Once Again, Right Wingers Are Blinkered

It's hardly new that I make a post on what some right winger (often libertarian - perhaps I should stop attacking the easy extremes, but these guys blog a lot and I wouldn't want there to be no opposition to their prejudicial rantings and ravings) has said. I just read that David Henderson is convinced that healthcare spending is a Ponzi scheme. For those unaware, a Ponzi scheme is a fraudulent scheme that pays returns to investors not out of profits but out of the investments of others in the scheme - it's fraud.

It takes a remarkable, breathtaking amount of blinkeredness to talk about how healthcare is a Ponzi Scheme. To focus only on the contributions people must pay, and what they individually get out of it in the end. To what extent are insurers thus not engaging in Ponzi Schemes?

Moreover, it shows yet another example of a total disregard for the informational problems in healthcare markets. Libertarians and staunch right wingers usually try and get around this by saying that regardless of what the informational problems are, the market still provides best. But does it? Can legislation and regulation and maybe even public provision not help solve the kind of informational issues in healthcare?

Let's just recap. Are we, as customers, well informed about our own health, and what the possible healthcare options are to us, and how much we need them? Answer: No. If we all did 6+ years of medical training, maybe. But given we all have other things to be doing, then no. So in a nice free market (something libertarians are want to compare healthcare to), your doctor can command a fee from you (or your insurer) if he undertakes some procedure on you. You see your doctor every now and again, and realistically there's no way to know whether what he/she is giving you is needed, harmful, etc. It really doesn't take much insight to see there are chronic problems associated with healthcare due to informational problems. Furthermore, the cost of a mistaken "choice" (it's hardly a choice if we aren't informed) is ill health and possibly even death. It's not like after we find one bad producer we can just costlessly switch to another, like we would if we decided that the bad producer was dodgy (and thus set about sullying his or her reputation).

It just doesn't stack up, and only confirms what I've really began thinking recently. If you take extreme positions on either side of the spectrum, left or right, you have to become blinkered and prejudiced, twisting truth and ignoring many important considerations to substantiate your position.

Pro Manipulated Choice

I found this rant quite astonishing: It's some chap called Sunny Hundal, who clearly has little time for people who have any religious beliefs about them, and it relates to some propsed changes to how abortion is organised in the UK.

The change is quite simple: It puts a stop to the situation where the NHS only funds an abortion at a clinic if the abortion goes ahead. Reason being fairly obvious: It makes it in the interests of the abortion clinic to go ahead with abortions.

Yet this is met with huge volumes of vitriol by Hundal who apparently from his comments doesn't care what others think of him.

Regardless of one's views on abortion (and as a Christian, it's quite hard to be in support of them), I find the vitriol directed towards this by pro-choice (which is an odd monicker for them given the attitutes displayed here) towards anyone who might just happen to tinker with the system in a way that could possibly just about with a pinch of salt be described as pro life is incredible.

The fact is, the current system is pro manipulated choice. And by defending the system, and attacking in such a hostile way the proposed changes, it seems that these people reveal that they are not pro choice after all. Pro choice people would favour a system where people made informed decisions, and were not being given advice by people for whom the financial incentive was to get them to say yes. If this was happening in financial markets, it's likely these same people would be in uproar.

My stance on abortion is that I can't force others to do the things I think are right, nor should I. But I would like people making such a life changing decision to be as well informed as possible, and it is clear that the current system cannot do that if clinics only get paid if people actually go ahead with an abortion.

Shock horror: Leftists Don't Understand Rightists, and vice versa

I think it's quite a hilarious little piece this one, by David Henderson. I was thinking about blogging on David Henderson and libertarians more generally and their pure cynicism about everything related to the government and I probably still will - my feeling is the arrogance of the position of people like Henderson in their market fundamentalism is incompatible with Christianity which exhorts humility, and emphasises just how fallen the world is. Of course, likely they don't care that it's at odds with a Christ-like witness, but the point of this blog is to try and point out where right wingers are totally at odds with what the Bible tells us.

But back to the article at hand. In it, Henderson quotes a bit by Krugman about how right wingers (conservatives) are unable to actually describe things like a Keynesian, or left-wing position. The funny thing is of course, Henderson says how he thinks this isn't true, and asserts that actually the converse is true. Is this real? It's so schoolyard it's hilarious. It's talking past each other on steroids.

His test of the hypothesis is also quite amusing - read Krugman until you find where he miscategorises a right winger/conservative. That's not really a test of his hypothesis really, is it? There's no checking when right wingers and conservatives get Keynesianism completely and utterly wrong (those are of course ten a penny). It's not really a test at all.

Striking Out

Strikes are in the news: There's going to be a mass walk out, it seems, on the 30th June. I think unions are another thing where people have very muddled thinking too - at least if the near-800 exam papers I marked this year are anything to go by. Students hate the free market, and describing something as free market is perjorative.

If you ask this man, he would tell you it's all because of their education - all teaches are whacko lefties and they indoctrinate students to be left-of-centre too. Apart from those with right-wing parents of course. But that's by the by. Because despite people having an inherent distrust of the market, they also think that unions should be "smashed", and that the job the Tories did on the Unions in the 1980s was an unfettered good thing.

Why do I find that odd? Well, in a free market wages are set theoretically where marginal costs equal marginal revenue for the firm. Not though if they have any bargaining power though and are able to extract economic rents. In most situations, the firm is a single unit bargaining with many disparate workers in the absence of unions which gives firms bargaining power. In addition to that in most situations the outside option (what they get if bargaining breaks down) for the worker is unemployment while for the firm they can just hire from the pool of unemployed workers. The more than likely upshot is that firms can bargain wages down in the absence of unions to below the marginal product of labour, and surely lower than if workers were able to organise themselves into a single bargaining unit.

Potentially my students will realise on entering the workforce that actually, a system by which wages are bargained higher and nearer to marginal product is handy.

Now of course, the unions do other things. Most libertarians I know, and Cranmer, paint them as sinister organisations, and the linked article is nothing but personal attacks on various union leaders; a great example being this:

One fully expects the NUT’s ghastly Christine Blower to insist that her members ‘have no alternative’ but to strike. But when meek and mild Mary Bousted of the ATL screeches from the same multi-faith meditation sheet, it may indeed be ‘a warning shot across the bows to the Government’.

The main offence all these people commit, in Cranmer's eyes, is they are "leftish". That they may be, but what they are doing is trying to ensure that they get a fair deal, something that might not otherwise be the case. Cranmer also attacks them as being entirely in the way of any kind of education reform - Cranmer's implicit assumption is that all education reforms proposed by the "rightish" Conservative Party must be sound and sensible, and should just be passed through parliament like the rest of those reforms that haven't yet seen U-turns.

On the subject though of U-turns, I liked this on politicalbetting. Why? Well it gives a nice insight to the bargaining aspect of all of this. The government has started making a whole load of U-turns, and so why wouldn't the unions sieze upon this to try and get a better deal?

Now of course, I do realise that there can be nasty elements in Unions that get in the way of progress - just as there can be nasty elements in firms (British Airways springs to mind) and in the government that seek to crush unions. But how much of that is propaganda (like Cranmer) and how much of it is reality? Why should workers be crushed from trying to organise and get their wage up nearer to marginal product? How do we know where the wage currently is, and who, really, are we to comment?

Of course though, if we are a staunch right winger (or leftie for that matter), we will respond by taking one side or the other. But I do still find it amusing that in otherwise leftie products of our education system, scepticism towards unions is strong...

The Blame Game

Apparently, each month YouGov asks people who is to blame for the cuts, and in the latest offering it seems Labour is still very much blamed. 

This blog gives away that I am not a right winger, but I'm also not about to defend left wingers either on here.

What interests me most however about this is that people really don't seem to get the economics going on.

I am fairly confident that if you talked to most of those involved in this survey, they would suggest that paying benefits to people out of work and making income tax proportional to how much you earn (so more for those earning over 40k etc), are reasonable things.

Yet if you believe in those two things, then in a recession you have to also accept that deficits will be run: More people lose jobs hence are unable to pay income tax, and may well also claim benefits. We're talking at least a million people that make this transition. People also spend less, meaning that indirect tax receipts (VAT mainly) must fall too. Firms make less in profits, hence corporation tax receipts fall also.

The bottom line is that in a recession, government receipts will fall, and expenditure will rise, if a system is in place that pays benefits to the unemployed, and taxes people and firms based on their income.

When that recession is the biggest in 70 years, is six consecutive quarters of negative growth, then all the more so will a deficit be run - and a big one!

So much so that in fact, looking at data just over the last 30 years (I'm working on getting a dataset for over 100 years - watch this space!), based only on previous government action relative to the state of the economy, the recession was so steep that in fact a deficit larger than that run by the past government should have been run!

That is data, not party politics, or even economic theory talking. It says that in recessions, the budget deficit worsens, and if the last government followed how all previous governments since 1981 behaved, it would have run a larger deficit than it did.

But these kinds of fact-based reasonings are generally lost, let alone the economics behind it, when politics come into play, alas...

Comparing pet food to healthcare now

It's not the first time, by any stretch of the imagination, that I've flagged up stuff posted on Cafe Hayek on here. As I always seem to say about Hayekians, or Austrians, or libertarians, they tend to ignore issues of imperfect information when launching their defence of markets in everything. The latest example, continuing with the healthcare debate in the US, is:

I have a question for anyone who believes that a single-payer health-care system (where the single payer is government) will reduce the quality-adjusted cost of health-care: will a single-payer pet-food system (where the single-payer for pet food is government) reduce the quality-adjusted cost of pet food?

The question is: Can the government deliver a most cost effective healthcare system than fully free markets could?

We can bring to bear fairly simple economic ideas relating to imperfect information to say: It is possible, because both extremes are probably not helpful places to begin.

Fully free markets would most likely be a disaster. Why is that? Well, customers are not well informed about their health, and healthcare procedures, and nor will they likely be even if there was an attempt to inform the public better. After all, a doctor does not learn in a few newspaper articles all he or she knows about operating on a patient.

Furthermore, what are the costs of mistaken choice in this market? Well, death is one possibility, and severely impaired health is another. It's not like if we're trying out different chocolate bars, or pet foods, where if we find we don't like it, well the cost is the cost of the bag of pet food or the Snickers bar. This is the crux, and why Boudreaux's attempt an an analogy completely fails and is in fact dangerous.

And we haven't even got on to talking about the externalities surroudning infectious diseases, or the problems of moral hazard and adverse selection in health insurance markets!

Other arguments could be brought to bear on this to argue in favour of some form of intervention - the market can't correct the kinds of information difficulties here as it might in other industries (with things like What PC magazine, etc). The only thing left is to ask: What form should that intervention take?

One thing would be to force all citizens to take out insurance to mitigate adverse selection (premiums going up because good healthy folk leave the market), but then that leaves moral hazard where providers (doctors, hospitals) convince patients to take out excessive healthcare since the insurance company pays, not the patient.

We could carry on. There are pros and cons to all systems, and healthcare is so damn complicated it's hard to sit in a room and theorise about things. But funnily enough, a report has just been released showing that out of all the decrepit, socialized (to use the North American parlance) health systems, the NHS actually comes out as most cost effective.

The thing I love most about the table on the link is the healthcare spending per capita. The US is at $7,290, while the UK is at $2,992. Last time I checked, health outcomes weren't all that different here in the poor old UK...

 

More on what I don't like on the left

Here's another example: Lindsay Mackie rails on about the Royal Mail privatisation at Liberal Conspiracy.

Before going into the complete lack of balance in the article revealing the writer's prejudice, one question needs to be asked. Was the Royal Mail not in private hands, what justification would be given for public provision of mail services? What about the mail delivery market makes it so special that it needs to be government run?

There is no reason why the delivery of mail needs to be a government service, no reason why competition between different providers couldn't improve the service. What about transporting valuable items? Insurance would work just fine for that. What about delivering to remote places? Pigouvian subsidies would bring the private marginal benefit of delivering to the Shetland Islands just as well as having the government run the whole shebang.

On the various criteria on which we might justify government intervention, there is little doubt that actually, Royal Mail doesn't really tick any of the boxes.

Furthermore, Mackie reveals a very obvious bias/prejudice (tick as appropriate) against all market provision of everything. Statements like "so we can have privatised competitors whose aim is not public service but profit" are very indicative, and really show an incredible level of blinkeredness. Is it really possible in a free market that by actively trying not to serve the public interest (provide products people want etc), a private company could make profits? No, is the obvious answer. To make profits in a competitive market a private company must serve the public interest.

Now of course, markets run badly such that participants have market power (become too-big-to-fail) give great examples of why markets are apparently so bad.

Yet funnily enough, Mackie uses BT as some example of where apparently we've done badly out of selling it off. Why on earth should we have the government running telephones?!?! And more to the point, would we have seen the kind of innovation in the telephone industry without the sell-off? Where BT could have made perpetual losses safe in the knowledge it would be bailed out? I think the answer is abundantly clear, and the use of this example really shows the absurdity of what Mackie is trying to propose.

Apparently also, everything surrounding the privatisation "smacks of ideology". Mackie is clearly unaware that everything she writes is pure ideology. If we want to get away from ideology, we try to look at, as close as we can, objective facts. We start from the premise of perfect competition, and what that would achieve, and then we ask: Where does this model fail? And do the failures justify government intervention? And if they justify intervention, what form is best?

This is something Mackie is 100% not doing, and instead is falling into that trap that all on either extreme of the left/right spectrum are forced to do: To mislead and deceive.

 

Putting your money where your mouth is, or gambling?

Not that the distinction hugely matters, but I'm intrigued by one of my usual inspirations to blog, the Cafe Hayek blog. There, one of the authors, Don Boudreaux, has far too much wealth it seems, as he's happy to throw $10,000 away on what essentially is a 50-50 bet: That less people will die from violent storms in the next 20 years than did in the previous 20 years.

He then cites some numbers over the last few years as evidence, but the amusing thing is: the numbers exclude Katrina! There's a small look at the data here by another blogger, but that really amounts to just fitting a time trend to some data as opposed to any serious attempt to look at it. If I was looking at that data, then actually I would have taken it had I had the money, and had Katrina not happened. Looking at the period 1991-2000, the numbers for both measures presented have completely flatlined. 1991-2010 is the reference period for Beadreaux. If we imagine that this flatlining will continue, then the average 1991-2000 may well drag 1991-2010 above 2011-2030. If Katrina is excluded though, what are the criteria for excluding future big events (which are bound to happen)?

Overall though, the $10k would need to be a sufficiently small fraction of my wealth for me to be interested in the bet. Why? Am I scared? Not really, it's just because it's a random bet which could go either way. Clearly, as a Christian I believe one should be a good steward of the resources God has blessed me with, and that doesn't rule out gambling if there's an expected positive return, since that is a wise use of money (parable of talents and all). However, when as shown, there has been no trend over the reference period in the variable that is being discussed, then I don't think this is much more than a 50-50 bet, and hence I doubt I would ever, regardless of how wealthy I was, be willing to put money down on such a bet.

He was also not a left winger

I rail on this site against right wingers quite a lot, but equally Jesus was not a left winger, and my intention is to try and keep this blog as neutral as possible, also to remove from some people I chat with the room for the accusation that I'm just playing party politics...

Here's an example of left wingers being deceptive in their arguments with maximal effect. There's a private provider of care homes for the elderly in the UK and it's looking like going bust. It's an example of bad management, full stop, period.

However, the linked article would suggest it's much, much more than that. It shows, proves, why we can never, ever trust the private sector with anything to do with healthcare. In what way does it do this? Well, it doesn't, so deception, scaremongering has to take the place of genuine arguments.

The writer doesn't even bother to recognise the fact that more competition would weed out the bad management like this, and a lower level of concentration in the industry amongst private providers would ensure that a failing provider wasn't "too big to fail", as people are suggesting this one is.

Now I say that not as someone advocating opening up the whole of healthcare to the private sector; other articles on here should have made it clear that there are economic efficiency arguments for government intervention in healthcare and that I base my position on that, fairly simple, economic theory. However, the form that that intervention would take would probably not be what most conventional Labour or Conservative voters (and certainly MPs) might propose.

I think most of these MPs, and also the writers of leftie pieces like the one linked above at Liberal Conspiracy, suffer either from a lack of knowledge of the tenets of very, very basic economics, or are seriously bent on deceiving the public. So as a result, lefties are just as bad as right wingers!

Is it Christian to Deceive?

My suspicion is that the answer to this question has to be "no". I don't think I even need delve into the Bible to get any appropriate verses either, it's that self-evident.

Yet there are many who would, it seems, ignore all the attempts at deception by political parties in order to maintain some belief that their party is the more Christian party.

At the last election, a number of people I spoke to would cite voting records of Labour and Conservative ministers, and would trot out the most recent story of some awful behaviour by a Labour minister as if that was evidence that the Conservatives must be more Christian, and hence we should vote for them.

Suffice to say, I said back at the time: Wait a year or two, and then we can compare. Then we can look at how the Conservative party behaves while in power. That'll help us judge whether it really is the more "Christian" party.

Certainly the imposter known as Archbishop Cranmer is still regularly trotting out examples of why the government, and Eric Pickles in particular, is so saint-like.

But do Christian ministers engage in disinformation campaigns that push "facts" that aren't facts? It would seem Eric Pickles does, and quite clearly Andrew Lansley is very good at it. This stance isn't even based on the duplicitous general election campaign run by the Conservatives which ran roughshod over any attempt at applying basic and sensible economics to the economic situation facing the economy. I haven't even mentioned the AV campaign...

The point isn't to paint out the Tories as any worse than Labour in this regard which is why I won't go on about the Tory election campaign or go on and on. My simple point is: Any party which sets itself up away from the centre will have to justify what it does, and almost always do so using lies and deception, as has been so brilliantly exemplified by the Conservatives recently. I know examples exist of where Labour has done that - I'm not defending them nor would I ever want to. The point is neither left nor right can claim to be "more Christian".