Open thread
OK y'all. I am very curious about the effects of the housing bubble bursting, and I really want to hear your thoughts on that. But, the two posts below seem to open up other lines of thought for you. Since I went off topic in one and Sean has posted his ideas about health care (which I don't agree with) in the other, I'm going to open up another thread for everything-else-those-housing-posts-brought-up.
From now on, please, if your response to those posts isn't about housing, could you use this thread? I want to make sure that we talk about housing AND whatever comes to mind for you. 'Fact, Seanie, I'm going to move your comment over to here. Also, dude. You should start a blog.
(I'll move my rant over as well, so that the housing threads stay pure of topic.)
From now on, please, if your response to those posts isn't about housing, could you use this thread? I want to make sure that we talk about housing AND whatever comes to mind for you. 'Fact, Seanie, I'm going to move your comment over to here. Also, dude. You should start a blog.
(I'll move my rant over as well, so that the housing threads stay pure of topic.)
posted by Megan at 8:53 PM
53 Comments:
Anonymous said...
I've never understood your "there should be less people" thing. If you think that life is good enough to bring kiddies into the world (which it appears that you do), then why should you want there to be less of them? Is it only because you are convinced that the time is soon coming that unless we have way less people they're all going to have to be miserable? Or is there some other reason?
David J. Balan
6:17 PM
**********************************
Megan said...
I said it before, in the locally grown food thread. But yeah, what you guessed.
I think we are vastly exceeding our environmental constraints. I don't want people to live in Third-World type slums, which what I think that 6.6B of us can afford without mining unrenewable stocks. I think that there should be so few people that living within the natural returns of sustainable agriculture and the growth rates of other food and resources stocks feels like comfortable abundance.
That is a much smaller number of people than live today, but I don't want the population to crash through wars and famines and plagues or compulsion. So I very much want people who don't want children to not have them. And I want everyone to be educated and comfortable enough that they delay the age of first birth by happy choice. And I want them to have only the children they want. I think that would be an excellent first step at contracting world population. If we need to do more after that, I will evaluate next steps, but fortunately, I think that is work enough for my lifetime. Harder decisions can be foisted on to later comers.
My decision to want/have kids is selfishness. But I still have it and I'm hoping that people who don't want kids will help absorb some of the burden I will be imposing by (hopefully) having kids. Please (other people who aren't David Balan, because he doesn't do this) don't harangue me about hypocrisy. I already know, and I am totally happy to live with that, and it will be annoying, mostly because it is predictable and I hate predictable thought.
Also, while I would love for the Cheap Non-Polluting Energy Unicorns to come solve all our problems, I do not yet believe in them. So I think we should take strong action until they show up. If they do, we can relax and laugh about all the trouble we went to. If they don't we'll be glad later that we took precautions now.
Hey, I know I responded to this with a rant that pushes your buttons and mine, but if you can explain the housing bust, I would rather hear about that.
6:37 PM
Anonymous said...
There's nothing contradictory or hypocritical about Megan's twin desires for a lower global population but children of her own. Plenty of people cannot plan the number of children they have. Others lack the physical or mental resources to care for their children. Megan is capable of caring for her children and [compliment deleted].
Michael
7:26 PM
Megan, this is Seanie.
I disagree with your assertion that giving everyone healthcare would reduce financial anxiety. There is a much better way.
This whole health care mess started with government price controls in WWII. Among other prices, the government fixed the wages that companies were allowed to pay their workers. This eliminated the ability for firms to use higher wages as an inducement to recruit workers. So, instead, a bunch of companies such as Kaiser that were flush due to big war contracts offered health insurance to workers to lure them away from other firms. Better yet, these companies were allowed to consider the premiums paid for this insurance as a cost of doing business. That is, the firms could deduct the premiums when calculating their taxable incomes (profits).
The real problem today is that ONLY companies can deduct health insurance premiums from their taxable incomes. Individuals cannot. This means that it makes sense for both individuals and firms if firms pay for health insurance as it in effect raise a worker's total compensation package relative to what they could get if they had to pay for their own health insurance.
For instance, suppose a firm has $100,000 to pay me. And suppose that I could get a health insurance policy on my own for $5,000. If the firm paid me $100,000 and did not provide me with health insurance benefits, I would get $100,000, pay about 30% ($30,000) of taxes on that $100,000 and then have to pay $5,000 out of what is left ($70,000) to buy myself health insurance. So, after taxes and health insurance premiums, my disposable income will be $65,000.
But now look at what happens if the company pays for the $5,000 in insurance premiums. They pay me a salary of $95,000 and buy me health insurance for $5,000. I pay 30% of my $95,000 salary in taxes. So I have $66,500 in disposable income AND still have health insurance (since my employer paid the $5,000 premium). I am now ahead $1,500. Nice. And I still have health insurance. Nice. And the firm got to deduct $100,000 worth of compensation from their taxable income just like before (since my total compensation is $100,000 either way since both insurance premiums and wages/salaries count as a cost of doing business.)
The problem now is that I have made a very bad decision. Why? Because I am now stuck in a third-party payer system. The incentives are now all screwed up. Since somebody else is paying for my medical care, I don't shop around as much as I would if I had to pay for it myself. Why have the prices of Lasic eye surgery and elective plastic surgeries and other such not-covered-by-insurance stuff fallen over time while the prices of covered-by-insurance stuff gone up? Because people shop around for the best deal on the not-covered-by -insurance stuff and because the doctors that provide those services have a personal profit incentive to figure out how to cut the costs of providing them.
There is no such incentive in third-party-payer insurance because, by default, payments are now all set by Medicare. That is, nearly every private insurer reimburses at the rates set by the Feds.
Now, I am not going to bash the bureaucrats there in any horrible way except to say that it's not their fault that they can't set thousands of prices correctly. Because that is what they are being asked to do: equalize supply and demand by setting reimbursement prices. But there is no known way to get these prices right except for a market mechanism. And the result is things like too few OBGYNs and urologists. It's NOT because the malpractice insurance premiums that such specialists face are too high. It's because the reimbursement rates set by Medicare are so low that such specialists can't earn enough to pay for the malpractice insurance. And so you have medical labor power being directed away from things that people would love to have more of and towards specialties that they don't particularly want more of because prices are misaligned.
There is a simple way to stop this. Allow individuals as well as firms to deduct health insurance premiums. If that was the case then I could get paid $100,000 in cash, buy my $5000 premium insurance and still have $66,500 in disposable income. And I would no longer favor working for firms that paid for my health insurance premiums just because firms can deduct health insurance costs but I can't.
And THEN, with millions of people looking for better deals because they will be paying for their own health insurance, there will be much more competitive pressure on firms to offer lower cost health care. Along those lines, there will also be competitive pressure by insurance companies to offer different menus of services. Just as I can buy high or low deductible auto insurance, I should be able to choose high or low deductible health insurance. And what procedures will be covered. Etc. This will put pressure on companies to stop setting doctor re-imbursements by the Medicare default rates as people will be demanding more of certain services than others and providers will have to bid for limited resources to get them.
And consumer driven demand will help to resolve the third big thing screwing up health provision in America. (The first two are the tax break that only firms get and the fact that Medicare is by default setting reimbursement rates.) This is the fact that with the current system it is too easy for state legislatures to force insurance companies to only offer policies that are very comprehensive. Most people don't want everything covered. They only want big things--and would be happy also with very high deductibles. They also don’t want to pay for things they don’t need. For instance, I don't want transsexual surgery. So why should I be forced to buy health insurance that covers that cost--a cost that I will never possibly encounter? If insurance were being paid for by individuals rather than by firms, there would be much more political pressure brought against legislatures forcing insurance companies to offer lots of things that most people don't want. By contrast, right now, the firms don't have much of an incentive to resist such mandates because no matter how much they cost, they are still a deductible business expense.
If we had real competition in health care, we would have about as much anxiety about paying for health care as we do about paying for food. The free market makes this most essential thing dirt cheap. Getting 2000 calories per day and enough vitamins can literally be had for less than $3 or $4 per day. Most people choose to spend a lot more on food because they like variety. But basic sustenance is very well provided for by the markets. The average supermarket company has a profit margin of less than 1% and is constantly trying to innovate and provide better food at lower cost.
We could have the same in health care if we could get competition back. Basic care would be very inexpensive. And most people would choose to spend more. And then the only role the government would have would be to fill in the gaps here and there for the indigent and impecunious. And just as it doesn't cost the government very much to pay for food for the poor through food stamps because the food itself is very inexpensive due to market forces, the government would also not have to pay very much to provide health care for the indigent because costs would be low due to market forces.
And that, my friend, would truly eliminate some insecurity from our lives. Instead of a third-party-payer system where costs go up year after year due to misaligned incentives, we would have a system with the right incentives to provide cheap, quality care for everyone. And *that* my friend would be lovely and would truly eliminate some of the anxiety from our lives..
And as for housing prices, blame the government for overly restrictive building permitting. But that is another story...
8:40 PM
Seanie: Don't forget the payroll taxes and insurance paid by the employer. In addition to all the taxes deducted from the employees' gross wages, the employer also has to pay federal and state unemployment insurance, workers compensation insurance, and the employer's half of social security and medicare. This adds up to another 10% or so on top of the employees' gross wages.
(oh, my comment wasn't clear, those 10% or so in taxes are only paid on wages, not benefits, so that's another incentive in the tax code messing up the health insurance market.)
And as for housing prices, blame the government for overly restrictive building permitting. But that is another story...
Funny, building permitting is just as restrictive in western PA as in CA, and yet housing prices never went through the roof. It's almost as if there's some other factor affecting prices....
Actually, even more relevantly, Megan bought her house cheap just 10 years ago. Do you believe, Seanie, that the last 10 years have seen a radical change in permitting rules in Sacramento?
I'm not Ezra, so I suppose I shouldn't try to get too deep in the weeds with Seanie (maybe not at all), but: do you really think that a system where healthy, young people buy no insurance and middle-aged, healthy people buy little insurance is going to make insurance more affordable? Do you have any concept of how insurance works? Risk pools? Anything?
Your imagined solution would be an absolute catastrophe on Day One.
The thing that has always made me marvel about libertarian-types is that they seem to think that the structures we have came about ex nihilo, as if some Almighty Bureaucrat invented zoning regs, or building permitting, or insurance regulations, just for fun. Not in response to observed problems with the laissez-faire system that we actually had in place in this country for decades.
Mr. or Ms. JRoth, your analysis is flawed by missing half the game.
There are demand curves. There are supply curves. Your analysis misses the demand curves completely.
The government through permitting rules can affect the supply of housing by affecting the cost of providing additional additions to the stock of housing. That is what overly restrictive building permitting is all about.
But whether a given permitting regime is "overly restrictive" or not depends not just on the supply curves but on the demand curves and how they *interact* with the supply curves.
In CA there is much higher demand for housing than there is in PA. Hence, even with identical cost/supply curves there would be higher prices in CA. But that does NOT imply that housing prices in CA could not be brought much lower by altering current CA laws to make them MORE PERMISSIVE than those in PA. And that is precisely what I propose.
So, Mr. or Ms. JRoth, I did no such stupid thing as you accused me of doing ("Do you believe, Seanie, that the last 10 years have seen a radical change in permitting rules in Sacramento?") And you should know better than to try to insult me or anyone else with such a flimsy Straw Man argument. I have never believed any such thing and never would given that I know basic economics.
Good day.
--Seanie
Seanie,
"So, Mr. or Ms. JRoth, I did no such stupid thing as you accused me of doing ("Do you believe, Seanie, that the last 10 years have seen a radical change in permitting rules in Sacramento?") And you should know better than to try to insult me or anyone else with such a flimsy Straw Man argument. I have never believed any such thing and never would given that I know basic economics."
No personal attacks or ascribing views to specific commenters, please. It gets people riled.
In general, folks: if you are feeling a rush and a need to defend yourself, ask a sincere question instead or take a break before answering. It is hard to be actively kind in a heated moment.
"I'm hoping that people who don't want kids will help absorb some of the burden I will be imposing by (hopefully) having kids."
And I'm hoping that someone else will raise the children who will pay for my Social Security, because I just don't think I can handle the whole parenting thing. So, see, it works out!
- Liz
Woo-hoo! We're a team!
What does the free market have to do with me getting my food?
"Furthermore, U.S. farm programs for a variety of commodities may be suppressing market prices in violation of the WTO Agreement on Subsidies and Countervailing Measures. Economic simulations based on a model developed here show that U.S. subsidies depress world corn prices by 9 to 10 percent, world wheat prices by 6 to 8 percent, and world rice prices by 4 to 6 percent."
There is a reason Brazil is suing the US for its farm subsidies.
Americans don't worry about food because we are rich, not because American agriculture even vaguely resembles a free market.
Mr. or Ms. JRoth, your major debating tactic appears to be to accuse me of ignorance. Sadly for you I am not ignorant.
Let me deal with your two points in turn: risk pooling and then libertarianism.
First, let us consider risk pooling and insurance by looking back at the insurance markets that developed during the early Renaissance. Think of merchant ships setting sale from Venice to trade. Some of them never come back. One way around the problem would be to diversify by buying a share in several (if not all) outgoing ships since the gains from those that would return would more than outweigh the losses from those that did not. But given the property rights system in place at the time, this sort of strategy was difficult. So, instead, insurance markets developed. The owners of the various vessels, or their financial backers, would each chip in some money to a fund that would then be divvied out at the end of the season to those whose ships did not return.
Along these lines, the great trick of insurance is to switch from considering the question “Which ships will not come back?” to considering instead the question “How many ships will not come back?” For instance, if one in 20 ships are expected not to return and all expeditions are of equal value, then if all the expeditions buy insurance, the insurance premium for each expedition will be 1/20th of a ship. Why? Because 20 times 1/20th equals the value of the one ship that is expected not to return. Similarly, if one ship in 10 would be expected not to return, then the premiums that would have to be paid if all were participating would be 1/10th of a ship.
But, should I have to buy insurance for such voyages if I own a donkey cart that I drive about Venice and do not participate in maritime shipping? As a hackney, I don’t face the same risks as a maritime trader, and so it would make no financial sense for me to buy maritime insurance. In fact, my premiums would be a total waste.
This brings us to your point about young, healthy people not wanting to buy insurance at the prices currently being charged. Why should they? They do not face the same risks as do sick, old people. In fact, if one were to charge both young and old equal insurance premiums you would not be running an insurance scheme. You would simply be running a transfer scheme. Just as you would if you forced donkey cart drivers to purchase maritime insurance.
Now, you may well believe that society owes old people free or greatly subsidized health care. But do not go about pretending that it is an insurance scheme. It is not. It is simply a tax and transfer scheme disguised as insurance to make it more politically palatable.
But let us dig a bit deeper into how insurance markets actually operate and why you are wrong, by looking directly at the question you posed to me: “do you really think that a system where healthy, young people buy no insurance and middle-aged, healthy people buy little insurance is going to make insurance more affordable?”
The problem with the question you pose is that it does not ask about affordability *for whom.* Clearly, if we force young people who have very little health risk to pay for expensive insurance, it will indeed make insurance “more affordable” to those who are sickly since we can use the money collected from healthy young people to subsidize the premiums paid by sickly old people. But any policy that does so necessarily makes insurance “less affordable” to the healthy young people.
Again, an example from maritime insurance makes this point clear. Suppose that there are two different types of Venetian maritime expeditions. One type has a one in 10 chance of not coming back. The other has a one in 20 chance of not coming back. Since these two groups face different risks, they should have different insurance rates. In particular, the first group, the one with the one-in-ten risk should have to kick in 1/10th the value of an expedition while the one with the one-in-twenty risk should have to kick in only 1/20th the value of an expedition. At those respective rates, members of each group will be quite willing to participate in insurance since the premiums accurately reflect the risks that they individually face.
But now what will happen if we force them to all join one big insurance scheme as appears to be implicit in your line of reasoning? By doing so, we could in fact lower the insurance premium of the ones facing more risk. We could, for instance, charge 1/12th of an expedition to everyone as the insurance premium. For the merchants in the riskier group, that rate is much better than the 1/10th that would correctly reflect the risks that they are undertaking. And so the merchants facing higher risk will be happier. But the ones facing less risk will be unhappy because their premium would rise from 1/20th of an expedition to 1/12th of an expedition—indeed to a level that does not reflect the risks that they face.
To put this point slightly differently, what you describe as “risk pooling” is no such thing. Risk pooling happens within a group that faces the same level of risk, in this example either within the group facing the one-in-ten chance of losing an expedition or within the other group facing the one-in-twenty chance of losing an expedition. It does not occur by pretending that two different groups facing different levels of risk are one and the same.
But now consider again what this example also implies. It implies that all people will be willing to pay for insurance that is priced so that it correctly reflects the risk level to which they are individually exposed. It is NOT the case that young, healthy people simply “don’t buy insurance.” Putting things that way totally misses the point. They don’t buy insurance *at the prices offered.* Why? Because those prices do not correctly reflect the low level of risk to which they are exposed. They would be quite happy to buy insurance that was correctly priced to reflect the low levels of risk to which they are exposed!
The reason they don’t buy insurance is that it is priced above the amount that would correctly reflect the risks that they face. This is due to government mandates that force grouping across different risk levels so that, as in my example of the two different classes of Venetian shippers, the price is set so that it is overly attractive to the old and sick (because it is less than the amount that would correctly reflect the risks they face) but decidedly unattractive to the young and healthy (because it is too high relative to the risks they face.)
So that is why you are totally wrong. It is also why you should not go about accusing me or anyone else of ignorance, as you did when you wrote, “Do you have any concept of how insurance works? Risk pools? Anything?” Can you do no better than to accuse those with whom you disagree of ignorance? Do you do it just for rhetorical effect, or do you actually believe that anyone who disagrees with you must be doing so out of ignorance? If the former, you are insincere, if the later then you are naïve in a very self-aggrandizing way.
Next, let me first deny that I am a libertarian and then go on to destroy your further Straw Man arguments about what it is you suppose I believe.
First, I am not a libertarian. Government has a salutary role to play in many instances. Additionally, I further reject the strongest libertarian arguments (which I have heard in person from leading libertarians) that we could simply voluntarily contract our way to a perfect society. This is not possible due to cultural differences that at the end of the day require the threat of force to get people to cooperate, coordinate, or at least not bother each other.
Next, your sense of history is completely backward. Belief in free markets and decentralized economic activity that is not heavily regulated by the government is the historically new phenomenon, arising just in the past few centuries. Command and control and bureaucracy, by contrast, is the historically old phenomenon and goes way back, nearly back in fact as far as historical records go. Be it Egyptian priests running every detail of Egyptian society, south seas holy men enforcing taboos, Hindu Brahmins enforcing caste organized labor, Roman Senatorial edicts directing many industries in minutia, Middle Ages restrictions imposed by the Church on who could own what or do what, or the mercantilism of Louis the 14th’s France, extreme forms of centralized command and control of the economy and daily life have been the historical norm. And they still have their advocates, Hugo Chaves and Robert Mugabe being leading lights of darkness in our day.
What is historically new is a belief in deregulation, in lassie faire, in the power of decentralized market processes to do a better job in many cases than what can be achieved by even a well intentioned central planner, king, minister, commissar, or bureaucrat.
This makes your second paragraph quite bizarre as it based on assumptions about the historical development of our current institutions that do not jibe with know facts. But let me repeat it here so that nobody has to scroll too far up to find it.
“The thing that has always made me marvel about libertarian-types is that they seem to think that the structures we have came about ex nihilo, as if some Almighty Bureaucrat invented zoning regs, or building permitting, or insurance regulations, just for fun. Not in response to observed problems with the laissez-faire system that we actually had in place in this country for decades.”
You are totally wrong to assert that there was a “laissez-faire system that we actually had in place in this country for decades.” What decades exactly were those? Were they the early decades, say the 1790’s and 1800’s when every manufacturing interest that could lobby Congress pressed (often successfully) for import protections? Was it the early 1800’s when firms digging canals got huge subsidies? Was it a few decades on when railroads and manufacturers got huge subsidies and protections from rivals and from foreign competition? How about say the early 1900’s when the Food and Drug administration was set up and as well as vast new anti-trust bureaucracies? Or how about the 1920’s when prohibition stopped firms from making liquor? Or the 1930’s when vast sections of the economy came under huge amounts of Federal control, going even so far as to say that voluntary labor contracts were not legal unless it was for a wage that the Feds thought was OK?
When exactly were these laissez-faire decades?
There weren’t any. There has been a constant fight from the founding of this country between those who believe in command and control and those who believe in decentralized systems. Neither side has ever been triumphant. And so even if you are in favor of command and control, you lessen your case immensely by asserting as fact a historical reality that never existed.
What we all need to ask in every policy case is whether the current institutions can be improved--be they command and control or decentralized. And as far as health insurance is concerned, I believe that the current system is faulty due to command and control and could be fixed with decentralization and less government interference. But I certainly do not believe that out of ignorance.
Once again, Good Day, Mr. or Ms. JRoth.
--Seanie
Seanie,
Two things.
1. Do not ascribe views or actions to other people. If you think someone is doing something like assuming you are a libertarian, sincerely ask them what they think your core beliefs are, and wait for a sincere answer.
2. Blog comments do not support long answers well. The columns are too short; attention spans even shorter. I don't read sympathetic long comments closely, and I surely don't read antagonistic long comments closely. It may be a shortcoming of the reader and it is certainly a shortcoming of the media. You'll convey more information with shorter comments.
Since you have lots to say, you should write them upfront, in a blog. People will absorb much more from a post than from a comment.
Good grief.
While I appreciate the history lesson, I understand the origins of both insurance and bureaucracy perfectly well. Somehow telling me things I already know hasn't changed my mind.
I'll try to be brief: I attempted not to call you a libertarian; however, there's no denying that your positions align closely with libertarian positions, and so I took your comments as an opportunity to say some larger things about that POV. The things I said are, IMO, relevant regardless of whether they apply in detail to everything you believe.
Especially since you clearly do believe some things that I find... naive, perhaps? The Food & Drug Admin did not arise from the Sun King's God-given right to absolute rule; it came about in response to abuses by unregulated corporations. Zoning laws did not develop in autocracies; they developed in New York City in the early 20th C in response to urban development patterns unprecedented in world history. These are things that, as I said, libertarians don't seem to understand. You also don't seem to understand them, but perhaps for non-libertarian reasons. Potato, potahto.
More in a moment....
I have to agree with Seanie's response to jroth's thoughts on health care.
I've never been able to understand how anyone can think it is somehow fair, let alone a good idea, to force healthy and relatively poor young people to pay for the health care of sick and relatively wealthy old people.
Why do people think that is so much more fair than taxing the homeless to pay for Megan's homeowners insurance? Or having Megan pay a portion of my car insurance premium?
jroth,
As a libertarian I am well aware that many regulations are the governments response to problems. I'm a libertarian because I believe that in many cases they are not the best solution, or the problems weren't that bad to begin with.
Wow, I just read more closely, and see that, in supporting his claim that the US never had a laissez-faire era, Seanie actually skips even a token example from 1865 to 1905, or what is commonly labeled in history books The Laissez-Faire Era (and no, tarriffs on English steel do not qualify as regulation - nothing else in this discussion relates to trade or taxation, and you may not bootstrap gov't doing the bidding of corporations into a discussion of gov't limiting the power of corporations).
Now, I suppose you might knock down a strawman of your own by pointing out that, in those 40 years, there was not, in fact, complete governmental disengagement from "the market." But it would be absurd and ahistorical to claim that those 40 years saw extensive economic regulation, or that they were so successful that no one wanted a change in the system.
So I don't know, Seanie. You got very huffy at what you perceive to be my condescension, ignorance, or arrogance. But you don't acquit yourself well when you try to pretend that there was never a period of (relative) laissez-faire in this country.
PS - There was actually no price at which I would have bought health insurance when I was in my healthy 20s; I was earning little, accruing debt most months, and even $50/yr - which wouldn't buy much health care - would have been prohibitive. And I was, if anything, better off than 20 million of my countrymen. So be careful what claims you make on behalf of others.
I'm a libertarian because I believe that in many cases they are not the best solution, or the problems weren't that bad to begin with.
Spoken like a man who has never been poisoned by his food or water.
I apologize if that's too snarky, but, seriously - the labor conditions of the steel industry in 1880? The sanitary conditions of the meatpacking industry in 1905? The health implications of the drug industry in the 1890s (got a cough? Try mercury!)? I understand - on some level - the sense that gov't is too intrusive, that liberty is infringed by regulation. But I don't understand this insistence that, without regulation, we'd be in some paradise.
The middle class is created by government interference in markets - it has never existed without it. Over the past 27 years of anti-gov't ascendance, the middle class in this country has been eviscerated. This was predictable. I, for one, don't like it.
Serious question: do Seanie and erik understand that healthy 25 yr olds are not, actually, immune to sickness? Eliminating women from the risk pool - 25 yr old women are prone to very expensive, very natural medical conditions - you get maybe 7 million likely-healthy people in their early 20s. As I said, I thought $50/yr was too much at the time, but let's say you could get them all in the pool at $100 each. So you've got $700M of medical care to spread around. Half of them go to the doctor for a checkup? $50 X 3.5M = $175M. 1% of them have a sports injury - sporty guys, right? $5,000 X 70k = $350M. Uh oh. 0.01% of them get something serious? $500,000 x 700 = $350M. And we're out of money.
Wait, I know - they would pay out of pocket for that checkup. Which means they probably don't go at all. That nagging cough? Will go away. Uh oh - it didn't. And now it's $1,000 (or more). Is that out of the pool? Or out of pocket? Which is better?
The trouble is that we're actually not really good at valuing for ourselves what our risks are. If we were, no one would play the lottery.
I've never been able to understand how anyone can think it is somehow fair, let alone a good idea, to force healthy and relatively poor young people to pay for the health care of sick and relatively wealthy old people.
Does it help - even a tiny bit - to recall that you will, in fact, become old (unless of course you die from getting sick without insurance)? So it's almost as if you're paying in advance of your own future sickness?
Ah, you say, but when I'm old, I'll be rich. Well, you can certainly hope so. But most (like 90% most) people aren't actually rich enough to pay medical expenses out of pocket on a PAYGO basis - $10k/yr for just minor conditions when you're 70, and only going up? And, of course, a hip replacement is through the roof. A pool of just the elderly would have monthly premiums of a couple grand per person. Again, you won't be that rich. So where does the money come from?
All of this is aside from the fact that every nationalized health care system pays less money for better results than we get here. Both erik and Seanie claim that they're willing to concede some role for gov't in economic life. Well, if it meant that we'd all be healthier and pay (a LOT) less money for it over the course of our lives, wouldn't it be worth it to give up a bit of your liberty to use to the emergency room for primary care?
Erik, Jroth and Seanie,
My guess is that the three of you have VERY DIFFERENT 'models of the individual' when it comes to health care. You will argue about how they aggregate indefinitely and never agree if you are building from a different initial model.
You can keep arguing at whatever level of analysis you like, but if you want to reach consensus (and I suspect you don't actually care that much), you would have to build carefully after you had negotiated a common model of the individual.
Whatever else you do in this conversation, do not snip at each other. I will ground you all until you are 60.
Megan,
Thinking about the comment policy. I wonder if deleting compliments directed at you might not be counter-productive?
Here's the mechanism I'm thinking about:
Joe Q. Internet googles "super cool lady" with "very interesting blog," or something.
Since you discourage and/or delete such comments, he never finds you.
Therefore, he may never read your blog to find out if your interests align (supposing he fears no-one shares his interests, and doesn't google, say "fixed-gear bicycle," "foot fetishist" and "ultimate frisbee").
Now he also can't write you to ask for a burrito-eating-trebuchet-building-frisbee-throwing date.
Hmm. I don't know. It seems plausible.
Alright, Megan will probably ground me for this, but since I care much more about the built environment than I do about health care, I can't let this pass:
But that does NOT imply that housing prices in CA could not be brought much lower by altering current CA laws to make them MORE PERMISSIVE than those in PA. And that is precisely what I propose.
Of course! Why didn't I think of that? Like, life/safety issues should be totally market-dependent. In this case, it would really pay to live in a distressed community - in Pittsburgh, you get 2 means of egress and 1.5" of egress width per occupant; but in Sacramento, 1 exit is adequate, and I'm sure y'all can squeeze through if it's just 30" wide, right?
Or, if you just mean zoning, maybe we could go back to the halcyon days of barbell tenements in industrial districts. It would be all old-timey!
Of course, all that said, I don't actually much like how most of CA is zoned - but I doubt that Seanie would like it if I told the OC they had to bulldoze it all and start over, but with more density. Don't forget that a lot of zoning restrictions come not from Evil Bureacrats, but from wealthy suburbanites. I've never before heard an anti-building reg rant directed at the suburbs, but maybe I've misread Seanie, and we can join together to protest. See you in the Marin!
I dunno, Tom. How do you assess the trade-off? We'd be balancing the risk of losing the "cool girl who does stuff" Googler against some frequency of reading "How could they not date you!!!1! You're so smart and pretty!!1!!1 And such a good writer1!!!"
Don't you think the expected values of those are pretty close?
Mr. or Ms. JRoth,
I could take the time to refute you on every point. But I won't.
I will just resign myself to be glad that I live in a country where the balot box allows people like me to stop people like you at least some of the time.
Good day.
Meggie,
You are most certainly correct that this medium is better with shorter comments since, as you point out, many people cannot be bothered to read the longer ones. But I am saddened that that even when they do, they often times learn nothing. And that is why I don't have a blog.
After all, what would be the point with people like JRoth, who first insult me and then ignore my detailed rebuttal arguments and then misrepresent and insult me again when replying?
No need to ground me till I'm 60. I am gone. Nature abhors a vaccuum and JRoth can fill it. Soon only his or her din will be heard...
--Seanie
JRoth, I am so with you on the content, and I fully agree with you that regulations should provide a health and safety standard that will be pretty universal if it fits humans.
But even though you feel provoked and it is really hard, I still wish you said it without the snark. Now I'll have to sooth your responders and ask them to answer sincerely and it will be that much harder for them.
Seanie,
You managed to work a personal slam against one of my commenters in your exit. You are always welcome to post here, but you may not do that to me or to anyone else here.
The next time you comment here and snark against a person, I'll delete it and ask you to repeat any remaining content without a personal attack.
Too true.
What if you limited fawning comments to one per commenter, lifetime?
Though I guess that would be pretty similar to a "warning followed by deletion" policy.
Okay, I'll think about it some more.
Tom, I am completely sincere when I say that I am so glad you are working the problem.
I just want to point out that, in at least 4 replies, I only resorted to snark once. And while Seanie may feel confident that his answers would devastate mine, and, apparently, that I was somehow unresponsive to him, I put a fair amount of effort into pointing out the logical inconsistencies/shortfalls of his comments. I'm not just snarking ignorantly with the certainty that I'm right.
I appreciate the effort you're putting in, Megan, to keeping this a worthwhile discussion place, and don't want to make work for you, or to take advantage of your sympathy for my positions to get away with stuff.
That said, I hope there's room for at least some snark, if backed up with substance. 'Cos otherwise, that's no fun.
...the labor conditions of the steel industry in 1880? The sanitary conditions of the meatpacking industry in 1905? The health implications of the drug industry in the 1890s (got a cough? Try mercury!)?
These are all excellent examples of things the government should have, and did, step in and fix with regulation. They all came during a period when our country was much less regulated than it is now, and I'm happy that they are not still problems today.
As a libertarian, and not an anarchist, I believe that there are things the government should do. However, that does not change or refute my previous comment.
I am not going to engage in the Heath Care topic anymore since I agree with Megan.
I hope no one has found my comments insulting or snarky. My only intention was to share a point of view.
I just want to point out that, in at least 4 replies, I only resorted to snark once.
Hopefully I'm not beating a dead horse here, but that's exactly the kind of thing that community moderation/scoring systems reduce--people arguing with your moderation decisions. And meta-discussions about moderation do take away from the main discussion. Which, obviously, I am also guilty of. Apologies.
Back on topic:
maybe we could go back to the halcyon days of barbell tenements in industrial districts.
Obviously I don't want to live next to a coal power plant, but technological change and the shift toward a service economy has made it a lot more reasonable to put living and working next door to each other. And I don't think the zoning laws have really kept up with the shift.
Also, zoning/building restrictions that come from wealthy suburbanites can be just as obnoxious as those that come from evil bureaucrats. Height restrictions in particular I find a bit obnoxious. Rather than an outright ban, there ought to be some kind of Coasian solution to the view-blocking negative externalities.
I'd be interested in hearing more about how you don't like how most of CA is zoned, JRoth. In what cases would those problems be solved by paring down the zoning laws/regs?
BTW - "bulldoze it all and start over" is a lame strawman without any redeeming humor value.
BTW - "bulldoze it all and start over" is a lame strawman without any redeeming humor value.
Is it a strawman? It was in response to a suggestion that the density of SF proper should be doubled. Obviously, that doesn't literally mean to rebuild every acre of land at twice the height, but it's not that different either - SF is a reasonably dense city, and doubling its density would require a lot more than just redeveloping a couple of neighborhoods. If people are going to suggest radical change, I don't see why I should have to pretend that it's a modest adjustment, for fear of being tagged a strawman builder.
I'd be interested in hearing more about how you don't like how most of CA is zoned, JRoth. In what cases would those problems be solved by paring down the zoning laws/regs?
Actually, I doubt that very much of it would involve "paring down" - I think it's a myth that the intrusiveness of regulation is somehow tied to its length. "No one shall settle beyond the Alleghenies" is a pretty pared-down regulation, with massive consequences.
That said, my impression is that much of CA is governed by 1950s-vintage zoning laws that essentially mandate non-walkable communities - places with isolated uses, big side yards, and too much surface parking. I would like to see mixed-use, dense communities with lots under 1/10 acre. I doubt that many Californians (who live outside of cities) would share my vision.
JRoth,
There are some neat groups doing really great work on that. While sprawl is still prevalent, there is lots of cause for hope. A denser transit-oriented village model is much less far-fetched than it used to be.
The local one is the Sacramento Blueprint Project.
Why do you even care about sprawl? How often do you actually head out into the country, or the wilderness?
I believe I read somewhere that the east coast is more densely forested now than it was in the 1800s by people naturally switching away from an agricultural society, and moving into cities on their own.
Anyway, as always, I don't agree with you, or JRoth. I think people are better off on their own, free to make decisions for themselves.
And, as far as looking at subsidizing the health care of the old as paying for my future health care, why not just save on my own? I get all the advantages of being responsible for myself without any of the downsides of the socialist nonsense.
Justin
And, as far as looking at subsidizing the health care of the old as paying for my future health care, why not just save on my own? I get all the advantages of being responsible for myself without any of the downsides of the socialist nonsense.
Americans pay more for health care than other OECD countries, do worse on a variety of measurements such as infant mortality, and millions of people don't have any insurance at all.
We've got the best health care system in the world for the wealthy. For the rest of us, we're paying too much and getting too little in return.
I was firmly against the Hillary-led healthcare plan of the early 90s, but since then the system has continued to deteriorate while the costs have continued to accelerate. Even for the pro-business argument, it's now to the point where entire industries are failing in large part due to health care costs harming their competitiveness.
In short, I've reversed my earlier opposition. We need a single-payer system.
I'm generally sympathetic to the libertarian view but societies are, by nature, communal. I don't care how rich you are, you'll share the suffering of those who are unable or unwilling to take care of themselves. You don't provide some safety net and soon you'll be riding a helicopter to work, Sao Paolo-style, to bypass the shanty towns where armed bandits are waiting to kidnap you for ransom.
Capitalism--like nature itself--is a winner-take-all game. I don't think we're prepared to deal the ramifications of such. Nor should we.
Not that you even responded to my question of, couldn't people just save for their health care costs later in life.
But, he talks about infant mortality rate, along with other health care issues here
Justin
They could, Justin, and they probably should, but they won't. There's a fat slice of humanity that is incapable, for whatever reason, of planning more than two minutes into the future. You can beg, cajole, threaten and you will not change their behavior.
Do we relegate these people to homelessness when they can no longer work and death when they cannot pay for their medical expenses?
If not, what is the most economic and most effective way to provide care for people who cannot or will not work? Our current system is not working.
Now forget about society's so-called dead weight and look at the working poor. There is another slice of society that is willing and able to work but does not have the mental resources to progress beyond jobs that pay 8-10 bucks an hour. We need people to fill these jobs too, but you know as well as I do that nobody who makes 10 dollars an hour will be able to afford cancer treatment and most of these jobs don't offer health insurance either. So this means they die, right?
I wonder at what point people decided that living without health insurance was the same as being sentenced to death?
Anyway. Why can't you set up your single payer system as a private organization? How is a national single payer system really different from an HMO? Couldn't you set up a private organization that only sold life time memberships with a contract requiring some % of your yearly income? Then if people really wanted in, they could opt in?
The problem with all of these socialist plans you guys like to throw around is it leaves no alternative for those of us who want no part. As always, you want a system where the rest of us have to play by your rules.
So, if people choose to not care for themselves, if they have the resources, but choose to not save, or spend on health care, then that's their decision. I don't understand why you think it's your place to force them to make what you've decided is the right decision.
And, as far as people not being able to afford health care, tough. People who can afford it go to different countries to get the best care they can afford. People who can afford it live lifestyles that reduce their health risks. Should we subsidize these things as well?
Insurance isn't so expensive that the average person can't afford it anyway. The average household income in the US is over $36,000/yr. My fairly comprehensive health insurance cost me about $300/mo, when I actually had to pay for it. It's not cheap, but it's certainly not out of reach either. And there are cheaper plans available.
But, if your concern is saving these people who are below the poverty line who really can't afford health care, why force all of us into a single payer system to help out that small % of the population? Why not create a program that just helps the low income people, you know, like medicaid?
Justin
People can't save for healthcare costs later in life because the second largest healthcare cost in most people's lives is having a child, which happens early in life when they have little or no savings. The average birth costs $10,000--$13,000. If you have one of the 15% of healthy, full-term babies that are held "for observation" you can expect a 3 day ICU stay at ~$2,000 a day on top of that.
It is implausible that America will ever be a society that is willing to punish those babies by letting them have poor or no health care because of their parent's choices.
Hell, we can't even let people who live in hurricane-prone areas pay for their own rebuilding efforts.
But maybe you didn't mean "save". Maybe you meant "finance". Young people could certainly "finance" a childbirth. It costs about as much as a pretty nice car. Maybe that would be a better policy. You would be enacting a de facto "one child (or maybe two)" policy in America for everyone but the rich, though.
I think you'd have a hard time selling a policy that is almost inevitably going to result in CNN Special Reports on people who are being evicted because all their money is being spent servicing childbirth loan payments. That's exactly the kind of heart wrenching story that riles up voters on every side of the aisle.
Actually, normal (as in healthy) childbirth costs are trivial compared to end of life costs. We spend a huge amount of money on the last year of life. This doesn't make sense on many levels, but few people go gently into that good night.
Justin, if by not having a choice, you mean that you would not be able to remove your portion of the taxes, just as you are not able to say you are not willing to pay for the Iraq war, then no, you wouldn't. But nothing would stop you from buying supplemental insurance to give you the Rolls Royce level of care that you desire, when society has determined that it's willing to pay for a Toyota.
Let's say I'm young, and healthy and want no care, because I want to save all of my extra money to start a business. What then? I have no choice but to pay your taxes.
And, regardless, my extra insurance now costs significantly more because I'm paying double. I have to pay your taxes, and I have to pay for a secondary health plan to get the coverage I want.
I don't get this fascination with health care. Why not have universal public car insurance? Or universal public home owner's insurance? People figure those things out on their own just fine, why pretend like health insurance is any different?
Justin
Justin,
Because health care costs vary from 0 to millions. Your car breaks down and it might be painful, but it's not ruinous. Health care costs are also increasing at unsustainable rates, so the problem is only going to get worse.
Michael
So, how does making all of us pay for everything make it any more sustainable?
Wouldn't competition in the market help drive costs down?
Or, maybe some of us accepting a lower level of care than the state of the art that may be available?
Justin
Is it a strawman? It was in response to a suggestion that the density of SF proper should be doubled. Obviously, that doesn't literally mean to rebuild every acre of land at twice the height, but it's not that different either - SF is a reasonably dense city, and doubling its density would require a lot more than just redeveloping a couple of neighborhoods.
If you do it in little bits over 50 years in response to a lifting of height restrictions then that part isn't a strawman; that would be pretty cool. The strawman part (which I should have quoted properly) was the idea that anyone is advocating forcing increased density, which is what "I doubt that Seanie would like it if I told the OC they had to bulldoze..." sounded like. Plus, I (mistakenly?) thought you were talking about doing it all at once, which is just crazy.
Actually, I doubt that very much of it would involve "paring down" - I think it's a myth that the intrusiveness of regulation is somehow tied to its length.
I did originally mean paring down in scope; given that the overall topic of the conversation is deregulation I didn't think I had to specify. I certainly agree that scope isn't necessarily related to the length of the text.
That said, my impression is that much of CA is governed by 1950s-vintage zoning laws that essentially mandate non-walkable communities - places with isolated uses, big side yards, and too much surface parking. I would like to see mixed-use, dense communities with lots under 1/10 acre. I doubt that many Californians (who live outside of cities) would share my vision.
Actually, I think some suburbanites are starting to get it. Anecdotally, my southern-california-dwelling relatives are starting to understand the relationship between sprawl and traffic. And while it may be true that people who live outside cities are less likely to share your vision (or else they would be living in the cities), people are moving back into the cities; the amount of condo construction in LA over the last several years is pretty amazing.
The question I'm interested in is to what extent this transition toward greater density would be helped if the scope of building regulations was reduced. What would we have given up if those 50s-era regs had never been created? What do those now-obvious flaws teach us about writing new, more subtle regulations? How do we allow mixed-use without ending up with a dingo farm next to the preschool? And can we set up a system where the preschool and the dingo farm can work something out between them? One imagines that the preschool's insurance carrier would at least require some better fencing.
Those 50s-era regulations were set up by people who thought they were doing the right thing, but we've learned a lot since then about the pros and cons of their approach. The regulations are hard to change once they've been set up, though, and now we're stuck with those mistaken decisions.
Wouldn't competition in the market help drive costs down?
Only it's not. Our health care costs per capita are far more expensive than in those countries with socialized medicine, but we're not getting better results.
I'm all for the free market, but it doesn't work in all cases. It's poor at building infrastructure or handling national defense (witness the freelance contractors in Iraq). It isn't good at preventing pollution or ensuring that you won't get e-coli from the next burger you eat. And, unfortunately, it doesn't seem to be working with health care.
Michael
On the "there should be less people" thing, I'm glad to hear that your reason for it is to protect existing people from suffering, and not because you think that the very presence of humans is an affront to Gaia or something like that. I have more confidence in the Cheap Non-Polluting Energy Unicorns than you do (I think they are very likely to show up if we don't destroy ourselves first in religious wars), but I take your point that banking on them is very risky.
On the housing thing, I am not an expert, but here goes. Whenever a price is out of whack relative to historical trends, there are two possible explanations: (i) the world has changed in some fundamental way; or (ii) what's going on now is a temporary unsustainable anomoly due to some kind of irrational psychological something-or-other. Housing prices are now out of whack relative to historical trends. People have offered non-crazy explanations for why (i) might be correct, but then again they did the same thing for stock prices in the 90s and it turned out that (ii) was where the action was.
A lot of very credible people are saying that (ii) is much or most of what's going on, and so that housing prices are going to have to fall and fall a lot (in inflation-adjusted terms) and what we're seeing now is the beginning of this. Of course nobody knows for sure, but I am inclined to believe them.
I'm sure your readers already know this, but they should not conclude from your fortunate experience that the way to a lifetime of financial security is to buy a house while young no matter what. In fact, the good fortune of people like you who bought when houses were cheap is probably a big part of the irrational psychology; they think that if they don't buy now rising prices will lock them out forever.
For what it's worth, I just resigned my lease for another year.
David J. Balan
http://www.marginalrevolution.com/marginalrevolution/2005/04/do_we_live_in_a.html
http://econlog.econlib.org/archives/2007/09/two_stories_of.html
http://www.kansascityfed.org/publicat/sympos/2007/PDF/2007.08.01.Shiller.pdf
The last post seemed to cut off the ends of my links. I'll try it again with breaks in the middle.
http://www.marginalrevolution.com/
marginalrevolution/2005/04/do_we_live_in_a.html
http://econlog.econlib.org/archives/2007/09/
two_stories_of.html
http://www.kansascityfed.org/publicat/sympos/
2007/PDF/2007.08.01.Shiller.pdf
Hey David,
Thanks for the on-topic answer. Love those.
to protect existing people from suffering
AND to maintain undisturbed places on earth, because other living things, or even fragile landscapes, have inherent worth.
I can't figure out how to balance those unless we have far fewer people.
Cheering on the Cheap Non-Polluting Energy Unicorns! Run unicorns! Run to us!
Justus,
I think you're missing the key point of what Justin is talking about. Allowing people to save for, or finance health care instead of buying insurance doesn't stop other people from getting insurance. Families that want many children, or have other reasons to make it fiscally intelligent, will use insurance to make it possible. This does not require that people who want few or no kids to also get insurance.
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