The deficit isn’t large enough

ESM Reply:
October 24th, 2011 at 8:37 am

@Jon Hooper,

“You realize the litigation system in this country is a profit centre for lawyers nothing more.”

I agree it has become a make-work business for litigators at any rate. I have some experience with civil litigation in federal court, and it has been ridiculously frustrating to say the least. In my opinion, it is the fault of the judges (unfortunately, appointed for life), who realize that if they work harder, faster, and more efficiently, they will just be given more work. So they slow things down and let litigators delay. The mindset is I suppose that if the experience is made as unpleasant as possible for the clients, then they’ll think twice about asking courts for redress in the future.

It’s a lot like the DMV – government in(action).

That being said, if there is an urgent issue (and I think a human being who needs a life-saving treatment qualifies), courts can move quite fast. I’ve seen a judge rule in less than 90 minutes (from the time an urgent letter request was emailed to his office) on something he had been sitting on for over 4 months.

A judge is pretty much omnipotent inside his own courtroom. When he decides to end the lawyerly BS, the BS stops immediately.

Tom Hickey Reply:
October 21st, 2011 at 10:34 am

@ESM,

ESM, he is talking about controlling spiraling health care costs, which I believe you hold are driven by the monopolist. IF the monopolist bids less, then the prices come down. He agrees with this approach, along with amping up policing of “waste, fraud and abuse,” which are conservative mantras.

ESM Reply:
October 21st, 2011 at 11:24 am

@ESM,

@Tom:

You know as well as I that this would be government price-fixing. If it works so well with health care, why can’t we do it with other sectors of the economy?

The reason of course is that when the government fixes a price, supply and demand become untethered from consumer desires and economic costs. If the government sets prices lower for a service, then there will be more demand for that service and less supply.

It’s not high health care costs that are the problem, per se. The problem is that consumers and suppliers are not meeting together in the marketplace directly to establish prices which allocate resources optimally. The fact that this has caused prices to rise fast is merely a consequence of the fact that it is the consumers which are insulated from price, rather than the suppliers.

Single payer health care would perhaps lower prices, but only at the expense of removing market-based feedback (and incentives) for suppliers. Inevitably, this will result in less supply, and the non-optimal allocation of resources would remain a big problem.

WARREN MOSLER Reply:
October 21st, 2011 at 12:01 pm

first, that applies to all govt purchases, labor included.

second, single payer reduces real costs that currently have a nominal cost of probably $1T annually.

third, i like my health care proposal better…

Tom Hickey Reply:
October 21st, 2011 at 11:44 am

@ESM,

Depends on whether one thinks of health care as a consumer good or a public utility. It’s already recognized as public utility in many ways. The idea that banking, healthcare, education, etc. are consumer goods is a conservative norm, not an economic principle, whatever that is. This is a political question.

Presently, there is a push by one political faction to privatize areas that the opposing faction associates with the commons. The kerfuffle is over where to draw the line between public and private.

The former argues for economic efficiency, while the latter argues for effectiveness wrt public purpose.

WARREN MOSLER Reply:
October 21st, 2011 at 12:03 pm

though presumably efficiency can serve public purpose as well…

Peter D Reply:
October 21st, 2011 at 12:01 pm

@ESM,

The question is whether a market place with low enough friction is possible in healthcare. Maybe, I am not sure.
But, besides that, if we think healthcare is a right, then the poor will still be priced out of good healthcare. We can tolerate when they get priced out of better housing and consumer goods, but are we OK as a society with a large chunk of population that receives either sub-par or no healthcare? In which case some sort of public healthcare becomes a necessity and with it the free frictionless market goes out the window. Yes, the resources might not be allocated the most efficiently in some sense, but that the price the society would pay for ensuring adequate access to healthcare for all.

Tom Hickey Reply:
October 21st, 2011 at 12:44 pm

@Warren,

“though presumably efficiency can serve public purpose as well…”

In The Effective Executive, Peter F. Drucker makes the basic point that effectiveness is doing the right thing, and efficiency is doing things right. He emphasizes that effectiveness is the top priority of leadership, not efficiency. Efficiency follows effectiveness. Too many leaders get absorbed in efficiency to the detriment of effectiveness and they fail. Other leaders are focused on effectiveness and they succeed, even if they aren’t always most efficient.

Drucker’s basic message to leadership is first focus on doing the right things and then on doing them better.

Drucker, then Deming.

Robert Kelly Reply:
October 21st, 2011 at 12:46 pm

@ESM,
I agree with ESM.
Health Care is tricky because single payer will increase demand greatly. Visit any city ER and witness what happens when a third party is paying the bill. Warren’s plan is good in that it keeps the incentives in the right place. Just “expensive” politically. The nightmare would be bureaucrats making medical decisions.
If insurance could actually be insurance (without all the various mandated coverage), we should be able to work something out without worrying about “death panels”.

ESM Reply:
October 21st, 2011 at 12:51 pm

@ESM,

@Warren:

“first, that applies to all govt purchases, labor included.”

No it doesn’t. It is possible for the government to pay market prices for goods and services (difficult perhaps, but certainly possible). And to the extent that the government fixes the price of the dollar to something (say, 6 minutes of unskilled labor under an ELR), it still doesn’t need to fix relative prices of goods and services.

“second, single payer reduces real costs that currently have a nominal cost of probably $1T annually.”

If you’re talking about administrative costs, they’re nowhere near that high, and in any case, administrative costs are the price we pay for competition. We could save administrative costs by merging Apple, Google, and Microsoft together too, but somehow I don’t think you would like that idea.

Also, I’m not proposing to keep the crazy system we have now. I don’t even claim that it is better than single-payer. I only claim that single-payer is not solving the fundamental problem, which is the lack of a free market in health care.

@Peter:

Health care is just too complicated and all-encompassing to establish as a right. Perhaps some small subset of health care could be. I think almost everybody in our society would agree that a person bleeding to death in the street should be saved regardless of his ability to pay for a tourniquet, stitches and the services of surgeon. But how about a person who (feels he) needs to see a psychiatrist or a chiropractor? Or somebody who needs physical therapy or medicine for acne? Or a terminally ill patient who wants to extend his life another month or two? This is 7-8% of GDP for even economies with socialized medicine, remember.

Also, it should be recognized that a right to healthcare is a positive right in the sense that it creates obligations on other people, necessarily infringing on their negative rights. If I have a right to have my bed pan emptied, then it means somebody else has to empty that bed pan, or at least pay somebody else to do it.

Negative rights are more fundamental (in my book) and easier to understand and protect. They’re also more in tune with the Constitution.

WARREN MOSLER Reply:
October 21st, 2011 at 3:30 pm

some 650 billion goes to insurance and other admin functions, and at least half that is spent by doctors dealing with insurance and other admin that would be eliminated with my plan, plus my plan probably doubles available doctor/patient time.

also,
health care can never be a ‘fair game’ re game theory, when a sick person absolutely needs attention and the provider only has to provide if he likes his return on equity.

and it’s hard for govt purchases to be at market when ‘market’ assumes both sides are price sensitive, etc.

Tom Hickey Reply:
October 21st, 2011 at 12:59 pm

@ESM,

In matters like education and health care the goal should not be to lower demand to lower prices if we are considering public purpose. Most people do have any great incentive to overuse either. IMHO, they should be encouraged to use a whole lot more than they are now, and with institutional redesign that would easily be possible in a more efficient way that either is now being delivered.

What I object to also is the monetization of what are essentially public goods. What we are seeing is huge rent extraction in the areas of health care and education, which is leading a huge number of people into debt peonage and also excluding a lot of people from what should be public services.

This would be good not only for the people involved but it would also strengthen society. It’s a win-win, and MMT shows that it is completely affordable as long as the real resources are available. With better institutional design, many resource issues could be reduced or eliminated.

The outcome would be a healthier, better educated, smarter and more productive society, which would contribute not only economically, but also politically and socially.

Peter D Reply:
October 21st, 2011 at 1:08 pm

@ESM,

ESM, then we can agree on single payer for basic health care – which would be still more than just not letting a bleeding man die, but not include the more advanced and expensive, “luxury” procedures – and then let the market provide the more expensive healthcare? How about that?

Mario Reply:
October 21st, 2011 at 1:15 pm

@ESM,

except people don’t “consume” health care services. They either NEED them or they don’t. Minus a logical annual or semi-annual check-up there isn’t any real potential increase in consumption. Therefore supply and “demand” don’t really exist. The level of demand for health care services is really based on the weighted average health of the population multiplied by the the size of that population. There’s not going to be much variance beyond that figure. There could be a tendency for the SUPPLIERS to create waves and bubbles and fads in health care services….(did you know how important your B levels are?!?! Get yours checked today!!….and everyone rushes to their doctor thereby stimulating more demand). However you can easily handle such bubble-creations by simply allocated a reasonable 1-3 fully paid for regular check-ups + subsidize all “normal and necessary” operations to keep a human citizen healthy and functioning (broken limb surgeries, organ issues, chronic disorders, etc.). Anything outside of the realm of “normal and necessary” can come out of the people’s pocket…like the lap band. This isn’t rocket science. Most things are not as complex and we humans sometimes like to make them.

ESM Reply:
October 21st, 2011 at 1:28 pm

@ESM,

@Peter:

I’m not against the government being involved in providing certain basic services. Certainly ones which are important for public health like vaccinations. As a rule, though, I prefer the government solve the problem of poverty by giving poor people money and letting them make their own consumption decisions, including decisions about how much health care to buy.

To a large extent, we already have guaranteed basic health care via the emergency room, since they can’t turn you down, and they can’t really collect any bills. I think the emergency room experience is a perfect example of what single payer health care will be like.

@Mario:

I disagree that health care is any more a necessity, or in any way more free from the law of supply and demand, than food, shelter, transportation, energy, or, frankly, an iPhone.

WARREN MOSLER Reply:
October 21st, 2011 at 3:34 pm

i prefer sustaining aggregate demand to the point where people can get good paying jobs rather than having the govt give them anything.

for me, welfare is not for the ‘able bodied’ but neither is unemployment

Peter D Reply:
October 21st, 2011 at 1:51 pm

@ESM,

>>I prefer the government solve the problem of poverty by giving poor people money and letting them make their own consumption decisions, including decisions about how much health care to buy.

But we know that a lot of people will not be wise or responsible enough to acquire coverage and the health of the society will suffer as a result. Basically, the solution is either to allow freeloaders or force a minimum mandate (which would probably translate to the same in the end).

>>To a large extent, we already have guaranteed basic health care via the emergency room, since they can’t turn you down, and they can’t really collect any bills. I think the emergency room experience is a perfect example of what single payer health care will be like.

I don’t think emergency room is enough. There are basic procedures that can increase overall health but would not qualify for emergency room. There are a ton of stories of people with no or bad coverage not going to the emergency room till its too late. In the end it costs society more, not less, in both nominal and real terms.

But, I think we are converging on a system that mandates a certain minimal level of healthcare (or, alternatively, allows freeloaders access to such a healthcare) and everything else in excess of that is supplied by the conventional insurance marketplace.

Tom Hickey Reply:
October 21st, 2011 at 2:07 pm

@ESM,

“As a rule, though, I prefer the government solve the problem of poverty by giving poor people money and letting them make their own consumption decisions, including decisions about how much health care to buy.”

Completely disagree. Downscale people aren’t the sharpest in the world, and giving them money for health care, unless it were a voucher, almost guarantees that the $ would go to something that degrade their health. I don’t think it is possible to trust a lot of people to make good decisions for themselves and their families, since they are just not equipped to do so.

They could be made better equipped by improving the educational institutional arrangements, but there are generations already beyond that possibility. Yes, a nanny state approach is needed in some instances, as much as I would like to see otherwise. But we haven’t prepared for it yet.

The ideal of education should be to produce self-sufficient, creative, knowledgeable and resourceful individuals who know how to improve their situation and that of society by increasing the adaptability rate through coordination and exploring options. Then they should be given access to an information rich environment and the necessary tools. That is only possible of key institutions like are redesigned to accomodate this.

Bucky Fuller laid all this out decades ago, using Bell Labs as a model. His contention was that provided with this kind of environment, one person in a thousand would be all it would take to produce the innovation that would make doing more with less possible on a grand scale, thereby improving productivity and use of real resources. (See Ray Kurzweil’s “Law of Accelerating Returns”)

Neil Wilson Reply:
October 21st, 2011 at 2:40 pm

And yet the evidence of Canada and even the UK shows that you can do public health care very well at high effectiveness.

‘Buying things is better’ is a religious belief. It ain’t always so.

There’s more argument for purchasing in education than healthcare. Sick people are not good consumers.

Mario Reply:
October 21st, 2011 at 2:49 pm

@ESM,

I disagree that health care is any more a necessity, or in any way more free from the law of supply and demand, than food, shelter, transportation, energy, or, frankly, an iPhone.

and I “disagree” with MMT that federal deficits aren’t a problem. That was so easy wasn’t it!!! Weeee!!!! Let’s play the “yes/no” game!!! Weeeeee!!!

Mario Reply:
October 21st, 2011 at 2:59 pm

@ESM,

@Neil

And yet the evidence of Canada and even the UK shows that you can do public health care very well at high effectiveness.

and don’t forget Australia too. I know from FIRST HAND experience. My wife is a cancer destroyer (PRAISE GOD!!!) and all of our services have been handled in AU by literally some of the best oncologists in the world, all at a very, very low cost, and very speedy process. ESM I’m sorry man but your obstinate refusal to look at the REALITY of these things is more than irritating and annoying…it’s personal and more than pisses me off to no end. I’d be less of a man if I said what I really think about the way you so stubbornly stick to your illogical and senseless “ideas” about health care. Grrrrrr!!!!!

Even if you INCLUDE the costs we have incurred flying my wife RT half way around the world to get her services in AU, it’s STILL a bargain compared to the US bullshit system. Fuck this shit and stop arguing against reality. It works. It WORKS!!! And I can’t tell you how much I THANK GOD that there are nations and societies that realize this stuff works and plan accordingly. THANK YOU GOD for saving my wife’s life with the aid and assistance of the AU health care system.

I hate when people are so perverse to put “theories” before real life flesh and blood let alone functional logic, reality, and truth.

Note: I am livid right now but still maintaining proper decorum as best as I can. Thank you all.

Tom Hickey Reply:
October 21st, 2011 at 3:48 pm

@ESM,

“I disagree that health care is any more a necessity, or in any way more free from the law of supply and demand, than food, shelter, transportation, energy, or, frankly, an iPhone.”

In line with conservative denial of the existence of public goods. That is a fundamental disagrement with liberals.

So what about the commons, public purpose, the general welfare, and public utility. Out too?

Greg Reply:
October 21st, 2011 at 4:43 pm

@ESM,

I have to chime in here on the ER claim cuz I hear it ALL the time. It is categorically untrue that people cant be turned away from an ER. It happens every day in lots of places. We treated someone in our hospital with a head injury that was helicoptered past four hospitals with neurosurgeons on call. They were injured 80 miles from us in the south metro Atlanta
area and ended up in our OR.

That is a myth that needs to die a fast death.

Senexx Reply:
October 21st, 2011 at 9:04 pm

@ESM, I like Mosler’s healthcare plan, it is appropriate for the US politics though it would be so much easier to just pinch Australia’s Medicare levy and surcharge system on income but I just can’t see that flying in US politics.

Just like I can’t see the STV (preferential voting) flying in the US even though it would be much more representative of the US public.

ESM Reply:
October 21st, 2011 at 9:14 pm

@ESM,

@Tom:

“So what about the commons, public purpose, the general welfare, and public utility. Out too?”

Tom, even the most extreme libertarians believe that the military should be a public utility. Certainly, no individual has a need for a cruise missile or a nuclear aircraft carrier, but they’re pretty useful at the national level. I consider myself a pretty moderate liberatarian, but I can’t see why a sector of the economy that is as large, as diverse and as individualized as health care needs to be controlled by the government. Course, I don’t think water or electricity should be either, so maybe I really am out of the mainstream.

ESM Reply:
October 21st, 2011 at 9:21 pm

@ESM,

@Senexx:

“I like Mosler’s healthcare plan…”

I agree. The catastrophic insurance part has to be nailed down a little better, but in general there is a lot of price feedback to the consumer, which I think will provide a more efficient allocation of resources.

ESM Reply:
October 21st, 2011 at 9:24 pm

@ESM,

@Greg:

“It happens every day in lots of places.”

Greg, is this allowed, or are these hospitals doing something illegal by rerouting patients elsewhere? If they’re acting illegally, then I would not consider my statement untrue. I mean I don’t think it’s wrong to say that you can’t kill somebody in the US for no good reason, even though it happens all the time.

zanon Reply:
October 21st, 2011 at 10:42 pm

@ESM,

An ER, cannot by law, turn a patient away.

So what greg says is illegal.

This is double edge sword of course as state also refuse to pay for many ER service. So, it means that state make slave of ER doctor

Matt Franko Reply:
October 22nd, 2011 at 7:27 am

@ESM, I came across this article by an economist looking to overlay Smith’s ‘Invisible Hand’ on Darwin’s “Natural Selection”.

http://www.latimes.com/news/opinion/commentary/la-oe-frank-darwin-economics-20111018,0,5949996.story

“It’s an important point, since the modern conservative’s case for minimal government rests on the presumption that competition always promotes society’s welfare. But our best understanding of how competition actually functions, as Darwin’s work makes clear, supports no such presumption.”

He makes the case that sometimes what is good for the individual doesnt necessarily lead to the good of the whole. For instance I could see how in some sort of unfettered ‘free market’, a bunch of for profit healthcare providers could end up competing with each other to make more money, and this would lead to worse healthcare for all… if the government didnt set up the regulations correctly. Resp,

Greg Reply:
October 22nd, 2011 at 8:59 am

@ESM,

And Zanon

Allowed?

The law has to do with acceptance of federal funds for health care, which virtually every institution does of course and “availability” of appropriate services. How does a hospital make a surgeon take call? Unfortunately, often a hospital “doesnt have anyone “on call for that service” So yes it is allowed while legislatively “illegal”

If there arent effective ways of enforcing a law what good are they. The point is our “system” doesnt in its totality provide basic life saving health care for all. And it wont until it becomes fundamentally different. Until that is a goal of the system

ESM Reply:
October 22nd, 2011 at 11:14 am

@ESM,

@Matt:

“‘the modern conservative’s case for minimal government rests on the presumption that competition always promotes society’s welfare.'”

This statement is both incorrect and woefully incomplete. The case for minimal government rests in individual choice and incentive.

Competitition creates incentives to work hard, lower costs, and innovate, but it is not the only factor. There is also the prospect of enjoying the fruits of your labor (which of course includes the concept of private property).

And choice is an extremely important part of the argument for limited government. Every individual is different, with his own set of preferences as well as tolerance for risk and pain and whatnot. The more decisions left to the individual, the greater the opportunity for individual optimization of utility.

Note that I am not arguing for no government. The optimal level in my opinion is quite a lot of government actually. Just happens to be a lot less than we have now.

WARREN MOSLER Reply:
October 22nd, 2011 at 5:01 pm

and anything short of ‘pure competition’ with monopoly at the extreme is problematic to the point of involving govt in some manner

Tom Hickey Reply:
October 22nd, 2011 at 11:42 am

@ESM,

“Note that I am not arguing for no government. The optimal level in my opinion is quite a lot of government actually. Just happens to be a lot less than we have now.”

I would say less government in some areas and more in another, depending on requirements. There are some huge imbalances now, and there is way too much corruption virtually everywhere in the world. One major problem with states is that their governments are rather easily hijacked.

As a radical libertarian of the left, I would prefer “no state” and I reject the authority of the state as either natural or rightful. While I am a philosophical anarchist, I am not naive enough to think that societies can exist and prosper without any governing principle. But I don’t think that the modern state is the only of providing this, and it is certainly not the best way for a lot of reasons that others have written extensively about, so I won’t repeat here. Obviously, I don’t think that abolishing the state is either possible or practical at present, but I look forward to the withering away of the state in the future, recognizing that this is likely some way off. In the meantime, we need to make do as best we can under the (awful) circumstances that prevail in the world to manage existing state power as democratically as possible.