Monthly Archives: August 2018

Handy Q+A: Policing For Whiffs of Racism/Sexism

25 Saturday Aug 2018

Posted by in Identity Politics

≈ Leave a comment

Tags

, , , , , , , ,

ααα

Too many folks today are disquieted by the possibility of uttering some erstwhile harmless expression that might conceivably offend peoples of various identity groups. As a service to my readers, I have decided to share a link to this thoughtful guide, actually a quiz, from the Manhattan Contrarian: “How To Identify Racist And Sexist Remarks And Slurs“. It is a short field guide, as it were, but one that may be applied to the “field of the mind” to fend off impurities of thought. In this day and age, one can’t be too careful!

Those who wish to score themselves on the quiz without exposure to spoilers should proceed directly to the link. I hope others, after reading just two of the questions and answers I quote below, will be so moved by the spirit of the exercise that they will go to the link to read the quiz in its entirety. Here are two of the questions and answers:

Q: “You say, ‘I believe the most qualified person should get the job.'”

A: “Obviously, this is racist, and probably sexist as well. … This statement demonstrates the ‘myth of meritocracy‘ and ‘assert[s] that race does not play a role in life successes.‘ It conveys the ‘message‘ that ‘[p]eople of color are given extra unfair benefits because of their race.‘”

Q: “I don’t give a, I don’t give a, I don’t give a fuck. I’m willin’ to die for this shit.  I done cried for this shit, might take a life for this shit. Put the Bible down and go eye to eye for this shit … If I gotta slap a pussy-ass nigga, I’ma make it look sexy.”

A: “Racist? Are you kidding????? These are lyrics from the song “Element,” from the album DAMN, by Kendrick Lamar, that won the Pulitzer Prize for music back in March. Obviously, if you had written this first, you would have won the Pulitzer Prize instead of Lamar.”

You must be attuned to the logic and politics of identity. Do NOT stumble into any implication that a thing matters that could be associated with an identity group, no matter how coincidentally. And do NOT under any circumstances attempt to adopt an element of the culture of another identity group, be it food, dress, music, or language. At the same time, however, do NOT forget that nothing matters more than honoring and paying restitution to each and every identity group that might have a claim to victimhood. Except for Jews, especially Zionists. Hope you like your straightjacket extra-tight.

Liz Warren Pitches Another Goofball

23 Thursday Aug 2018

Posted by in Central Planning, Property Rights, Regulation

≈ Leave a comment

Tags

, , , , , , , ,

Elizabeth Warren wants to nationalize all private businesses with more than $1 billion in annual revenue. She plans to introduce legislation called the “Accountable Capitalism Act” that would, if enacted, authorize an outright theft of private property from the owners of these companies. Among other things, her plan would require large companies to obtain a federal charter and set aside 40% of their board seats for members to be elected by employees. In addition, henceforth these businesses would be answerable not merely to shareholders, but to employees along with a limitless array of other “stakeholders”. That’s because under their federal charters, firms would have a duty to create a “general public benefit”. The operative assumption here is that merely creating a product or service does not produce adequate value for society, regardless of the benefits to buyers, income to employees and suppliers, taxes paid, and the returns earned by millions of working people who have invested in these companies via pension and 401(k) plans.

In the very first place, Warren’s bill is unconstitutional, as Richard Epstein points out. Owning a business is protected as a property right under several amendments to the U.S. Constitution, but particularly the Fifth Amendment. Warren would place unconstitutional conditions on this right via the requirements for a federal charter and the so-called public benefit. If enacted, her bill would quite likely be ruled unconstitutional by the courts. But if it stood, capital would quickly take flight from the U.S., depressing asset values.

Don Boudreaux notes that absent ownership, vaguely-defined “stakeholders” have risked nothing in the success of the company. Shareholders bear the financial risk that the company will fail to produce adequate earnings, lose value, or fail. Management has a fiduciary duty to protect the funds that shareholders invest in the firm, including a duty to protect the firm’s ability to acquire credit. Warren’s legislation would compromise these duties by elevating the objectives of non-owners to the same or greater status than those who have provided the equity capital. Again, this would happen in at least two ways: required representation of employee-elected board members, and the vague public-benefit mandate under the firm’s federal charter.

Significant employee representation on the board is likely to distort decisions about labor compensation and virtually any decision affecting employment. While 40% is short of a board majority, union pension funds already purchase shares in companies both as investments and as a way of driving labor issues before shareholders and into boardrooms. Those votes, along with the 40% board representation and oversight from federal bureaucrats, would give additional leverage to labor in influencing the firm’s decision-making. To take the simplest case, economic efficiency requires that the rate of labor compensation be the same as the marginal value of labor productivity. Warren’s proposal would surely result in wage payments exceeding this threshold, diminishing the economic value of the firm and its ability to raise capital. And by reducing the efficiency of the production process, it would raise costs to consumers and/or business customers.

There any number of other worker demands that would gain viability. For example, extended break times or extra paid-time-off would certainly raise costs, and such demands from a plurality of the board would be unrestrained by the need to negotiate other terms. Or how about a plant-closing decision? The upshot is that mandated board representation for labor would create instability and lead to a decline in the firm’s performance, competitiveness, and attractiveness to suppliers of capital. Ultimately, the very jobs on which labor depends would be threatened.

Further dilution of business objectives would arise from the requirement under the federal charter to produce a “public benefit”. Serving customers is not enough, but what will satisfy federal overseers that the firm has fulfilled its social obligations? And what are the limits of those social obligations? Again, these amorphous requirements would constitute a theft of resources from the business owners, requiring the payment of alms in order to produce something of value. There is already evidence that board activism in pursuit of non-business, social objectives destroys business value:

“Labor-affiliated pensions regularly file shareholder proposals, usually involving social and political concerns. Those social and political shareholder-proposal campaigns are associated with lower shareholder value. These labor investors also tend to attack companies facing ongoing union-organizing campaigns, as well as companies with political action committees that support Republicans.”

In time, the dilution of objectives undermines a firm’s viability, its health of its suppliers, and its ability to employ workers and hire other resources. Many of the suppliers hurt by Warren’s proposal would be smaller firms. It would ripple through the ranks of consultants, repair shops, electricians, plumbers, accounting firms, janitorial services, and any number of other businesses. But even before that, Warren’s proposal would send capital scrambling overseas.

I share Don Boudreaux’s astonishment that writers such as Matt Yglesias in Vox can assert that the Warren plan would have no costs. It might or might not have an impact on the federal budget, but the cost of destroyed economic value in the business sector would be massive, not to mention the jobs that ultimately would be lost in the process. It’s also astonishing that proponents can pretend that Warren’s bill would “save capitalism” when in fact it would do great harm.

Finally, here is Kevin Williamson expressing his disdain for Warren’s true intent in putting her bill forward:

“Warren’s proposal is dishonestly called the ‘Accountable Capitalism Act.’ Accountable to whom?  you might ask. That’s a reasonable question. The answer is — as it always is — accountable to politicians, who desire to put the assets and productivity of private businesses under political discipline for their own selfish ends. It is remarkable that people who are most keenly attuned to the self-interest of CEOs and shareholders and the ways in which that self-interest influences their decisions apparently believe that members of the House, senators, presidents, regulators, Cabinet secretaries, and agency chiefs somehow are liberated from self-interest when they take office through some kind of miracle of transcendence.”

The Due Process Right To Plea Bargain

16 Thursday Aug 2018

Posted by in Criminal Justice, Over-Criminalization

≈ Leave a comment

Tags

, , , , , , , , , , , , , ,

Our criminal justice system is not the exemplar of due process we’d like to think. Instead, the deck is often stacked against defendants because prosecutorial incentives, mandatory minimum sentences and plea bargaining interact in perverse ways. This is exacerbated by our tendency to demand laws against every behavior that offends us, some that are redundant, some with lower burdens of proof, and some that are just silly. Civil justice is subject to excesses as well, as claims of victimhood are bounded only by the fertile imaginations of plaintiffs’ attorneys, but that’s a subject for another day.

Prosecutors tend to be ambitious, which is not necessarily a bad thing. But the U.S. is unique in electing prosecutors, and a “tough-on-crime” message is often successful at the polls. This magnifies the incentive for aggressive prosecution to achieve a high rate of conviction and lengthy sentences. Of course, defendants are often at a disadvantage in terms of the quality of their legal representation, but beyond that are a variety of prosecutorial tactics that can be used in pursuit of these goals.

A nexus between several factors has made the criminal justice system much harsher for defendants. Multiple charges on related and even unrelated crimes, often with harsh mandatory minimum sentences, can help secure a guilty plea on the original charge. The prosecution gets a conviction and avoids the cost of a trial, but the due process rights of the defendant are compromised in the process. Former Federal District Court Judge Kevin Sharp resigned from the bench because he could no longer tolerate the abuses done by mandatory minimum sentences. He offers a couple of examples:

“Antonio was driving down the street and, without being too graphic, he and his girlfriend were engaged in an activity that caused him to cross slightly over the double-yellow line. The police saw it and pulled him over. The police suspected his girlfriend was a prostitute, so they split Antonio and his girlfriend up and asked them questions. The police realized based on her answers that she in fact was Antonio’s girlfriend. Then, the police said, ‘OK, we are going to let you go. Oh, by the way, do you mind if we search your car?’ Antonio, forgetting that he had an unloaded pistol under the front seat of his car, responded, ‘No, go ahead.’ Antonio was charged with being a felon in possession of a firearm. Because he was convicted as an adult in his prior crimes, his mandatory minimum sentence was 15 years. …

Members of Congress, in their desire to be elected and reelected, often show how tough on crime they can be, and they say, ‘Look, mandatory minimums are necessary so that we can take discretion away from the judges.’ But these legislators have not taken away discretion, they have just moved it to the prosecutor, who has a dog in the hunt.“

The so-called “trial penalty” is the subject of a study on the disparate sentences offered in plea deals versus those likely to be imposed if the defendant goes to trial. This disparity is truly a threat to the Sixth Amendment right to a fair trial. Over 97% of federal criminal cases are now settled by plea, and again, rejecting a plea deal can carry considerable risk for a defendant. In fact, in discussing this study, Walter Pavlo puts things starkly: innocent people are pleading guilty. He quotes this finding:

“There is ample evidence that federal criminal defendants are being coerced to plead guilty because the penalty for exercising their constitutional rights is simply too high to risk.”

“How to make an innocent client plead guilty” is the topic of Jeffrey Stein’s confessional on the topic:

“... according to the National Registry of Exonerations, 15 percent of all exonerees — people convicted of crimes later proved to be innocent — originally pleaded guilty. That share rises to 49 percent for people exonerated of manslaughter and 66 percent for those exonerated of drug crimes.

You tell your client that they would probably win at trial, but if they lose, they will go to prison. The plea promises some meaningful benefit: getting out of jail sooner, avoiding deportation, not losing a job, seeing a daughter before her next birthday. But your client would have to accept responsibility for a crime they may not have committed.

The final stage happens in court. Your client has signed the paperwork admitting to something you believe in your gut they did not do. Maybe they acted in self-­defense. Maybe they were standing near the actual perpetrator and were presumed guilty by association because of the color of their skin. Maybe they were the victim of an honest misidentification.”

An episode in South Carolina indicating possible manipulation by prosecutors involved a grand jury, which is convened to hear preliminary evidence in a case and decide whether the defendant should be indicted on charges brought by the prosecution. This particular grand jury approved 904 indictments in a single day, averaging 39 seconds per indictment! In response, 27 defense attorneys filed a motion to have the indictments thrown out. It’s impossible to imagine that all of those cases received serious deliberation. Instead, the grand jury appears to have served as a rubber-stamp for the prosecution.

Over-criminalization is another major factor contributing to the erosion of due process rights. As Glenn Reynolds says, the next step should be fewer laws. This earlier paper by Reynolds made the point more forcefully: “Ham Sandwich Nation: Due Process When Everything Is a Crime” (free download):

“Overcriminalization has thus left us in a peculiar place: Though people suspected of a crime have extensive due process rights in dealing with the police, and people more charged with a crime have even more extensive due process rights in court, the actual decision whether or not to charge a person with a crime is almost completely unconstrained. Yet, because of overcharging and plea bargains, that decision is probably the single most important event in the chain of criminal procedure.

Reynolds offers a number of remedies, including replacement of absolute immunity for prosecutors with “qualified good-faith immunity”, pro-rata allocation of defense costs based on the ratio of convictions to the number of charges, and requiring that earlier plea offers be revealed to the jury at trial.

Today, the many laws we have against victimless behavior overburden the justice system. Have you ever: purchased a large soda? Used recreational drugs? Purchased raw milk? Engaged in oral sex? Played fantasy sports? Used a plastic straw? Vaped? Paid for a sex toy? Sold lemonade from a stand without a permit? Purchased a Happy Meal? Given food to a homeless person? These are just a few activities that are, or soon-to-be, illegal in certain jurisdictions, and I mentioned only one case having to do with licensure. I have not even mentioned crimes promulgated by federal regulators.

In “Enforcing the Law Is Inherently Violent“, Conor Friedersdorf quotes Yale Law Professor Stephen L. Carter:

“Every law is violent. We try not to think about this, but we should.  On the first day of law school, I tell my Contracts students never to argue for invoking the power of law except in a cause for which they are willing to kill. They are suitably astonished, and often annoyed. But I point out that even a breach of contract requires a judicial remedy; and if the breacher will not pay damages, the sheriff will sequester his house and goods; and if he resists the forced sale of his property, the sheriff might have to shoot him.

This is by no means an argument against having laws. … It is an argument for a degree of humility as we choose which of the many things we may not like to make illegal. Behind every exercise of law stands the sheriff – or the SWAT team – or if necessary the National Guard. Is this an exaggeration? Ask the family of Eric Garner, who died as a result of a decision to crack down on the sale of untaxed cigarettes. That’s the crime for which he was being arrested. Yes, yes, the police were the proximate cause of his death, but the crackdown was a political decree.”

Yes, we need “a degree of humility as we choose which of the many things we may not like to make illegal.” We have over-crowded prisons and we have failed to protect the due process rights of the accused. A conviction should require proof of guilt beyond a reasonable doubt. In statistical terms, that would mean a very low p-value. Instead, our system has devolved into one in which defendants presumed innocent are forced to reckon with myriad risks, exaggerated by “kitchen sink” prosecutors and mandatory minimum sentences. The tradeoffs facing defendants are so unfavorable that few cases ever go to trial. The plea bargaining system often reduces the burden of proof to a matter of gamesmanship. For prosecutors, it’s like shooting fish in a barrel.

Forest Fires Ignite Climate Change Delusions

10 Friday Aug 2018

Posted by in Global Warming, Wildfires

≈ 2 Comments

Tags

, , , , , , , , , , , , , ,

The geographic extent of this summer’s forest fires won’t come close to the aggregate record for the U.S. Far from it. Yes, there are some terrible fires now burning in California, Oregon, and elsewhere, and the total burnt area this summer in the U.S. is likely to exceed the 2017 total. But as the chart above shows, the burnt area in 2017 was less than 20% of the record set way back in 1930. The same is true of the global burnt area, which has declined over many decades. In fact, this 2006 paper reported the following:

“Analysis of charcoal records in sediments [31] and isotope-ratio records in ice cores [32] suggest that global biomass burning during the past century has been lower than at any time in the past 2000 years. Although the magnitude of the actual differences between pre-industrial and current biomass burning rates may not be as pronounced as suggested by those studies [33], modelling approaches agree with a general decrease of global fire activity at least in past centuries [34]. In spite of this, fire is often quoted as an increasing issue around the globe [11,26–29].”

People have a tendency to exaggerate the significance of current events. Perhaps the youthful can be forgiven for thinking hot summers are a new phenomenon. Incredibly, more “seasoned” folks are often subject to the same fallacies. The fires in California have so impressed climate alarmists that many of them truly believe global warming is the cause of forest fires in recent years, including the confused bureaucrats at Cal Fire, the state’s firefighting agency. Of course, the fires have given fresh fuel to self-interested climate activists and pressure groups, an opportunity for greater exaggeration of an ongoing scare story.

This year, however, and not for the first time, a high-pressure system has been parked over the West, bringing southern winds up the coast along with warmer waters from the south, keeping things warm and dry inland. It’s just weather, though a few arsonists and careless individuals always seem to contribute to the conflagrations. Beyond all that, the impact of a warmer climate on the tendency for biomass to burn is considered ambiguous for realistic climate scenarios.

And what of the “mega-fires” burning in the West, like the huge Mendocino Complex Fire and last year’s Thomas Fire? Unfortunately, many decades of fire suppression measures — prohibitions on logging, grazing, and controlled burns — have left the forests with too much dead wood and debris, especially on public lands. From the last link:

“Oregon, like much of the western U.S., was ravaged by massive wildfires in the 1930s during the Dust Bowl drought. Megafires were largely contained due to logging and policies to actively manage forests, but there’s been an increasing trend since the 1980s of larger fires.

Active management of the forests and logging kept fires at bay for decades, but that largely ended in the 1980s over concerns too many old growth trees and the northern spotted owl. Lawsuits from environmental groups hamstrung logging and government planners cut back on thinning trees and road maintenance.

[Bob] Zybach [a forester] said Native Americans used controlled burns to manage the landscape in Oregon, Washington and northern California for thousands of years. Tribes would burn up to 1 million acres a year on the west coast to prime the land for hunting and grazing, Zybach’s research has shown.

‘The Indians had lots of big fires, but they were controlled,’ Zybach said. ‘It’s the lack of Indian burning, the lack of grazing’ and other active management techniques that caused fires to become more destructive in the 19th and early 20th centuries before logging operations and forest management techniques got fires under control in the mid-20th Century.”

The annual burnt area from wildfires has declined over the past ninety years both in the U.S. and globally. Even this year’s wildfires are unlikely to come close to the average burn extent of the 1930s. The large wildfires this year are due to a combination of decades of poor forest management along with a weather pattern that has trapped warm, dry air over the West. The contention that global warming has played a causal role in the pattern is balderdash, but apparently that explanation seems plausible to the uninformed, and it is typical of the propaganda put forward by climate change interests.

Success In The Enlightened West

08 Wednesday Aug 2018

Posted by in Free markets, Liberalism, Liberty

≈ Leave a comment

Tags

, , , , , , , ,

The Left is engaged in a full attack on true liberalism and it is an attack on the rights of the individual: life, liberty, property, speech, due process of law, and other enumerated and unenumerated rights enshrined in the U.S. Constitution. These rights are themselves the very underpinnings of Western civilization and are together an unambiguous force for good in the world. Joe Lonsdale has written a declaration regarding the powerful legal, political, and economic philosophies that have served as the bases of Western civilization and its successes and which have, as a consequence, been adopted around the globe. Lonsdale, in his mid-30s, is an “American entrepreneur and technology investor” and founder of The Cicero Institute, an organization dedicated to encouraging “public-sector entrepreneurship to address America’s most pressing problems.”

I love Lonsdale’s full-throated advocacy for Western principles. Their articulation over three centuries ago by an enlightened “patriarchy” (as today’s social justice warriors might call them) managed to upset an entrenched and rapacious oligarchy, over time lifting whole populations out of subjugation and penury. Ultimately, this upheaval made possible the legal recognition of the same rights for all individuals, regardless of race and gender. Lonsdale’s insistence on the appropriate use of the word “liberal” is refreshing. It should (but won’t) serve as a corrective to the towering ignorance of those who accept “liberalism” when used as a cover for statism.

I’m going to quote “liberally” from Lonsdale’s piece because it speaks so well for itself, but if you’ve made it this far then you should read Lonsdale’s essay in its entirety.

“[John] Locke’s moral insight is ‘liberalism’, a principle of mutual restraint inspired by the inviolable rights of others to design their own lives. Freedom is life in accordance with reason; reason compels us to respect the freedoms of others. By respecting the rights of others, we guarantee our own.

This Enlightenment thinking was put into practice in the Glorious Revolution in 1688 in Britain, and especially in the founding of America, where Locke’s liberalism formed the backbone of the new republic. To be sure, in practice there were deep contradictions—the founders were simultaneously freedom fighters and slave-owners—but the institutional architecture was in place. The West’s new framework of property rights and political freedoms unleashed a surge of creative energy, enabling a three-century miracle of growth, prosperity and unimaginable wonders of innovation.

It didn’t have to happen that way. The natural order of things is for life to be ‘solitary, poor, nasty, brutish and short’ (in the words of Thomas Hobbes, a contemporary of Locke). Western civilisation is a great artifice: a liberal framework that enshrines property rights, allowing us to restrain most forms of tribalism, participate in free markets and prosper by serving others regardless of their identities.

These political rights of treating people equally and letting them get on with their business had a hugely beneficial effect on society and the economy. Consider that historically speaking, it is actually unnatural for the best ideas to dominate and spread, thus allowing entrepreneurs to displace incumbent, vested interests. More common is for force or hierarchy, not the meritocracy of ideas, to win. However, the West established a cultural and legal environment where a competition of clever ideas and activities could flourish. 

Lonsdale offers several examples of the malignant effects of forsaking these Western ideals. The hallmark of all these failures is an abandonment of the individual as the true and natural rights-holder and productive force. Here are Lonsdale’s  closing paragraphs:

“As pre-Enlightenment modes of value-signaling, tribalism and power-politics come to the fore on campus and social media, we must reaffirm our commitment to Western liberal values by actually putting them into practice. Only a rational order which enshrines individual rights to person and property, and expands opportunities for all, will create the stability and economic progress necessary to quell populist discontent.  

Unsurprisingly the anti-liberal, top-down parts of our society are experiencing cost-disease and decay. The West enabled a market order where the best ideas win, no matter whose idea it was. We need to remind ourselves of how unusual the miracle of our political economy is and enact its lessons. Only then can we save the concept of ‘Western civilisation’ and spread its benefits of freedom and prosperity—not just for people in the West, but for everyone.”

Right-to-Work Promotes Employment, Wage Growth

06 Monday Aug 2018

Posted by in Labor Markets, Right to Work

≈ Leave a comment

Tags

, , , , , , , , , , , ,

The economic evidence is quite clear that state right-to-work (RtW) laws do not reduce wages, though a few seem desperate to convince us otherwise. In fact, RtW has proven to be an unambiguous economic tonic for states that have enacted such laws (though perhaps not for union lobbyists). Note that this has nothing to do with comparisons of nominal wage levels in RtW vs. non-RtW states, as organizations like the left-wing Economic Policy Institute (EPI) are wont to make. Adjusting for the cost of living often shows a different result. Either way, the recency of RTW laws in many states means that those differences tend to be legacy effects and are not useful as a gauge of the incremental impact of RtW laws.

It’s no coincidence that RtW laws have gained favor as a mechanism for encouraging economic growth in historically low-wage states. The efforts have been largely successful. Jeffrey Eisenach reported the following findings in 2015:

  • “RTW laws directly affect economic performance through their impact on business location decisions, especially in heavily unionized industries such as manufacturing. Other things being equal, businesses are more likely to locate in states with RTW laws. There is also evidence that RTW laws have a direct, positive effect on employment, output, and personal income.
  • RTW laws do not lead to lower average wages in either unionized or non-unionized industries. There is some evidence that the long-run effect of RTW laws is to raise wage rates as a result of increased productivity.
  • RTW laws also affect economic performance indirectly through lower rates of union density. The weight of the evidence indicates that lower union density is associated with higher levels of employment, increased investment and R&D spending, and increased innovation.”

Mark Mix reports similar evidence, including more rapid employment growth and larger wage gains in RtW states. And James Sherk addresses some of the myths surrounding RtW, including the misleading narrative that RtW reduces wages and that RtW is unpopular among the American public. Indeed, Sherk quotes a Gallup poll finding that Americans support right-to-work laws by more than a 3 to 1 margin, though it’s not clear how well the average American understands the issue.

A disturbing aspect of the opposition to RtW is an effort to disparage the business community by characterizing private enterprise as exploitative. I leave you with some wisdom from Bran Caplan on that point (HT: Don Boudreaux):

“Businesses produce and deliver virtually all of the wonderful, affordable products that we enjoy. Contrary to millennia of economic illiterates, businesses rarely do so by ‘exploiting’ their workers. Instead, businesses provide gentle but much-needed leadership. Left to our own economic devices, most of us are virtually useless; we don’t know how to produce much, and we don’t know how to find customers.  Businesspeople solve these problems: They recruit workers, organize them to vastly raise their productivity, then put these products in the hands of customers all over the world. Yes, they’re largely in it for the money; but – unlike every government on Earth – business rarely puts a gun to your head. Businesses assemble teams of volunteers to meet the needs of willing consumers – and succeed wildly.” (emphasis Caplan’s)

Perspective on U.S. Health Care Spending & Outcomes

05 Sunday Aug 2018

Posted by in Health Care, Health Insurance

≈ Leave a comment

Tags

, , , , , , , , , ,

The U.S. spends a lot on health care, and our health care system is frequently criticized for poor health outcomes. The chart below is an example of evidence used to buttress this argument. It shows combinations of health care spending and life expectancy over time for the OECD countries. The U.S. appears to be a severe outlier and inferior to the other countries. A variation on this chart appeared on the home page of The Wall Street Journal this week. It accompanied (but was not part of) a good article by Joseph Walker in which he used 12 other charts in an effort to explain why the U.S. spends so much on health care. (Sorry, this link is probably gated.) Walker discusses several important cost factors, including third-party payments, tax treatment, and the deployment of expensive technology in the U.S. However, the claim that the U.S. is really an outlier is worth examining on other grounds.

The chart’s construction suggests that a reliable link should exist between health care spending and life expectancy, but there are several reasons to question whether that is the case. U.S. life expectancy has been held down historically by high rates of smoking, but reduced smoking rates should help moderate the U.S. life expectancy gap in coming years. Obesity in the U.S. is a more persistent problem, especially for the poor, and an even bigger contributor to low U.S. life expectancy than smoking at present. (See this report for evidence on the contributions of smoking and obesity to shorter life expectancy for older adults.) Other contributors to low life expectancy in the U.S. include high motor-vehicle deaths and homicides, the latter attributable in large part to the war on drugs. All of these factors contribute to higher health care spending and directly reduce life expectancy.

The status of the U.S. as an outlier in terms of health care spending is questioned on the Random Critical Analysis blog (RCA). The author’s detailed analysis includes the following points among many others of interest:

  • Health care is a superior good: as income rises, spending on health care rises faster;
  • The U.S. has a much higher standard of living than any of its peer nations;
  • U.S. consumption spending relative to GDP is an “outlier”, like health care spending relative to GDP;
  • Consumption is a stronger predictor of health care spending than income;
  • Relative to consumption, health care spending in the U.S. is not an outlier, nor is spending on pharmaceuticals, physician/nursing compensation, and the levels of health price indices.

Take a look at the following sequence from the RCA blog linked above (the animation might not be visible on a phone):

So the argument that the U.S. health care system is inferior to peer countries based on cross-county spending comparisons and life expectancy, to the extent that it holds up at all, is subject to strong qualifications. Inferior lifestyle choices, diets, and lack of exercise might be problematic in the U.S., but the healthcare system cannot be faulted based on spending levels relative to other OECD countries.

In fact, the superiority of the U.S. health care system in many areas is not even in dispute. As Mahdi Barakat points out, wait times for care, cancer survival rates, and stroke mortality are all clearly better in the U.S. than in many peer countries:

“Lives are indeed saved by the many types of superior medical outcomes that are often unique to the US. This is not to mention the innumerable lives saved each year around the world due to medical innovations that are made possible through vibrant US markets.”

Barakat compares dubious progressive claims that up to 45,000 American lives are lost each year due to a lack of insurance with the likely incremental lives lost if various performance measures in the U.S. were equivalent to those in other countries:

  • 25,000 additional female deaths per year with Canada’a wait times for care (no estimate for additional male deaths is given by Mahdi’s source);
  • 64,000 additional stroke deaths each year with the UK’s overall stroke mortality;
  • 72,000 additional cancer deaths each year with the UKs survival rates.

Theoretically, the national spending figures could be adjusted for the cost of queuing, i.e. wait times. While Obamacare certainly increased wait times in the U.S., the adjustment would likely reduce or eliminate the spending advantages that several OECD countries appear to have over the U.S.

The performance of health care systems in many countries with single-payer systems or universal care is subject to challenge, as some of the statistics offered by Barakat demonstrate. In “The Truth About SwedenCare“, Klaus Bernpaintner expresses his dismay at the romanticized view of health care in Sweden among so many Americans. His effort to convey the truth about Sweden’s stultifying health care bureaucracy is illuminating. There are few private physician practices in Sweden. Care is generally rationed and waits are lengthy, and it is delivered by disinterested, centrally-assigned providers.

“For non-emergency cases in Sweden, you must go to the public ‘Healthcare Central.’ This is always the starting point for anything from the common flu to brain tumors. You must go to your assigned Central, according to your healthcare district. Admission is by appointment only. Usually they have a 30-minute window every morning, when you call to claim one of the budgeted slots. Make sure to call early or they run out. Rarely will you get an appointment for the same day. You will be assigned a general practitioner, probably one you have never met before; likely one who does not speak fluent Swedish; and very likely one who hates his job. If you have a serious condition, you will be started on a path of referrals to experts. This process can take months.”

Bernpaintner calls this Sweden’s health care “bread line”, where people go to die. He mentions several other nightmarish features of health care in Sweden that Americans should hope to avoid. In particular, we should resist calls for a single-payer system, like Bernie Sanders’ Medicare-For-All proposal. An analysis by Charles Blahous of the Mercatus Center at George Mason University has shown that it would increase federal spending by $32.6 trillion over ten years. This estimate is basically in-line with others mentioned by Blahous. Much of the additional federal spending would represent a transition away from private spending, a process that would be massively disruptive. However, the study gives the plan the benefit of several doubts by accepting the assumptions made by Sanders: 1) a huge saving in prescription drug costs; 2) a huge saving in administrative costs; 3) providers will happily accept Medicare reimbursement levels; and 4) new immigrants will not be attracted by an essentially free health care program. Fat chance. But given all of these questionable assumptions, total health care spending would fall even as the government takes on the massive new outlays. Take away just fantasy #3 and total national health care spending would rise, a swing of $700 billion by 2031.

John Cochrane makes a useful distinction between two conceptions of universally-accessible coverage: one that all must use vs. one that all can use. (He calls them both forms of single-payer systems, though that usage sounds a bit awkward to me.) The voluntary form is preferable for several reasons: it can preserve choice in terms of coverage and providers; while the public-payer’s share must be funded, it demands little or nothing in the way of cross-subsidized pricing; and it does not imply that government must act as a single “price setter”. Cochrane warns of the possible consequences of a universally-mandated single payer:

“Not only is there some sort of single easy to access health care and insurance scheme for poor or unfortunate people, but you and I are forbidden to escape it, to have private doctors, private hospitals, or private insurance outside the scheme. Doctors are forbidden to have private cash paying customers. That truly is a nightmare, and it will mean the allocation of good medical care by connections and bribes.”

The presumption that universal health care will improve quality and save lives is unsupported by any real evidence. Its proponents incorrectly assume that the uninsured do not get care at all. Providers might go uncompensated, but the uninsured can often get needed care with more immediacy than they could with the lengthy wait times typical of many single-payer systems. The quality of care is likely to deteriorate under a single-payer system given the stresses placed on providers, the highly regulated conditions under which they would be forced to operate, and restricted treatment options. And of course a single-payer system would suspend the price mechanism and any semblance of competition in the health care marketplace.

The health care system in the U.S. has massive problems, but they were created and exacerbated by a series of governmental intrusions on the marketplace over many years. A flourishing market requires choice for consumers and competition between providers—in both health care delivery and insurance coverage. It also requires a roll-back of regulation on providers and insurers. But as Cochrane emphasizes, such a marketplace can exist apart from a voluntary, tax-funded payer-of-last-resort.