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Friday, October 07, 2011

Hope Meets Mr. Market, Dies Ignominously.

Below, there is a substantive economic post.

If I were a cartoonist I'd have fun with this. While Mr. Hopey-Changey is running around talking up his health care magical mystery reform (women will have no costs for contraception - utopia!), the issue of required coverage is causing certain canaries to stop chirping in the health-care mines:
An advisory panel of experts on Thursday recommended that the Obama administration emphasize affordability over breadth of coverage when it comes to implementing a key insurance provision of the 2010 health-care law.

Obama officials charged with stipulating what “essential benefits” many health plans will have to cover should make it a priority to keep premiums reasonable, even if that means allowing plans to be less comprehensive, counseled the committee of the National Academy of Science’s Institute of Medicine (IOM).
So basically what this means is that your free contraception comes at the cost of actually getting treatment for cancer. This committee was commissioned by HHS to guide HHS in its regulations. Try the Kaiser health care reform calculator - you can rapidly see that if comprehensive coverage is mandated, many employees will drop coverage and pay the fine, because it will be far cheaper. Then the public will be stuck with huge health care subsidies the public can't pay.

ObamaCare is like entrusting your health care to the same people you entrusted with your retirement savings.

God what a disaster.
Charles - and remember the recent post and your comment about risk-balancing and managing risk in the modern medical environment?
This is a step back, not a step forward.

And when people figure out that they've exchanged more expensive coverage for stuff that they could buy on their own (such as generic BC pills) for actual coverage and diagnostics for major illnesses, they are going to find out the hard way.

No different from the yammering about "affordable housing" whose inevitable result was "risky loans" - the exact opposite of affordable housing.

Now we're gonna get health insurance for routine maintenance only - the exact opposite of health insurance.
Here's the reasoning of the present regime: they have x dollars to spend on healthcare. They can either spend it on helping those with catastrophic illness by providing coverage, and on the process serving some number y of citizens, or they can play identity politics with that sum x, financing unlimited in vitro for women, and gain the unquestioning devotion, and votes of, 10y females, who just love the thought that the Dems are attentive to their " needs ". Which course do you think the Democratic Party will follow? This is just a re-application of the politics of Huey Long, adapted to the needs of Democrats of the present day.
Anon - that may be a shrewd assessment of the political realities, but it is one that is doomed to kill a lot of people.
MOM, I've never lost money yet by betting on the politicians to do the thing that is in their short-term vote-buying interest over the long term national interest. This is precisely one of the major worries the Founders had, and one of the reasons why Franklin said we had "a republic, if you can keep it."
Got to say, I've seen this play out already with my two kids. In both cases, insurance via Kaiser. Pre-Obamacare, I paid $5 for each pre-natal visit. Total cost was about $100, spread over nine months. Hospitalization, on the other hand, was free.

Two years late, my pre-natal appointments are free. But hospitalization is $250, to be paid on admission in one lump sum. So the cost is higher, and has to be paid at once, instead of being spread out. It wasn't an issue for us, fortunately, but I do wonder if it caused a lot of other people heartburn.
Notice this Hannah Richards quote and figured it would cover most of the coming political discussions:

Your opinion is irrelevant because I hate you!

Hannah Richards
Hmm - Ron, I think you're right.

Nonetheless, if you strip away the acrimony and the fantasy (I've been having fantasies myself about the US not collapsing into a recession), most of the participants in the debate do have good underlying points.

WS has assumed far too much influence over politics - if Eisenhower were alive today he probably would be warning us about the interlocking interests of the investment banker/political class. We really DID need health care reform. What we got doesn't appear to be feasible, but it is a factor that is hurting our economy and definitely slowing job creation.

Our entitlement programs as they are set up currently are not sustainable long term. We are in too many wars for purposes that seem doubtful and ill-defined. We do have decisions to make about longer-term energy policy. We do have to change our tax system.

I think our political debate is currently blocking the real debate that must occur. To the extent this is occurring, I am profoundly cynical about politics - a process that should be about negotiating seems to have entirely broken down. It seems to me that the professional spinners that now form the infrastructure of the DC crew are vile people who do not have the interest of the country or its people at heart.

Under the stress of acute real-world problems, I think the populace is going to have to beat politicians into sanity. We don't have any easy ways out - we have to buckle down, grit our teeth and craft some solutions which will displease everyone, but allow us a workable path forward.

My word verification on this comment is "scrip", so I assume the newly sentient Google WV computer network is feeling cynical also.
I think we are going to have to change the public discourse too. I' m no longer willing to put up with demonizing the other side. We need to demand that politicans work together.
If we do not tolerate "demonizing" the other side, then all they have to do to win is have progressively more "demonic" ideas. In my opinion, one reason we are in this mess is that the pro-entitlement wing of the country has taken progressive steps toward expansive and invasive government, and the good guys, being good guys, compromise with them thereby moving the middle to the left. How can you not demonize the Occupy Wall St crowd? They want to destroy the system. Granted, they dislike the same things that I dislike, but their answer is to destroy the whole thing. If you don't demonize it, then you compromise with it. They are secularly demonic.
I don't agree with the idea that politics are getting in the way. Politics is what happens when you get more than two people in a room, and is just part of being human. Each side does have some good points, but the bulk of their viewpoints are both deeply held and mutually exclusive. There may be an obvious compromise here, but there are an awful lot of people (and not just in D.C.) to whom it looks more like a capitulation than a compromise.

The economic left is correct that a change from the status quo will destroy most of what they've worked toward for the last 80 years, and that this change puts many people at risk of sliding back out of the middle class. This is why I take Sporkfed seriously.

The economic libertarians are correct that we can't have the economic opportunity or personal liberty we are accustomed to without radically revamping the status quo.

The social conservatives are correct that libertarianism presents a danger of societal disintegration unless there is a shared idea of what our society ought to be.

We have three ideologies in the room, and many of us even have all three in our heads. It would take a Solomon to sort this out, and we don't have a Solomon. This just has to be fought out to the end (which will hopefully be some sort of a compromise).
Neil - but where we should have argument - even somewhat abrasive argument - we have political name-calling.

It's not argument, it's not debate, and it's not about facts. It's about emotionally swaying populations to get votes.

Demagogues will always be with us, but they should be a subgroup and not the standard.
PS: You have me laughing about the three Solomons in our own heads. I have four. I was just thinking last night before I fell asleep about how non-standard my personal politics are.

I would theoretically like to be a Democrat, possibly because I have some idealized idea in my head of what a Democratic political agenda "should" look like. When I look at what Democratic politics have become over the last few decades, I see the impossibility of it.

I would like to be an economic libertarian, but a large hunk of economics consists of money and credit flows, and libertarianism and banking have historically been terrifically destructive.

No political debate that evades the question of possibility/impossibility can be substantive or worthy of respect.
The one answer that might work would be to allow states to make their own choice. Oklahoma and Vermont have nothing in common right now. The one thing that a federalist approach would give them in common is a respect of the other's right to be different. If we are all going to try to make everyone agree, it will not end well. Social Security, Medicare, and Medicaid should all be pushed down to the state level in both funding and implementation. So should social issues. If we agree that we are not going to do much at a national level, we at least have something to agree on.
Bruce Krasting has a good read on the Obama jobs bill and IMF & the protest that doesn't seem to go away! a bit and link:

"I’m off to see the Wall Street protesters today. I expect there will be a big crowd. The press has been maligning these protests. The suggestion has been that there is no central theme or objectives of the OWS movement.

The OWS protest has legs at this point in history. The failed debate on the stimulus and a USA blank check for the IMF is exactly what the protesters need. A rallying point. I think they will get what they need/want to take this to the next level. It will happen over the next two weeks. As a result, the OWS movement will go nuclear. I wouldn’t be at all surprised if it ends with violence. There are too many cops and way too many angry people. Soon they will have something to be really be angry about."

My boyfriend asked me who I felt sorry for (in the OWA group). The only ones I could think of were the folks who lost their jobs. I find it hard to feel sorry for folks who went heavily into debt for a degree. I do think that they should be able to discharge the debt in bankruptcy. Given that most bankruptcies are Chapter 11 now, they'd still have to pay something. My suspicion is that most of the protest is an attempt to bring back the 60s.

As for letting the states handle things, I like the idea but I'd have to move.
Teri - bankruptcy is the oil that greases the wheels of commerce. Everyone hates it, but it is necessary.

And student loans will eventually be discharged in bankruptcy. I figure a 35-50% write off. Which is why I am so unhappy about the federal government's huge investment in junk degrees.
Ron - no normal human being can be anything but disgusted by some of the WS frenzy, but in truth, many of the people out there demonstrating are students who are living off the government handout pie.

I feel terribly sorry for the jobless, and I have written before that I do not think unemployment should have been stopped as it has been, and that I thought a public jobs program was probably the better solution.

But I have spent about 30 hours reading through OWS stuff, and a good percentage of the protesters are totally out there - their demands, such as they are, constitute a belief that someone else owes them a living, and NOTHING ELSE.

Demonstrate to end the H1B excesses - I'm for that. Demonstrate to restore the basic protections of Glass-Steagall - I'm for that. Demonstrate to end some of our foreign military adventures - I'm for that. Demonstrate to restore a political sense that the country's economic future really depends on the ability of the average worker to have a decent life - I'm for that.

But that's not what is going on with these protests.
How and what happens to the protest is beyond me but what makes this protest interesting is exactly what you don't like about it
"their demands, such as they are, constitute a belief that someone else owes them a living, and NOTHING ELSE."
The problem is that both the government and private business interest have pushed the idea of consumer luxury lifestyle to the extreme creating the illusion that technology or education will magically create high paying jobs and that the American economic Dream is available but one needs good credit or just credit. This protest is about returning to a status quo lifestyle, shopping till you drop, but for the protesters and most of the country its time to grow up and face the reality that only the very wealthy can have such a lifestyle.
The reason we get so much demonizing is that we are unnaturally trying to force everybody into one system. We have a hard enough time getting everyone into a "democratic" system. Over the last few decades we now try to force people into the same education system, the same banking system (the end of Glass-Steagall was the formalization of it but the process began long before that), and now the same health-care insurance system.

There is absolutely nothing intelligent about trying to get everyone into the same system. let a thousand systems bloom and let people choose which ones work best for them. I think we've even the indigent a disservice by trying to get all of them into the same welfare/aid system - better to let hundreds of charities help people instead of one bureaucratic system.

In other words, the growing demonization that's is going on in US politics isn't the problem, it's a symptom of the problem. We are becoming far too centralized which, for a country this size and of this history is completely unnatural and simply unworkable. Look at every other country in history that has tried centralization amongst disparate peoples and they too devolve into demonization.
Ron - you are certainly correct that people believe that getting a college education or "investments" in technology will magically create wealth.

We're into magical thinking in a big way.

What concerns me about our present situation is not unrealistic expectations, but the fact that most people have to become wealthy to enjoy reasonable security. I think that problem has created a lot of the magical thinking.

With the demise of the private pensions, and with growing health insurance costs, losing a job in your late 50s/early 60s can destroy a lifetime of hard work and saving.

So I want to be a Democrat, or at least be able to contribute to some sort of political program that discards the unrealistic ideas but focuses on what the ordinary person could have.

I hate the unrealistic thinking on the right and left because it is a barrier to getting to that point. Worse yet, I haven't seen realism develop yet in the Democratic party, but I also am not quite seeing it take hold in the Republican party (MAYBE this election cycle will begin that process).

If the average person can have the basics, the average person will adapt to that and work to that. If we are going to create a system in which only the rich can have the fundamentals, then I think we face further disaster and growing insecurity.
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