at any cost, though it sounds like some may (slightly) prefer #3 and #2. So, what will we get? #1 and #3. Again. Which means costs will skyrocket. Again.

Of course, it would be best if we just got #1 and #2, by getting the goverment out of health care. But that’s not going to happen. Instead, we basically face the choice between government-run health care that rations and government-run health care that doesn’t and so utterly destroys the nation’s economy. Which would we rather have? This is the choice that’s lost in the “death panels” rhetoric. Nat Hentoff apparently would rather have no rationing and exploding costs. Marty Feldstein doesn’t face this question squarely, instead hoping for #1 and #2. Which should libertarians prefer: a limited new government package that provides minimal care (e.g. with high deductibles) or a big luxury package that provides everything? I would think we should prefer the minimal package (so long, of course, as private health care isn’t outlawed and so people can still get additional care elsewhere).

So, yes, let’s keep pointing out the trilemma. But, if our only options are government-run health care with “death panels” and without them, I’ll take the one with the death panels.

Did the Supreme Court “Botch” Wyeth v. Levine?

by Alex Harris on March 5, 2009 · 1 comment

in Healthcare, Legal, Precaution & Risk, Regulation

I was initially going to post this as a comment to Greg Conko’s recent post arguing against the Court’s recent decision in Wyeth v. Levine, but the comment system didn’t work correctly for me.

I appreciate the force of Greg’s argument (and I certainly agree that this particular case should have been decided much earlier on different grounds), but I think there is room for reasonable disagreement within the libertarian community about whether FDA preempting state tort law is good or bad. This is one of these questions about what to do in the real world, where first-best solutions just aren’t politically possible.

Most libertarians would likely agree that there should be only one system to deal with injuries caused by products, including drugs: the tort system. The tort system only operates once there has been an actual injury, not just some scared politician’s prediction of a harm. And it doesn’t ban anything; it just forces manufacturers to internalize the external costs of the injuries their products cause. If the benefits of the product outweigh the total (social) costs, the product will keep being made. This is the optimal outcome. And, further, the injured consumers will not simply be ignored; they get compensated for their harms, restored to a position as good as they’d be in had they not been harmed.

Unfortunately, however, we don’t just have the tort system. We also have the FDA and other prospective regulatory agencies that pass judgment on products before they hit the market, banning some and restricting how others can be marketed and sold. If the FDA isn’t going away, what should we do?

Greg’s answer is essentially the one I gave in the context of internet regulations: “multiple levels of regulation [are] always worse than… only one.” There is a difference between multiple levels of regulation and a tort system plus a regulatory system, though. If the FDA gets lots of stuff wrong, but the tort system functions ideally (a big, and admittedly untrue, assumption), then the FDA should not be able to preempt the tort system. If the FDA allows a drug that nonetheless causes injuries, the tort system has not failed or “overregulated” if it correctly assesses and assigns damages. It has internalized costs that would otherwise be external.

If the Court had found preemption, however, then there would be calls for the FDA to regulate even more heavily, banning every drug that might cause any problem. The tort system currently functions as a safety net. Remove it and politicans and voters will demand more stringent protection from the system left – the regulatory one.

However, finding no preemption emphasizes the point that the FDA is not infalible and that the tort system does a better job, at least sometimes. Unfortunately, it only does this in one direction, and does nothing to expose the much more common and deadly – but largely invisible – type I error. Still, I think though the tort system may get some stuff wrong and incorrectly over-compensate, this risk is more acceptable than the risk of further entrenched and onerous FDA regulation.

More on Environmental Policies and Protectionism

by Alex Harris on February 24, 2009

in Environment, Global Warming, Trade

Marlo made three interesting arguments yesterday contending that cap-and-trade would generate protectionist outcomes. I want to add another, pervasive, yet oft-neglected reason.

Environmental regulation spurs the businesses who feel cheated to lobby for other forms of protectionism for their industries. This is a very different mechanism from Marlo’s identification of particular measures with protectionist policies. It doesn’t matter what the content of the regulation is; as long as businesses perceive it as hurting them, they will lobby for and get protectionist measures to help them in other ways. Just think what the auto industry would do if Congress tried to increase CAFE significantly or require drivers or manufacturers to buy carbon credits; they’d probably log-roll and get tarriffs against foreign manufacturers as part of the package deal. Something for you, something for me, less for the consumer.

There is good empirical support for this proposition. Western Washington University economist Steven Globerman made the argument back in 1999, hidden within a broader book arguing that trade is actually good for the environment.

Globerman noted that “lobby groups will use environmental issues to extract protection against imports.” And they will generally win. “Governments in high enforcement countries can and will invoke trade remedy laws, particularly countervailing duties, against exporters in weak enforcement 

countries.” The log-rolling takes place internationally as well. If we give into the EU’s demand to join a climate regime, we may be able to get acquiesence in our new protectionist measures.

We don’t want “significantly higher risks of trade wars tied to escalating retaliation for specific environmental practices.” As economist and MP Michael Spicer put it in his 1996 book The Challenge from the East and the Rebirth of the West, “if the stability of the world is to be assured it must be through the spread of free trade.”

More Libertarian Lolcats!

by Alex Harris on February 14, 2009 · 2 comments

in Bureaucrash

Bureaucrash just posted a new round of libertarian lolcats to the networking site, Bureaucrash Social. Many are topical. Many are hilarious. Some (such as this one, I think) are both. Check them out and let us know what you think!

The “Stimulus” and the Broken Window Fallacy

by Alex Harris on February 13, 2009

in Stimulus to Nowhere

It’s been a while since I posted here, but I thought OpenMarket readers may want to check out a piece I have up on TechLiberation that has generated a lot of heated discussion. I there argue that “2008 was the year of Schumpeter” and 2009 is looking like it will be the year of Bastiat/Hazlitt, because it is the year that we all give in to the broken window fallacy and come to believe that we can improve the economy by going around and smashing windows… or taking money from taxpayers and wasting it. For a more detailed review of broken windows and the modern Keynesian state, look here.

Philosopher’s Corner: The Principle of Intervening Action

by Alex Harris on August 15, 2008 · 1 comment

I promised, and I shall deliver. As it’s my last day as an intern at CEI, this is my last Philosopher’s Corner post, and it covers a very important question: What actions am I responsible for? If I cause someone else to act, am I responsible for what they do as a result? This question implicates not only whole swaths of tort law, but also such issues as safe harbor for websites from copyright infringement or other law-breaking by their users.

Luckily, Alan Gewirth (the famous political philosopher with whom Cato’s Roger Pilon worked on his dissertation) has proposed a moral standard, which he calls the “principle of intervening action” (POI) that responds to this problem. (For the full text of Gewirth’s argument, check out pages 229-230 in his book, Human Rights: Essays on the Justification and Applications.) As I explained in my thesis (email me for a copy): [click to continue…]

Liters Illegal in the UK (Litres, Too)

by Alex Harris on August 15, 2008 · 1 comment

Who doesnt love a good half-liter?

Who doesn't love a good half-litre?

Over at the self-proclaimed “irreverant blog for food outlaws” Crispy on the Outside (which our own Richard Morrison dubs “one of the finest libertarian food blogs I’ve ever seen”), Baylen Linnekin reports on pub owners being fined £2,000 for serving metric quantities of beer. The owners established a bar catering to the Polish community, who use the metric system. So, they served half-liters (roughly equivalent to a pint) and three-tenths-liters of beer to their customers, none of whom complained. The British government cracked down on this use of metric measurements.

Ironically, Britain had earlier fined a stall owner for selling produce by the pound instead of using metric. That stall owner had been catering to an African-Caribbean community that was used to the English measurements.

Proprietors should be free to list their offerings in whatever standard they choose. Britain should allow for a greater diversity of shops, with niche clientele, by eliminating restrictions on how people can measure things.

FEC: You Can Blog About Candidates

by Alex Harris on August 15, 2008

The Federal Election Commission has held that bloggers are covered by the same rules as journalists, permitting them to write about candidates without their actions counting as campaign contributions. Today, the FEC extended that precedent, concluding that even if bloggers coordinate with campaigns, they are nonetheless exempted from campaign contribution requirements. A rare victory for free speech online!

Your Cable Company Also Rents You a Cable Box? Sue ‘Em!

by Alex Harris on August 15, 2008 · 1 comment

in Economy, Tech & Telecom

what TimeWarner offersTime Warner Cable is getting slapped with an anti-tying lawsuit. The plaintiff claims that by renting him a cable box, the company engaged in unfair trade practices. He acknowledges that he could have instead rented a CableCARD and used his own cable box, but claims it was too difficult.

But tying arrangements are good for consumers. They allow cable companies to offer packages that customers want (after all, if I’m buying cable service, I probably want a box too) at lower prices than they’d be able to provide a la carte. That’s because bundling provides revenue predictability. It’s the same reason you can get combination platters at restaurants for less than each a la carte item added together – and the same reason a dozen eggs costs less than two half-dozens.

Now, I will admit that perhaps the same analysis does not apply wholesale to cable companies, who are often government-granted monopolies. But the correct solution to this problem is not more regulation, but rather to eliminate the anti-competitive franchise system.

For more details, stay tuned to TLF for Ryan Radia‘s upcoming post on the subject.

UK to Mandate Data Retention of… Everything

by Alex Harris on August 15, 2008 · 1 comment

Your new computer, phone, and TV!

The British government has not been known for its high level of respect for privacy. But this truly surprised me. Vnunet reports:

The Home office has issued a consultation paper for a new law that would force phone companies, ISPs and network operators to record and store every phone call, web page request and text message.

The information would have to be stored for 12 months by service providers and would be searchable by a wide variety of organisations, including local councils, health authorities, and even Ofsted and the Post Office.

Every website I visit, every email I send, every phone call I make, every text I send… that’s pretty much everything about me. Where to begin? The security problems are obvious. Not only will the massive database with all information collected in the past year about everyone become the greatest target for hackers ever forged; hacking is not even needed to get in. Just find a friend who works at the Post Office! Anonymity will become impossible. Private feuds or flings will become public. Dissenting speech will be chilled.

At least the proposal only applies to one’s electronic communications. In-person conversations on the street are still safe… oh wait, they’re not.

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