Making bad situations worse

Here is a man thanking a "price-gouger" for rescuing him from the cold very late one night last week. "An Economics Lesson at the Baggage Carousel ... Government-regulated taxis weren't around in a snowstorm. Then came a man with a car and price."  But the writer is an admitted economist.

It's a very old story. Markets elicit cooperation between willing parties. But many only smell "unfairness" when the service is not offered at a loss.  The regulated taxis who would have had to take a loss had already disappeared.

The bad weather and the emergency had happened.  Accept that and do the best.  If markets clear at a higher price, that's the best of a bad situation.  Enforcing "anti-gouging" laws (or sentiments) would make a bad situation worse.

But this is what we do. The toughest U.S. price controls were put into effect in World War II.  This only made a very bad situation worse. As in the taxis-in-the-snowtorm story, it is unwise to punish those with the extra capacity to serve when it counts most. As Prof Higgs noted, during the war this only brought law-breaking and black markets.

ADDED

I have often noted that many see pricing as exotic and/or sinister.  Here is the NY Times' Annie Lowrey struggling.  She sees "high-tech gouging", sees no difference in the time-of-day that the "same ride" occurs, and sees some "longing for inefficiencies they never knew they were benefiting from."

Ideas matter

Acemoglu and Robinson argue that ideas matter for economic growth and a way has to be found to get them into economic theory. Of course.

To do this, economic growth discussions must include cities and spatial organization. Most spatial organization is within cities. The spatial organization that we get within cities is prompted by continuous and decentralized search by large numbers of firms and households. Each one seeks to contain transactions costs (including access costs) while navigating among all of the externalities encountered because of all of the proximities involved in any location choice. Positive externalities are sought and negative ones are avoided. Balancing these three is how bids for sites are formed. Land markets process all the bidding.

Chief among the positive externalities included in this story are opportunities to be located in ways to access useful "buzz". 

New ideas are recombinations of old ideas.  Better to access the old ideas from the brains of many others as well as our own.  Paul Romer said as much  many years ago (in Daedalus, 1994, not available online).  I cited this in my discussion of ideas, growth and cities here.  Jane Jacobs wrote about it many years ago.

ADDED

Witold Rybczynski notes that "placemaking" is much more complex than we hear from planners and designers.  Jacobs wins again.

ADDED

The evaluation of sites is more complex than ever because we can network and access electronically as well as physically.  Today's WSJ includes "Football Fans Forgo Tickets, Prefer View From the Couch ... NFL Struggles to Sell Seats to Some Playoff Games While TV Ratings Soar."

Teaching moment

What are the top three ideas in economics? How about (1) The non-zero-sumness we get from specialization and voluntary exchange; (2) The benefits (and inevitability) of creative destruction; (3) The fact that there is no economics without politics and no politics without economics. 

Call the latter "political economy" or call it "public choice" or call it "politics without romance."

All of my top three appear in this episode reported in today's WSJ: "Uber, Taxis Engage in French Street Fight ... Online Car Services to Oppose New Rule on Pickup Times". And what are the French public servants proposing? "Under the new rule, all car services—but not licensed taxis—must wait 'at least 15 minutes' between taking a reservation and picking up a passenger, more than double what car services like Uber say is their normal wait time. The only exception: pickups at four- and five-star hotels and at industry expos."

Where there are "public servants" there you will find interesting contrivances that seek "level playing fields."

I mention all this because (late to the party) I had my first Uber experience yesterday. The service was many times better than I had been getting from the LA taxi monopoly -- and the fare was lower.

I expect that the local public servants are well aware of the problem -- and that they have it in their sights.  

Pope Francis' turf

In today's WSJ, John Cochrane describes market-based alternatives to Obamacare.  Sounds like a no-brainer but apparently a hard sell in the "real world."

A page away, Paul Rubin writes "How to Roll Back the Demonizing of Free Markets ... 'Competition' carries a negative connotation, despite its contributions to human happiness."

The "How to" part is beguiling but there is a huge literature on how to get the non-zerosumness of markets into the heads of undergraduates and others.  Contrary to Rubin's argument, many of us celebrate the cooperation that happens quite spontaneously in markets.  I, Pencil and variants are widely taught.  Here is the movie.

An uncountable number of many-times-more-complex supply chains routinely serve us.  Unlike pencils, none of us could even describe them.  Baumol and Litan and Schramm note that "The most astonishing thing about the extraordinary growth and innovation that the U.S. and other economies have achieved over the past two centuries is that it does not astonish us."

I think Rubin is on the right track. Non-zerosumness is a wonderful thing. It happens in markets and it is celebrated in the world's great religions (The Evolution of God). This is Pope Francis' turf.

Great conversation

Russ Roberts and Judith Curry talk about climate change.  This is the most enlightening and delightful discussion of the topic I have yet seen or heard.  I am calling attention to it for the benefit of anyone who was not already aware of it.

Enjoy.

My regulators will be better than yours

Joseph Stiglitz writes "In No One We Trust ... Inequality is eroding our institutions and our way of life." in today's NY Times. What to do?

I suspect there is only one way to really get trust back. We need to pass strong regulations, embodying norms of good behavior, and appoint bold regulators to enforce them. We did just that after the roaring ’20s crashed; our efforts since 2007 have been sputtering and incomplete. Firms also need to do better than skirt the edges of regulations. We need higher norms for what constitutes acceptable behavior, like those embodied in the United Nation's Guiding Principles on Business and Human Rights. But we also need regulations to enforce these norms — a new version of trust but verify. No rules will be strong enough to prevent every abuse, yet good, strong regulations can stop the worst of it.

I had to chuckle at the UN recommendation.  More than a few of the member states (and their delegates) are not the folks I would go to for advice on clean government. I also had to smile at the idea that the New Deal years were without cronyism. Those were the days?

We all like to be seen as on the side of the angels. But does that mean we do not consider how great wealth was accumulated?  Was all of it nefarious? Do we begrudge Silicon Valley billionaires who improved our lives in tangible and profound ways?  Did the Wall Streeters who Stiglitz attacks not get bailout help from Stiglitz's friends in high places?

It's easy. My regulators will be better than yours. Very smart people still talk this way. Politics without romance (public choice economics) got James Buchanan a Nobel in 1986 but since then most people have managed to ignore the whole thing.

Were Buchanan still around, he might even see this as ironic vindication. Romantic notions are the last ones to go.

ADDED

Here is "Public Choice 101" from Arnold Kling.

ADDED

Greg Mankiw lists six ways to get median income trends wrong.  All the errors bias results in the same direction?  Coincidence?

Winners and losers

Bootleggers and Baptists explains more than any macro-economic model I have seen. Someone alert the proper Nobel committee. Never underestimate the power of rent-seeking coalitions.

While we're at it, never underestimate the tenacity with which people will hang on to their sunk human capital.  (This is where even economists put aside what they know about sunk costs.)

Today's WSJ includes "California's Bullet Train Derailment A judge says the rail authority is breaking the law. Who cares!" Eminent domain is being used to confiscate private property for a project that will never be completed.

This morning's LA Times includes "Buses are their route to a brighter future" which emphasizes that it's not easy depending on the region's bus system. But it would be asking a lot to get transit fans to connect the dots. The Times has been beating the drums for rail transit for as long as I can remember.  We live in a world of trade-offs and we have less bus transit service now than we could have, had funds not been diverted by the campaign to build rail.  A lot has been spent so that fewer could be served. Where are all those who make it a point to be advocates for the people described in the story?  Read the whole thing.

Many years ago, the advantages of bus over rail for modern American cities was demonstrated by Meyer, Kain and Wohl. But that analysis was no match for the B and B coalition.

Designs

Before the tech-bust of 2000, Po Bronson wrote this:

"Silicon Valley Searches for an Image ... Recently a five-person crew from ABC's 'Nightline' planned a trip to Silicon Valley to shoot a minidocumentary.  Their subjects were preinterviewed, schedules were cleared, flights were booked.  There was only one problem: No one of the crew had ever been there before, and they had no idea what scenery to put on tape. Theye were hoping for the equivalent of New York City's skyline or the Hollywood sign. They needed to point the camera at something that captured Silicon Valley's buzz.  Instead, they found an endless suburb ..." (WSJ, Feb 9, 1998).

That was then. Fast forward and here is Paul Goldberger on plans underway for the Valley:

"In a community that you could almost say has prided itself on its indifference to architecture, Apple, which had already changed the nature of consumer products, seemed now to want to try to do nothing less than change Silicon Valley’s view of what buildings should be."

Read the whole thing. Goldberger is disappointed in how two large projects are taking shape, Norman Foster's ideas for Apple and Frank Gehry's plans for Facebook.

"Undoubtedly, both buildings will bring a degree of architectural excitement to Silicon Valley that it has never seen before. But the real question is whether, for all their ambition, they will do much to change the underlying suburban culture. They are both big, private, sealed-off corporate villas that most people will reach by car. At a time when the city, not the suburb, seems to hold the allure for younger workers in the technology industry, how much will Foster’s refined, iPhone-like architecture or Gehry’s lively, garden-topped workspace matter? Twitter’s renovated office space in an old San Francisco neighborhood may, in the end, be the real harbinger of the future."

The new look will make life simpler for future camera crews.  But employees who can afford it will commute from San Francisco -- which no one designed.  Steve Jobs had an amazing knack for finding pleasing designs for small gadgets.  But how scalable is that knack?

Silicon Valley will continue to thrive as long its workers come up with ideas.  They will exploit the great communications gadgets available to them to do that -- to find ways to interact no matter the design of their work setting. 

Wealth and spatial order of cities

Chris Webster and Lawrence Wai-Chung Lai published their Property Rights, Planning and Markets: Managing Spontaneous Cities in 2003.  They highlight the various "orders" they see relevant to cities, including "spatial order".  In describing the latter, they note the economics of land markets and also the possibilities of externalities as well as their internalization.

I went back to Webster and Lai because I just came across Glaeser and Gottlieb's "The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the U.S." Here is their abstract:

Empirical research on cities starts with a spatial equilibrium condition: workers and firms are assumed to be indifferent across space. This condition implies that research on cities is different from research on countries, and that work on places within countries needs to consider population, income, and housing prices simultaneously. Housing supply elasticity will determine whether urban success reveals itself in the form of more people or higher incomes. Urban economists generally accept the existence of agglomeration economies, which exist when productivity rises with density, but estimating the magnitude of those economies is difficult. Some manufacturing firms cluster to reduce the costs of moving goods, but this force no longer appears to be important in driving urban success. Instead, modern cities are far more dependent on the role that density can play in speeding the fl ow of ideas. Finally, urban economics has some insights to offer related topics such as growth theory, national income accounts, public economics, and housing prices.   

They mention density thirty times throughout the article but they do not say much about it. Cities are cities because they are more dense than non-city areas. And we know that this is beneficial -- otherwise cities would not be the "engines of growth."  But there are many possible densities and there are many densities within each city.  In other words there are complex spatial patterns that matter.  How do we get the patterns that work? the ones that enable cities to continue to compete for labor and capital (especially entrepreneurial capital)?

I think that Webster and Lai are on the right track. There are emergent spatial orders. In fact, although they do not say so in so many words, the spatial patterns that succeed are the ones that manage to internalize many of the possible positive externalities -- while  creating enough distances to avoid many of the negative ones.  Profitable locations include ones that deal with externalities this way.

This is how the land market process is essential. This part is much more interesting and complex than just "density".  It also highlights the fact that there are more than just the standard textbook ways (Pigouvian taxes or Coasian rights trades) to internalize externalities.This is part of spatial order. It is part of how cities create wealth.

Gross Output and GDP

Mark Skousen celebrates the fact that Commerce's BEA will soon issue quarterly reports on Gross Output (GO) -- in addition to regular GDP reports.

Most Econ 101 courses cover the various limits of GDP accounting which are well known.  The economy is huge and complex; efforts to sum it up in a single number are heroic.  Compromises are inevitable. "Accountants measure what they can."

GDP is crafted to avoid double-counting.  In the process some data are not reported.  In contrast, input-output accounting and modeling are now widely used and available.  These highlight gross output consequences that do include all inputs and all outputs -- even though the value of the latter may include the value of the former.

Businesses practice double-entry bookkeeping and that has never brought on double-counting worries.  GO and GDP serve different purposes.  GDP reports all of value added. But all of activity is greater than all of value added.

My friends and I have been interested in linking economic activity to infrastructure activity.  Here is an example.  Infrastructure services are required for all material inputs as well as all material outputs.  This is just one example where GDP cannot replace GO

How to really help

Here is Prof Arindrajit Dube's summary of research that points to moderate to negligible unemployment impacts of a minimum wage law.  Here is Prof. Don Boudreaux's response.  Color me skeptical when it comes to claims that the Law of Demand does not hold.  The intuition that higher prices are incentives to discover substitutes has been corroborated an uncountable number of times.  There may be cases where within some narrow range of price hike there are short-term negligible effects.

But this is all the green light that the class-warriors need as cover.  Their redistribution and price-fixing agenda is way beyond any short term and narrow range. Steven Landsburg notes that if there are no unemployment effects, there are likely to be price effects. Who shops at WalMart and MacDonald's? Not the 1%.

But the deeper point is that the only way to really help low paid people is to give them an education and a marketable skill. It is telling that those most eager to be seen as lining up to "help people" are also reluctant to back the radical shake-up of the public schools that might make a difference to the very poorest. The Obama Justice Department fights school voucher programs where and when it can.

Meaningful shake-up has to be bottom-up-demand-driven. This means choice and empowering the parents.  Shake-up from the top is Obamacare.  The difference between schooling and education is best identified by parents, not the people responsible for the current state of the public schools in poor neighborhoods.

ADDED

Here is Pritchett discussing his book with Russ Roberts.

Simple but hard

What governments should and should not do is an old question. Adam Smith had his say.  "Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things."  But this is hard because of the great urge by officials to be expansive -- and to get re-elected.

What about cities?  Keep the streets safe, pick up the trash, remove the snow, patch the pavement, etc. Get the basics right. Do few things but do them well.  But here again, the impulse is to do too many things -- and end up doing them badly.  In the interests of "economic development," we gets sports stadia and and a thousand other such projects that feed the local corporatism.

Ray Avent is astute about these questions. He discusses modern American cities and ends this way:  "And so one thing society might want to discuss is whether leaving land-use decisions mostly in the hands of a metropolitan area's local, rich elite is likely to produce the best outcomes or is maybe just a recipe for inefficiency and rent-seeking on a jaw-dropping scale."  It's a simple idea but seemingly very hard to execute

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.
Read more at http://www.brainyquote.com/quotes/quotes/a/adamsmith408719.html#Tii8xh7HKzXqz1i8.99

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.
Read more at http://www.brainyquote.com/quotes/quotes/a/adamsmith408719.html#Tii8xh7HKzXqz1i8.99

Exotic and/or sinister

What can economists contribute to public policy discussions?  Job #1 would be to introduce markets and/or pricing where there isn't any.  Greg Mankiw's "Pigou Club" advances the idea but it has been around for a long time (at least since Pigou).  Countless papers and books argue for the pricing of road access, parking spaces, airport landing slots and any other facility where rationing by price is feasible.  If price does not ration something else will. The alternatives, crowding and congestion spring to mind, are usually frowned on. Teachers and textbook authors usually present the basic story with slam-dunk logic and finality.

If you do not like pricing administered this way, consider allowing markets where there aren't any and let them find a price.  Cap-and-trade have practically made it into mainstream discussions.

But it is not that simple.  look at portions of this op-ed from this morning's WSJ:

You know an agency has gone off the rails when its rules make the Ninth Circuit Court of Appeals look like a beacon of sanity. So it goes at the Department of Health and Human Services, where a proposed rule-making is seeking to override the court's decision to allow bone-marrow donors to be compensated for their donations.In 1984, Congress passed the National Organ Transplant Act banning the purchase or sale of organs like livers and lungs for transplants. The intention was to prevent the exploitation of poor donors or self-mutilation for profit (think drug addicts). Swept up in the ban was bone marrow, which produces blood cells and is critical to the immune system.Organs are unique and specialized groups of cells, but bone marrow is a connective tissue that regenerates naturally in a healthy body. In 1984 the typical bone marrow transplant was relatively complicated. Today, you can donate bone marrow through an outpatient procedure called apheresis. A donor receives a series of shots and then is hooked up to a machine that draws blood and collects marrow cells, much like blood donation.

The default non-price rationing here is death.  Many sick people die waiting for a donor.  Altruism is not enough (unfortunately) and introducing (permitting) markets will save lives.  

Here is the rest of the story:

In 2009, the Institute for Justice sued on behalf of Maine resident Doreen Flynn, whose three children have a disease called Fanconi anemia and will most likely need bone marrow transplants to survive. In 2012's Flynn v. Holder, the Ninth Circuit agreed, noting that new technology and the ease of marrow donation put the ban wholly out of step with the purpose of the organ donation law.The Justice Department petitioned for rehearing en banc, insisting that marrow transplants should "not be subject to market forces." When the Ninth Circuit declined to rehear the case, the Administration mobilized HHS, which has proposed a rule that would overturn the Ninth Circuit and define marrow extracted from the bloodstream as an organ. The purpose, says the rule, is to "ban the commodification" of bone marrow used in transplants, "encourage altruistic donations, and decrease the likelihood of disease transmission resulting from paid donations."

Market forces are viewed as exotic and/or sinister in some quarters. "Commodification" is how we get our food.  In fact, absent food "commodification", people starve.  That's been the case in all too many places where "food policy" has banned or discouraged markets.

In the bone marrow case, given the chance to let market forces save lives, the administration intervenes to try and stop them.

"Havoc"?

Would you give up internet use for life for a million dollars? It only costs you pennies a day. It's a great question and Michael Cox's way of illustrating what economists call consumer surplus, the difference between price and how much the item is valued.

We also know that consumer surplus is not in GDP.  And we know that accountants measure what they can.

But people take their economic stats very seriously.  Data releases move markets almost daily.  No doubt the people laboring at the various statistical agencies are smart and hard working, but they have a difficult task -- one that is becoming harder all the time.

So official GDP reports must be taken with at least a grain of salt. And GDP is likely to become a more difficult concept as we get ever more satisfaction from "free" stuff.  These simple observations are a challenge to the increasingly popular stagnation narratives.

This is nicely summarized in the latest James Surowiecki column in the New Yorker (Gross Domestic Freebie.) He adds that these new-economy effects are unevenly spread. What is not? He also mentions "havoc" but that too is inherent in a dynamic economy.  Who really wants to go back to "the good old days?"  Almost no one who is seriously informed.  I usually have two words for anyone who pines this way: "medical science."

ADDED

Same theme but more vivid.

Cosmos and Taxis

David Andersson introduces us to a new journal, Cosmos and Taxis.  The lead essay in the linked issue is by Gus diZerega and lays some of the groundwork, introducing readers to the various themes to be developed.  These include spontaneous orders and spontaneous networks.  The latter includes Jane Jacobs' insights into how cities work: "At a time when many believed cities could be planned and reorganized through directives chosen by experts ... Jacobs argues that cities are too complex to respond predictably to such planning ..."  Read the whole thing.

Johanna Palmberg elaborates the story in another essay. Note that she elaborates the urban agglomeration theme of the spontaneous co-location of complementary firms (as they judge the complementarity and as they see fit).  I have previously stressed the co-location of households and firms -- as workers and their employers behave strategically and also as retailers and shoppers do the same.  Households produce and consume knowledge and can be treated as "firms" in this context.

Questions not asked

David Theroux sends us to this bizarre Obamacare interview with Nancy Pelosi.  Nevertheless, many writers are trying to be charitable. Here is Gerald Seib, who writes that the ACA we got is the most plausible left-right health care compromise in light of current U.S. politics. The resulting complexity of the compromise is the Achilles heel. Here is Arnold Kling also being charitable.

But it's hard to blot out the Pelosi performance; she has long been one of the ACA's most passionate sponsors and defenders. Note how many times she defends herself by touting the ACA's feature that pre-existing conditions are not grounds for insurers' screening or rejection.

But that's not insurance. I could, for example, have the pre-existing condition of multiple DUI convictions and I expect that this would impact an auto insurer's decision of whether or not to offer me a policy. ACA defenders go repeatedly unchallenged (as in the Pelosi interview) when they tout this great reform feature.

The argument for "reform" and  ACA-type legislation often hinges on the poor U.S. showing ("U.S. Ranks Below 16 Other Rich Countries In Health Report") when health care spending is compared to longevity and other health outcomes.  But the health (and unhealthy) habits of many Americans are not addressed by these approaches.  

"Many people might be surprised to learn, for instance, that for more than half the males who die before age 50, the cause of death has nothing to do with disease — and is therefore not amenable to reduction through medical care."

In all of today's health care discussions, most do even mention this elephant in the room.

Most Americans have their health care paid by third parties (private as well as public insurance).  This explains high levels of demand and treatment and also high prices (and costs). But this links to a bigger problem.  In his very readable and informed discussion, Angus Deaton (The Great Escape, p 146-7) points out that most people do not see that the current arrangement lowers their wages; they do not blame slow growth in take-home pay on how they buy health insurance.

One cannot even imagine an interviewer pitching these questions at the Pelosi we see on the video.

Where we are

Media and others have coined the term Abenomics to describe the economic policies of Japanese PM Shinzo Abe.  There are seemingly three prongs:  more fiscal stimulus, more monetary stimulus and "reform".  We hear of late that the third one has stalled.

But this is true almost everywhere.  It is easiest for politicians to turn on the fiscal and the monetary stimulus -- and less easy to somehow turn them off.  "Austerity" is widely disparaged.  Reform means taking on the special interests and that's much harder than spending money.

I mention all this because Kevin Warsh does a fine job of summarizing U.S. policy challenges in his "Finding Out Where Janet Yellen Stands."

I had previously posted some reactions to Edmund Phelps' fine new book, Mass Flourishing. But now, listening to Phelps discuss it with Russ Roberts at econtalk, I get the impression that he is more pessimistic than I had thought when I read the book. Phelps worries about a decline in U.S. productivity growth and is seemingly perplexed about where we go from here.

If we adopt the shorthand of three possible policy prongs, it seems clear that politicians rely on the ones that are easy (spend more money, print more money) but these have almost nothing to do with the problems that they are addressing.  Structural problems are bigger.  The schooling establishment, for example, has a lock on political support and also produces product that badly fits the requirements of the labor market. In that case, all of the monetary and fiscal stimulus will not do much for unemployment rates.  That is where we are and where we have been for some years.

ADDED

Lindsey on Phelps

Off topic: caption contest

I expect that most people have seen the delightful Nov. 11 cover of the New Yorker. But the weekly magazine that most people buy for its caption contest, passed up the opportunity to link a caption contest to this cover.

Let's see. "Fatal conceit" is taken. "Ignorant arrogance" is clunky.  "Arrogant ignorance" is not much better. "Social engineering is hard work" is too long. "Central planning is hard work" is not any better. "Hope and change" is rubbing it in. "If you like your current plan ..." is too painful. “But we have to pass the [health care] bill so that you can find out what’s in it....” is actually pretty good but a bit long.

Full disclosure: I have entered the actual caption contest a few times but never even made the best three. Time to move on.

ADDED

On a serious note, Keith Hennessey cites all the unforced errors.

"More commuters go it alone ..."

In 1997, Loren Lomasky published "Autonomy and Automobility."  He articulated what we all knew, that nothing beats the freedom and mobility of the private auto. This is not about "car-crazy Californians" or such. Look abroad; as people begin to earn, guess what they want. Or, as we used to say, "Ask any teenager."

Today's WSJ includes "More Commuters Go It Alone ... Americans Increasingly Ride Solo or Work From Home; Carpooling Now Below 10%. ... Meanwhile, just about every other way of getting to work has either languished or declined. Carpooling has tanked—falling from about 20% in 1980, when gasoline prices were soaring from the oil shock of the late 1970s, to under 10% in 2012. Public transportation accounted for just over 6% of daily commutes in 1980 and is now 5%. A category the Census calls 'other means'—which includes biking—stands at 2%, largely unchanged over the past decade. These commuting trends come despite efforts to get people to use public transportation or other alternatives. ..."  The writer could have added that there are no signs that these efforts are even being re-thought.

None of this is news. It highlights the power of the Bootleggers and Baptists insight. Once a coalition forms that includes those who feed at the trough (favored construction interests in this case) holding hands with greens who will support any program that might challenge automobility, it is game-over. This is a much more powerful public policy analysis than all the silly stuff about "evidence-based" policy and serious cost-benefit accounting.

Bad fixes

Pre-ObamaCare health care in America had many critics. Daniel McFadden referred to that "system" as "A Dog's Breakfast." I have kept that clipping around since it appeared in 2007 as a useful classroom conversation starter.

McFadden's essay must be recalled in light of what the apologists are now reaching for as it became apparent that many Americans will not be able to keep their health plans. This morning's NY Times editorialized that those were "Policies Not Worth Keeping". The President just "misspoke".

One could say that the last refuge of a political scoundrel is the rhetorical device of a false choice. The Dog's Breakfast vs. Obamacare. Various state legislatures have been in bed with various insurance companies and assorted lobbyists for years. We get restricted competition (including barriers to inter-state buying and selling of policies) as well as a heap of mandated coverages. We also have favorable tax treatments of insurance plans as long as long as they are employer provided. On top of that we have Medicare and Medicaid which weigh in with their own requirements. Both the private and the public insurers invite price discrimination that pundits routinely see as some sort of fraud

All of this is well known and better explained by health care scholars. Here are five common sense reforms that (sad to say) both political parties have shied away from. It is the old story of bad policies prompting a demand for fixes by way of more bad policy.