Hearing the discourse on the quasi-terrorist of Christmas Day is saddening. I find myself wishing that people would hunger for reality -- a kind that would make them assess the effectiveness of our government and the realistic chances of attacks if we keep our free society as free as it is now.
Early in my banking days, the fellow who headed the retail bank commented that the only reason that banks did not experience more robberies is that so few people tried. The analogy holds true for counter-terrorist efforts. We either surrender some of our civil liberties or we take the risks inherent in the freedoms that we enjoy. The cost of a fail-proof system is more than we are willing to pay, yet people talk as if there is a way to detect/prevent/anticipate determined suicidists.
Computer security companies hire notorious hackers to gain their knowledge of software vulnerabilities. The TSA should do the same: offer rewards to citizens that can effectively defeat the system. They would be flooded with ideas because every traveler could probably offer an idea on how to penetrate security (and especialy now that the TSA inadvertently published their screening procedures on the Internet.)
Example: two years ago, my family attended a cooking school in Sienna, Italy. When we asked why the teacher used a kitchen implement made of a certain material, she explained that the implement could be hidden in carry-on luggage for air travel. Lo and behold, she was right.
Example: ICE (successor to INS) agents work very hard to prevent suspicious people from entering the United States. Our borders are so porous that bumbling amateurs could sneak in. On successive canoe trips on the northern US border, both of my sons observed that there was no scrutiny at all when they paddled from Canada into the US.
We could all add examples to the list. The point is that we are only minimizing risk by our security procedures and surely not eliminating it. Just because we have car insurance, we are not justified in believing we are safer from accidents. What progress it would be if we acknowledged the risks of a free society, and asked how much risk reduction we get for a given expenditure or system.
We cannot anticipate every method that would-be terrorists might employ. If we think that profiling will solve everything, we are naive. How many authentic-looking Americans were spies for the USSR? Why not hire a terminally ill non-Arab person to commit the terror event and compensate his family? Why not recruit disaffected non-Arabs to Al Qaeda and persuade them to become martyrs for the cause? We did not anticipate jumbo jets as guided missles, shoes as weapons, or powdered explosives with plastic and liquid detonators.
Furthermore, no matter how well-designed the system, the quality of the execution will vary given that we have to depend on humans to implement the plan.
Pardon me, but this is one of several moments when we see the weaknesses of our political system. Elected representatives see the issue as a headline-grabber to exploit for personal gain, not as an urgent national priority that deserves clear-headed thought. If we want our government to serve us, we need term limits. Otherwise, the pols will serve themselves regardless of how urgent the issue. If we want the government to be responsive to genuine needs, we need campaign finance reform. Otherwise, the legislative process will be purchased by the highest bidder.
Plain and simple, a democracy takes a long time to solve a problem, and a big democracy takes a longer time. Sadly, too much of the commentary in on-line media has been silly partisan yammering. During the last presidential election, one of my friends said she wanted a president who could unite the country. That would require some issue, any issue that we could rally around, and people just are not in the mood to form a concensus. The antipathy between left and right is so great that I wonder if anything or anyone could unite us. Maybe we should amend the Constitution to change our name. Perhaps the Cynical States, the Suspicious States, the Zero-Sum States, or the Internecine States?
The Declaration of Independence says: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." We are so divided as a nation that I suspect we could not get a majority of both houses of Congress to ratify this statement again.
What a mess we are. Here is a real problem that needs our best thinking, and the loudest response so far is partisan yammering. Enough already. Is there a way to unearth detached, disinterested discourse that moves toward reality? Funny.....I read that Cal Tech (in Pasadena) is apolitical because the people there are so intently grounded in science. Could science help us? A democracy is not a function of science, ruefully. It is a function of emotion and opinion, which require knowledge and self discipline to be useful guides to our prosperity. That "consent of the governed" thing can be a two-edged sword.
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Monday, December 28, 2009
Saturday, December 12, 2009
Quick Fix for the Political Economy
The thorny problem of health care could be solved quickly and simply but we do not have the political will.
The quick fix for health care is to restore price and cost discipline to a market system. Sometime between 1960 and 1980, it went away.
Let's give everyone a Medical Savings Account together with insurance for catastrophic events (cancer, organ transplant, etc.) If one does not spend the MSA in a given year, one can carry it over to a payout at retirement. Employers can furnish these as a payroll benefit. An expenditure of the MSA can be to purchase a medical insurance policy of the consumer's choosing, much like automobile insurance. For those left with no coverage, let Medicaid administer a comparable plan wherein each individual gets an MSA of a standard amount. Govco will maintain clinics and hospital space for Medicaid patients. No longer will paying patients directly subsidize those that cannot pay, at least within the ledger of an individual clinic or hospital. This will force providers to offer services that are subject to market price discipline.
As much as everyone hates it, there has to be some way to ration health care. Presently, we ration food, public transportation and housing with market prices. Why is health care different? The evidence is clear that without price discipline imposed by the market, costs mushroom. Govco provides subsidies to the needy for food, public transportation and housing, but not in a way that the price structure is destroyed or the cost inflation is affected. Cost inflation for health and medical care has been unacceptably huge due to the government's role and employer-provided (and selected) health care.
We are not a centrally planned economy like the USSR in the '60s and '70s. Yet we have become that way in the health care industry because of government influence on prices.
It is true that technological advances in miniaturization, information processing, and scientific knowledge have increased the complexity and therefore cost of medical care. However, it is a common business phenomenon that science permits technologies that the market is not wholly willing to pay for. Example: The Saudis are willing to deploy water desalinization plants on a wide scale, but other than oil-rich middle eastern nations, the market has not seen fit to support desalinization as a means of meeting our water shortages.
Herewith, a simple example of lack of price discipline: knee pain can be treated with a $2 shot of cortizone or a $100 shot of lubricant enhancement for synovial fluid. If the insurance company is paying, why not choose the deluxe treatment?
There are countless instances of people whose avoidable behaviors make medical costs staggering. Is it morally defensible to give such individuals free rein to create these unnecessary costs? I believe it is not.
The United States has the highest per capita health care spending of the industrialized nations and yet we have crummy statistics on our national health. This means that our international competitiveness (income) is harmed by our excessive health care spending. Therefore, if the productive people in the US can only generate a declining national income going forward, at a minimum we will have less as a society to spend on indigent health care. I wish people could see the effect of this issue on our prospective national income, especially now at our moment of weakness when we have: a progressivly higher percentage of students without fundamental skills; burgeoning competitors that do have a well-educated and motivated labor force; a currency that is weak and promises to get weaker; a consumption-based economy based on dwindling consumer income; an imponderable situation in Afghanistan that has unfathomable spending attached; and declining ability of our nation to issue debt to pay for out-of-control spending.
As our national competitiveness and wealth decreases, Govco will have a smaller and smaller tax base. What a strange result that liberal spenders will have finally implemented a way to control government spending: reduce national income that can be taxed.
The quick fix for health care is to restore price and cost discipline to a market system. Sometime between 1960 and 1980, it went away.
Let's give everyone a Medical Savings Account together with insurance for catastrophic events (cancer, organ transplant, etc.) If one does not spend the MSA in a given year, one can carry it over to a payout at retirement. Employers can furnish these as a payroll benefit. An expenditure of the MSA can be to purchase a medical insurance policy of the consumer's choosing, much like automobile insurance. For those left with no coverage, let Medicaid administer a comparable plan wherein each individual gets an MSA of a standard amount. Govco will maintain clinics and hospital space for Medicaid patients. No longer will paying patients directly subsidize those that cannot pay, at least within the ledger of an individual clinic or hospital. This will force providers to offer services that are subject to market price discipline.
As much as everyone hates it, there has to be some way to ration health care. Presently, we ration food, public transportation and housing with market prices. Why is health care different? The evidence is clear that without price discipline imposed by the market, costs mushroom. Govco provides subsidies to the needy for food, public transportation and housing, but not in a way that the price structure is destroyed or the cost inflation is affected. Cost inflation for health and medical care has been unacceptably huge due to the government's role and employer-provided (and selected) health care.
We are not a centrally planned economy like the USSR in the '60s and '70s. Yet we have become that way in the health care industry because of government influence on prices.
It is true that technological advances in miniaturization, information processing, and scientific knowledge have increased the complexity and therefore cost of medical care. However, it is a common business phenomenon that science permits technologies that the market is not wholly willing to pay for. Example: The Saudis are willing to deploy water desalinization plants on a wide scale, but other than oil-rich middle eastern nations, the market has not seen fit to support desalinization as a means of meeting our water shortages.
Herewith, a simple example of lack of price discipline: knee pain can be treated with a $2 shot of cortizone or a $100 shot of lubricant enhancement for synovial fluid. If the insurance company is paying, why not choose the deluxe treatment?
There are countless instances of people whose avoidable behaviors make medical costs staggering. Is it morally defensible to give such individuals free rein to create these unnecessary costs? I believe it is not.
The United States has the highest per capita health care spending of the industrialized nations and yet we have crummy statistics on our national health. This means that our international competitiveness (income) is harmed by our excessive health care spending. Therefore, if the productive people in the US can only generate a declining national income going forward, at a minimum we will have less as a society to spend on indigent health care. I wish people could see the effect of this issue on our prospective national income, especially now at our moment of weakness when we have: a progressivly higher percentage of students without fundamental skills; burgeoning competitors that do have a well-educated and motivated labor force; a currency that is weak and promises to get weaker; a consumption-based economy based on dwindling consumer income; an imponderable situation in Afghanistan that has unfathomable spending attached; and declining ability of our nation to issue debt to pay for out-of-control spending.
As our national competitiveness and wealth decreases, Govco will have a smaller and smaller tax base. What a strange result that liberal spenders will have finally implemented a way to control government spending: reduce national income that can be taxed.
Wednesday, December 9, 2009
SQUAWKING AT THE C.O.
1.. Harry Jones defends DSS spending probe: Jones is daily digging deeper in the hole of credibility deficit. How dumb does he think we are? He can account for all of the spending, but can't offer assurance that it was spent as intended or that a misappropriation occured? Ergo, he does not know what "account for the spending" means. Larger issue: Claiming expense control, City and County government spends far too little on compliance audits. They have tomes and binders of procedures, but do you think anyone ever measures compliance with them? I saw first hand that they do not. Penny wise and pound foolish.
2. SEC has let some Wall Street firms off the hook. The expression "moral hazard" does not seem to light anyone's fire inside the Beltway. When companies get so big that they are too big to fail, the government needs them more than they need the government. "Too Big to Fail" means "Fiefdom of those that make up the rules as they go along; locus of power for those who can get away with anything; and, juggernaut of imprudent risk." One of the real failings of the Bush Administration was the muzzling of the SEC. If they had been allowed to do their jobs according to the laws we already have, the sub-prime crisis would have been a fraction of what it became.
3. B of A repays TARP money. Every time I read a headline like this, I find a contradiction in the story. They keep threatening to repay, but have not yet. This latest salvo is an equity issue (converts) that is still subject to shareholder approval.
1.. Harry Jones defends DSS spending probe: Jones is daily digging deeper in the hole of credibility deficit. How dumb does he think we are? He can account for all of the spending, but can't offer assurance that it was spent as intended or that a misappropriation occured? Ergo, he does not know what "account for the spending" means. Larger issue: Claiming expense control, City and County government spends far too little on compliance audits. They have tomes and binders of procedures, but do you think anyone ever measures compliance with them? I saw first hand that they do not. Penny wise and pound foolish.
2. SEC has let some Wall Street firms off the hook. The expression "moral hazard" does not seem to light anyone's fire inside the Beltway. When companies get so big that they are too big to fail, the government needs them more than they need the government. "Too Big to Fail" means "Fiefdom of those that make up the rules as they go along; locus of power for those who can get away with anything; and, juggernaut of imprudent risk." One of the real failings of the Bush Administration was the muzzling of the SEC. If they had been allowed to do their jobs according to the laws we already have, the sub-prime crisis would have been a fraction of what it became.
3. B of A repays TARP money. Every time I read a headline like this, I find a contradiction in the story. They keep threatening to repay, but have not yet. This latest salvo is an equity issue (converts) that is still subject to shareholder approval.
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