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May 2017 posts

Hayek on Health Care Reform

As the Senate considers removing health coverage for 23 million Americans in the name of greater freedom, it is well to recall what Hayek wrote in a much-poorer England during war times:

“It will be well to contrast at the outset the two kinds of security: the limited one, which can be achieved for all, and which is therefore no privilege but a legitimate object of desire; and the absolute security which in a free society cannot be achieved for all and which ought not to be given as a privilege-except in a few special instances such as that of the judges, where complete independence is of paramount importance.

“These two kinds of security are, first, security against severe physical privation, the certainty of a given minimum of sustenance for all; and, secondly, the security of a given standard of life, or of the relative position which one person or group enjoys compared with others; or, as we may put it briefly, the security of a minimum income and the security of the particular income a person is thought to deserve. We shall presently see that this distinction largely coincides with the distinction between the security which can be provided for all outside of and supplementary to the market system, and the security which can be provided only for some and only by controlling or abolishing the market.

There is no reason why in a society that has reached the general level of wealth which ours has attained, the first kind of security should not be guaranteed to all without endangering general freedom. There are difficult questions about the precise standard which should thus be assured; there is particularly the important question whether those who thus rely on the community should indefinitely enjoy all the same liberties as the rest.[1] An incautious handling of these questions might well cause serious and perhaps even dangerous political problems; but there can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody. Indeed, for a considerable part of the population of this country this sort of security has long been achieved.

“Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance, where, in short, we deal with genuinely insurable risks, the case for the state helping to organise a comprehensive system of social insurance is very strong. There are many points of detail where those wishing to preserve the competitive system and those wishing to supersede it by something different will disagree on the details of such schemes; and it is possible under the name of social insurance to introduce measures which tend to make competition more or less ineffective. But there is no incompatibility in principle between the state providing greater security in this way and the preservation of individual freedom. To the same category belongs also the increase of security through the state rendering assistance to the victims of such "acts of God" as earthquakes and floods. Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself, nor make provision for the consequences, such communal action should undoubtedly be taken.”

[1] I There are also serious problems of international relations which arise if mere citizenship of a country confers the right to a standard of living higher than elsewhere, and which ought not to be dismissed too lightly

--Chapter 9, The Road to Serfdom



By Jonathan B. Wight

In the age of individualism, is there nothing we owe to the state?  Is every communal obligation a kind of theft? 

We are all familiar with the outrages of communist societies in which the state, far from withering away, grows into a cancer that destroys everything.  There are certainly good sci-fi novels depicting libertarian and anarchic nirvanas.

But here and now, do we need the state? If the answer is yes—say for national security reasons—then what are our obligations as citizens to ensure its survival?

I am not a political philosopher so my answers are naïve.  My gut instinct says I owe some allegiance to the tribe that cared for me when I was young, and now that I am an adult, I can examine it in the light of logic and conscience and support it despite all its warts. Allegiance and sacrifice to country matter.

All of this is preface to the claim made by Krugman today that Republicans are selling the country out: Treason for the sake of tax cuts.

I have good friends who stopped reading Krugman, finding him shrill and excessively partisan.  I myself gave up reading him for awhile but have returned to the fold. 

I can’t come up with a better explanation than his for why Republicans are willing to overlook the appearance that the administration in power has been hacked by the Russians, and that the president, like a dictator, demanded loyalty over professionalism in the state apparatus of justice.

If circumstances were reversed and a Democratic were in the W.H., Republicans would be screaming for impeachment.  Their silence now is a calculation that they need Trump for their economic agenda, and partisanship trumps (so to speak) patriotism.

It is hard not to feel the weight of this administration sagging towards eventual repudiation.  History will deal harshly with accomplices.

Firing Comey

By Jonathan B. Wight

Underlying and enforcing the concept of “rule of law” is a virtue ethic that leads people to do the right things for the right reasons.  It is not enough to know what is ethical (as in utilitarian or Kantian ethics), it also takes courage and self-control to do it. In ethics and economics the personal characters of the actors are important, especially for those like James Comey who enforce the laws.

ComeyLet’s acknowledge that Comey deserves credit for a public service that until recently was seemingly exemplary (professional and non-partisan).  A person of his talents could have made far more money in the private sector, but instead he spent his early years prosecuting the Gambino crime family and terrorist bombers.  For that, we owe him a large debt of gratitude. (Full disclosure: for a time he was also an adjunct law professor at the University of Richmond.)

Comey should have been fired, but not for the reasons given by the Trump Administration.  Comey twice revealed news of an investigation into Clinton’s email, but failed to disclose an on-going investigation into the Trump campaign’s possible connection to a Russian attempt to influence the U.S. election.

There may be many reasons to justify such one-sidedness, but until these are apparent, it certainly seems that Comey threw the U.S. election—and that is a good reason to fire him.

On the downside for America, Comey was leading an investigation into areas of possible treason involving Trump campaign officials or insiders.  Is there anyone left at Justice and the FBI willing to stand up to Trump?  There should be a special prosecutor appointed to examine the evidence.

For those who may not remember, the Saturday Night Massacre occurred on October 20, 1973, when President Richard Nixon ordered Attorney General William Richardson to fire the Special Prosecutor looking into Watergate allegations.  Richardson refused and resigned.  That took courage and virtue.  Nine months later Nixon resigned, under intense media and Congressional heat. 

The “Deep Throat” figure who supplied the leaks to Woodward and Berstein at the Washington Post turned out to be none other than the Deputy Director of the FBI, Mark Felt.  Not everyone thinks that whistleblowers are virtuous characters.  For one thing, leaks about investigations serve political purposes and inevitably result in asymmetric information, since leaks are always partial and incomplete. 

Comey has shown virtue earlier in his career, and being fired by this president may make history look more fondly on him.  We can await his autobiography in twenty years when we’ll learn the truth (or at least his version) about his strange behavior last fall.  

Meanwhile, there needs to be a full-court press for the appointment of a special prosecutor.  America is not a two-bit dictatorship where chutzpah and graft should get you bye.   

[Photo: Mike Licht, https://www.flickr.com/photos/notionscapital/30788495266]

How to Lie with Charts

By Jonathan B. Wight

This interesting post about the international trade in used cars has a startling graphic:

Cars to mexico

Startling because when I looked at it I thought, “We’re suddenly getting swamped by a flood of Mexican-made used cars!  OMG, Donald Trump is right.”

Then I looked closer and … yup.  The axes are in different scales!  While Mexican imports are rising, the U.S. still has a large trade surplus on used vehicles, about $360 m. 

This is a good example to use in class of how visual displays can mislead. 

In this case I suspect either that:  a) the chart was generated using a computer program with an automatically selected axis scale; and/or, b) the human operator was concerned with visual display beauty, not conveying useful comparative truth.

Public Policy Malpractice

By Jonathan B. Wight

When should major public policy initiatives be carried out without any reference to costs compared to benefits?

I would say—rarely

I can think of times, such as in declaring war after a surprise attack, when the immediacy of action is dire and the fortunes of war too obscure, to make a cost-benefit analysis meaningful. Even then, it is an ethical stretch to operate simply from raw emotion and not some cold logic.

There are also Kantian moments when basic respect for an individual requires taking some action, regardless of the utilitarian considerations.

By contrast, the Republican mishmash of a health bill that passed yesterday is an example of public policy malpractice. The substance is unknown, because the leadership scrambled the provisions together in pitch darkness.

The Congressional Budget Office—which should have been given time to score the legislation and predict its impacts—was totally out of the loop. 

Perhaps it doesn’t matter, you might say, since the Senate (the grownups) will be in charge of fixing the disaster.  In that light, the House action was simply a Hail Mary pass to score political points.

Yes, I am naïve, but isn’t there a better way to do public policy?

Mahatma Gandhi on the Ethics of Helping and Universal Basic Income

By Jonathan B. Wight 

Gandhi_South-Africa“Whenever you are in doubt [about public policy]… apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions? Then you will find your doubts and your self melt away.”

“My ahimsa [principle of nonviolence] would not tolerate the idea of giving a free meal to a healthy person who has not worked for it in some honest way…. [Doing so] has degraded the nation and it has encouraged laziness, idleness, hypocrisy and even crime. Such misplaced charity adds nothing to the wealth of the country, whether material or spiritual, and gives a false sense of meritoriousness to the donor.”

--Mahatma Gandhi

As usual, a great mind is hard to compartmentalize.  Gandhi practiced socialism, yet it is obviously not the stereotypical version of redistribution.  He worried about the effects of redistribution on dignity and human character.

The quotes above appeared in an Indian Ministry Report in a chapter on the ethics of a Universal Basic Income (UBI) proposal, asking what Gandhi would think of it? The short answer (according to the author) is that Gandhi would be conflicted, but ultimately support it. 

I would disagree with the author’s claim that a Universal Basic Income is an “unconditional and universal” human right.  That’s because all the newly invented alleged rights of the 20th and 21st centuries are gimmicks. The claim to a right is made up out of thin air, and, as Jeremy Bentham said, such claims are “nonsense on stilts.”

The human rights enshrined in our constitution are negative rights because they prohibit government from intruding into our lives.  By contrast, the rights of humans to health care, housing, or a UBI constitute a claim to a positive good that would require government to take some action.  But the demands on government to provide positive rights are limitless, hence any such claims are also limitless and somewhat farcical.

To take one quick example, the claim that there is a human “right” to health care sounds wonderful, until we try to put it into practice.  Who is to pay for this right?  Even if we could agree that it is taxpayers, what is the limit to this right?  What if the money to pay for Frank’s expensive operation at age 95 could be used instead to save the lives of 3 children by getting them into foster care?  When is it okay to deny Frank his “right” to health care?

I’m being flippant.  I support universal health care as a sensible public policy, and in some contexts I also support UBI.  I support them as policy initiatives that can be analyzed using cost-benefit, Kantian, and virtue-ethics lenses.  I don’t support them because someone makes a claim to a human right, even though—I must admit—the notion of human rights is a powerful idea that has done more good than harm.  It is a powerful fiction if used for good, but not if it is used as a bludgeon to stifle critical thinking.  

The valid point the author seems to want to make is that if we come up with a national policy for reducing poverty (something like UBI), every person should be accorded basic dignity and should not be denied this policy if they choose to participate.

If you are interested in the economics and ethics of the UBI, check out this report for an interesting analysis that lays out the pros and cons in the Indian context. 

[Image of a young Gandhi: https://commons.wikimedia.org/wiki/File:Gandhi_South-Africa.jpg]