Personal Independence

Comments

43 responses to “Personal Independence”

1. 

   Charles D

   2009-12-11

   We aren’t really too far apart here, amazingly enough. No we cannot have radical democracy, there must be some rules, some principles which cannot be violated. The Constitution would not have been ratified without the Bill of Rights, the basic rights of the individual (as they were viewed then) had to be protected regardless of what the majority might want the government to do. I could quibble that basic human rights have more to do with how we relate in society and community than with personal independence as such. Fully protecting free speech, press, assembly, religion, habeas corpus, etc., are important because they are necessary to the health of the community as a whole as well as to the individual.

   Personal independence however, is not able to solve every problem and I am not comfortable ignoring or simply living with problems that negatively affect my community or my nation because I can’t do anything about them personally and neither can my local Rotary Club. Some people don’t think they really have personal independence unless they are able to ignore the needs and desires of others, they don’t believe they are free unless they have complete control of their time, energy and property. If they are hermits, I have no problem with that viewpoint, but most of us live in a context where we are surrounded by other people. We live in communities and when the community has serious problems, we are affected.

   I don’t know the solution to all of our nation’s problems, but I do not believe that simply giving up, or blaming someone else, or passing the buck is not going to solve any of them. Like a marriage, my relationship with my community and my nation is not always ideal, but I have a commitment to this country and a love for it that makes me unwilling to let its problems fester because I can’t personally do anything significant about them, or because I don’t believe government can, will or should do anything about them, or because I can’t think of any other rational solution.

   We have a great nation but 45,000 of our fellow citizens die every year because they can’t afford good medical care. millions of our young people finish high school but can only read at the middle school level and no nothing about our history or about the world, we are fast approaching a level of income disparity that is more in tune with a banana republic, many of our children get their only decent meals when they are in school. I could complain that these folks are being irresponsible and made bad choices. I could state that the government has no business involving itself in such matters. I could make myself feel better by donating money to organizations that help others, but none of those things will solve those problems. I could sit back and wait for the market to solve these problems, but my grandchildren might not live to see positive results from that. I could ignore the problems and just make sure my family is OK, but what kind of world will greet us when we leave the house?

   Reply
   1. 

      David

      2009-12-11

      Like you said, we are closer here than we might have anticipated. Personal independence alone can solve very few problems, but without some degree of personal independence there is little chance that anything can be done. The more free I am from the ill-advised choices of those around me the greater my opportunity to identify a need and work to find a way to meet it. Does my being free from outside constraints promise that I will do that? No, but if I am not free I do not even have the option.

      When I argue that the government cannot or should not address certain issues that should never be taken to mean that those issues should not be addressed. It means that I don’t believe in using a screwdriver to pound in a nail. Some people think the government is a multi-tool that can be used for any job, but I believe it is a much more basic tool than the Leatherman™ on my keychain.

      We do have problems such as 45,000 people dying for lack of medical care or 50,000 dying on the highways, but the solution to those problems is actually relatively basic- communities need to pull together. Government does not create community. In fact the evidence is strong that the more government (especially federal) is involved the less vibrant and active the community life becomes. We see a problem and assign government to fix it. When they do it often fails or creates new problems. We then assign government to fix the problems they created. It’s an endless cycle that no magic overhaul will fix.

      I work on some software that really reminds me of the way government works. Every time the vendor issues an upgrade we get new problems even as they address problems they previously introduced. We have gotten tot he point that when we consider applying on their upgrades we don’t talk about fixing things, we talk about upgrading our problem set.

      Reply
2. 

   Charles D

   2009-12-11

   Well this will sound a bit utopian, but government is an expression of community. Communities create governments, not the other way around. One reason they do is that it provides a way for them to address problems they cannot otherwise fix.

   The software analogy hits home since that’s my field as well. Yes, chances are that every upgrade will break something somewhere in the system, but over time the product will improve and become more functional. If the alternative is to ditch the system and go back to working manually, most of us choose to stick with the software.

   Government at the federal level in the US doesn’t work. I would classify it as totally dysfunctional. Government at the state level has to work within the constraints imposed by the dysfunctional national government and some states are pretty good at it and others (perhaps most) are not. That said, we are still left with problems for which we have no solution and the only entity with the resources to solve those problems is government, and government is usually the only entity over which we can hope to gain sufficient control to cause the problems to be addressed. But there is an overriding problem, a meta-problem perhaps – and that is the corruption and dysfunctionality of government itself.

   Can we fix government? Can we make government respond to the people instead of the corporations? Can we change our priorities so that funding is available to work on the nation’s problems rather than bomb others? If the answer to these questions is no, then we have to return to the set of problems and come up with another plan. I don’t know of one. When you have developed systemic problems, you need to find resources strong enough to change the system and resources that can be made willing to do so.

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   1. 

      David

      2009-12-11

      Government is an expression of community just like corporations are the unified interests of individuals working together. Something gets lost in the translation.

      It amazes me that people can admit that government at the federal level is “totally dysfunctional” and that states are forced to work within the constraints imposed by that dysfunctional government and yet these same people think that the federal government should be taking charge of yet another problem. As far as I am able to figure out the only way people are able to make that argument is if the people of Massachusetts are busy trying to solve the problems that exist in Nebraska and the people in Texas are trying to solve the problems in Idaho etc.

      Is there some evidence that state governments, the collection of millions of people in a state (well, not millions for Wyoming) banding together, would not be able to address these issues within their own states if they were not so tightly manipulated by the federal government? Of course there is the race to the bottom argument, but if that’s all states do then tighter federal control is not a significant issue. If states are being hampered by federal control then the federal government should be more limited. If state governments, which have significantly reduced powers due to federal control, are essentially corrupt and disposed to harm the societies they govern then how could we expect an expansive federal government to be less corrupt and less disposed to leave messes in their wake?

      Can we fix government and make it responsive to people instead of corporations? Yes, but not so long as we are busy asking government to take more control over another set of problems. The only way to fix government is to focus on fixing government. As long as we are focused on fixing other things government will continue to corrode and society with it.

      Reply
3. 

   Charles D

   2009-12-11

   The reason people still want government to solve the problem is that they know there is no possibility of the problem being solved any other way. Less federal interference in state government (if that is the solution) doesn’t necessarily mean limiting the federal government in other ways. Frankly I don’t think state governments would be able to make much of an impact on the kinds of systemic problems I’m talking about even if the feds gave them free rein. If Wyoming decided to provide free health care and free higher education and full employment policy, using taxes perhaps from their resource extraction industries, then everyone who needed any of those things would move to Wyoming and they would collapse. If every state decided to have free education through PhD level (like in Denmark) except Utah, then you’d find your universities pretty empty, not to mention the jobs you’d lose. We are way too interdependent for that kind of solution.

   So let’s focus on fixing government – I agree. I would say that we’ll get a lot more interest in fixing government if people believe that having a functioning and responsive government will make their lives better. The main thing we would have to do is determine on what needs fixing and how to fix it.

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   1. 

      David

      2009-12-11

      Why don’t you believe that the state governments can affect their systemic problems? many of our states are larger economically and population wise than other self-sustaining countries (we have 26 states that each have a population larger than New Zealand and they seem to be fairly stable) so why is it that they can’t address these issues?

      Let’s look at your two examples.

      Wyoming provides free health care and free higher education and full employment – long before they collapse under the weight of all the people who come to take advantage of those benefits (because it takes time to get up and move) two things would happen, first, Wyoming would figure out that they could not sustain all those people and they would begin to scale back their offering to something more sustainable. Besides that people would need to have places to stay and housing is a limiting resource. Second, other states would begin to compete with Wyoming by trying to the best of their ability to match what Wyoming was offering – sounds more like a race to the top than a race to the bottom.

      Every state besides Utah decides to have free education through PhD level – long before the Utah universities collapsed Utah would have ample opportunity to adopt the same policy. Even if they didn’t the depressed population level would make for a lower cost of living – also, the lack of taxes to pay for all that “free” education would make it nicer to live under Utah taxes both for individuals and businesses so people might leave the state for their higher education and then return to the state in droves to live during their productive work years or their retirement years.

      Besides, because states cannot deficit spend they would have to make their benefits based on something approaching sound economics which would be a huge benefit for the nation as a whole because we would not be so dependent on a perpetual supply of foreign investment to fund our ill-conceived government promises.

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      1. 

         Ronald D. Hunt

         2009-12-11

         “Why don’t you believe that the state governments can affect their systemic problems? many of our states are larger economically and population wise than other self-sustaining countries (we have 26 states that each have a population larger than New Zealand and they seem to be fairly stable) so why is it that they can’t address these issues?”

         Because regulating Inter state commerce is against the Constitution and illegal.
         Because regulating Inter state immigration is against the Constitution and illegal.

         No State even the big ones can handle the influx of costs because they can’t regulate many of the things that contribute to the costs. The costs of illegal immigration from Mexico are potent enough to be obvious. Unregulated immigration between states for services would be much worse if it wasn’t all in or all out.

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         1. 

            David

            2009-12-11

            I don’t see how inter state commerce relates to the issues that we have been discussing. I can see how inter state immigration relates but you have never heard me argue that the federal government should not regulate that – nor is anyone in Washington, or supporting Washington from other places in the country addressing immigration issues as they try to tackle these problems.

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4. 

   Charles D

   2009-12-12

   David, you raise a large economics issue here. The US Dollar is, like it or not, the world’s reserve currency. Debts between nations are usually settled in dollars and the US can, if it chooses, act as a sort of mega central bank to the world. I don’t necessarily think this is a good idea, but that is the rationale as I understand it.

   It is possible and sometimes prudent for the national government to go into debt. The question, like it is for individuals, is whether the money borrowed is invested in something that can be expected to provide a return in excess of the amount invested, or whether it is spent on goods and services that have no long term value. Also, as with individuals and families, there are times when it may be necessary to borrow for basic everyday expenses for a short period so that the family will remain in a position to generate income in the future.

   Using this analogy, I find it generally irresponsible to borrow to spend on weapons systems to fight enemies that no longer exist, or to project a military presence into parts of the world where we are not wanted. It might however, be responsible to borrow to educate new engineers or doctors, or to build infrastructure since the nation’s economy is likely to be boosted by a better educated and healthier workforce and a strong infrastructure. That boost should enable the government to pay back the debt over time.

   I realize that those in Washington who call themselves conservatives do not represent your viewpoint David, and those who call themselves liberals don’t represent mine, but both groups are guilty of maintaining spending at a level far above revenue. They differ mostly about what to spend money on and whether or from whom they should get revenue.

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   1. 

      David

      2009-12-12

      I find it very interesting that you and I can disagree along generally the same lines as the “liberals” and “conservatives” in Congress but we are able to do it much more civilly and productively. I will not try to guess whether your consider the liberals in Congress to be more or less liberal than you but I can say that the conservatives in Congress are almost universally less conservative than I am. What really strikes me as funny is that the liberals and the conservatives in Congress are both more profligate in their approach to spending than either you or I.

      I think that the comparison between individual or personal approaches to finance and government approaches to finance is appropriate. I am not against any form of debt for individuals, corporations, or governments. Borrowing is a perfectly acceptable practice, but it only bares a vague resemblance to what Congress has been doing for many decades. Individuals, corporations, and smaller governments (state and local) must eventually begin repaying what they have been borrowing. States and cities may bond and borrow money for 5, 10, or even 20 years, but they do so for specific projects and they have to ask permission to borrow again – not so with the federal government. Also, there is a debt ceiling for individuals and smaller governments. That ceiling has payments that are usually a relatively small portion of their annual income – perhaps 30% for individuals on their home (as an example). The federal government is currently spending 25% of their annual revenue on the interest alone of their debt and they have no debt ceiling (I know, technically there is one, but they get to set it themselves) and we have been running an ever increasing debt that is currently hovering around 90% of our annual economy and 600% of the government’s annual revenues. (In other words if the government stopped paying for anything except the debt for 7 years we would barely erase our debt – assuming that revenue remained constant despite the lack of spending. And no, I don’t think this is possible or prudent, I’m just putting our debt load into context.) Each year the federal government is spending 50% or more beyond their revenues.

      Seeing the unrealistic approach to finance pursued by our government it should make sense why I want to make myself financially independent of them as much as possible.

      Reply
5. 

   Charles D

   2009-12-12

   For the record, I am more liberal than most liberals in Congress. The standard Democratic liberal has been a pro-war, pro-interventionist and that lost them my vote some time ago. Perhaps true conservatives and true liberals (aka progressives) feel the same way on election day – choosing between the least of two evils.

   I subscribe to the economic theory that is OK for the federal government to deficit spend when necessary, but they should be more fiscally responsible when the economy is doing well. What worries me about government at every level is that we only seem able or willing to address one side of the equation. We can talk about spending but we can’t talk about raising revenue – taxes. While clearly claiming to be a tax cutter is good politics for any candidate, we have moved beyond the point where there can be a claim of fiscal responsibility that doesn’t not come with a proposal to raise taxes.

   We seem to have fallen victim to an economic theory that one can constantly lower taxes and this will stimulate economic activity to the point where the government will get more revenue. Of course, being so sure this theory is correct there’s no need to wait until those projected increases happen before we spend the money. While I do believe that targeted tax cuts with actual requirements behind them can generate jobs, simply cutting taxes willy nilly doesn’t have the same effect. You certainly can’t get out of as much debt as the federal government is in without increasing taxes.

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   1. 

      David

      2009-12-14

      The whole stance on war is another example of the disconnect between the leadership in Washington and the citizenry in the rest of the United States. I do not consider it remotely conservative to pursue war aggressively, despite what many neocons will proclaim. I recognize that as a point of difference between myself and many Republicans, but I feel confident in my assertion that a true conservative cannot pursue war as recklessly as we have. My preferred stance would be “we won’t start a war, but if you start one with us we’ll finish it.”

      It sounds like you and I agree that the worst aspect of our deficit spending is its perpetual nature. Congress spends in deficit whether we are in good years or bad years economically. The reasoning seems to be that the tax-cutters are happy to let the spenders increase spending during the good years under the pretense that we will grow into those spending levels (or out of the deficits) while the spenders don’t mind the electoral boost of being in office when taxes were cut.

      I recognize the value of raising revenue to start paying down our debt, but we’ll never get there simply by increasing the government’s take of GDP, we have to cut spending as well.

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6. 

   Ronald D. Hunt

   2009-12-12

   Myself I am a progressive/liberal leaning third-wayist.

   A traditional Third-wayist of course being someone that believes in a fundamentally free market but with the government subsidizing the welfare state.

   I believe that interaction between government and private industry leads to corruption and that interaction between private industry and the welfare state leads to corruption, So I differ from the traditional third-wayist in that I believe the government should run the welfare state. I don’t take this to the absolute however, I merely think that government should set the floor but not the ceiling, in that vain the way Social security works I think is great such that their is a basic amount of savings that occurs through Social security but it doesn’t prevent anyone from obtaining savings beyond what it provides. And social security is isolated from the corruption breed from the interaction between government and corporation. Social security also is protected from the rise and fall of markets that is the cause for 401K’s/Pensions being such a gross failure of a retirement savings system.

   Medicare has generally had very low levels of fraud and corruption until 2003 when Republicans passed Medicare advantage and Medicare drug benefits. Both of which create huge payments to private industry through the government program. Medicare advantage has been used by private industry to defraud the government of Billions in tax payer dollars, In fact the largest fraud settlement ever was from a private company that defrauded the Medicare advantage program in 2004-2005. *Medicare advantage being a program where a Medicare recipient opts out of Medicare part A and receives coverage from a private provider instead of Medicare via a government payed subsidy to that private provider*

   20 Largest Fraud Cases EVER!!!!! *I think you will get a kick our of this!*

   Their is a resent settlement involving Pzifer that may end up being larger involving Medicare Advantage and privately administered Medicaid plans.

   Allowing private industry to touch the welfare state is a mistake, if the sole purveyor you end up with huge swaths of people left out, gross abuse of customers, gross administrative complexity, etc.

   If subsidized you get gross across the board fraud and corruption, and you will still have people left out, abuse of customers, likely worse levels of administrative complexity then left alone.

   So neither is really a good option. Medicare Part A is beautifully efficient well beyond what any private provider can do. Medicare supplemental plans are a great way for people to get services beyond Medicare’s offerings and they are segregated from the problems of government interaction with private industry.

   Medicare for all would allow the government to use nationally standardized forms/paperwork, Bulk payment and Global budgeting which would slash administrative costs in health care to the tune of $300-$400 Billion dollars. It would remove over $400 Billion in Medicaid mandates from the States allowing those state to cut tax’s or fund programs etc.

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   1. 

      David

      2009-12-14

      The idea of government subsidizing the welfare state would not be so unpalatable to me if it were done like Social Security and if it did not induce any mental complacency in the populace wherein they begin to act foolishly for themselves because they expect that the welfare state will prevent them from feeling the effects of their foolish choices. So far, it does not appear that the government has a good track record of structuring things the way Social Security is structured. Secondly, I have no confidence that the mental complacency is not a natural side effect of every welfare program the government runs.

      The theory that private industry should not touch the welfare state is good – obviously their goal in touching it is to exploit it for their gain. The only problem with the theory is that I don’t believe we can prevent it unless the welfare offerings are structured along the lines of vouchers. I don’t think the government can possibly grow enough to directly manage all the welfare offerings without turning the entire nation into a communist society. If the welfare were offered as vouchers that allows the individuals receiving the aid to manage the use of their resources instead of depending on the generosity of the private enterprises they work with, or the omniscience of their government caseworkers.

      Reply
7. 

   Charles D

   2009-12-14

   David, I read this insightful piece at one of my favorite blog/podcast sites and he raises the point of legitimacy of government. I’d be curious as to your thoughts.

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   1. 

      David

      2009-12-14

      Wow, that really was a good read. I think he is absolutely right. I started writing a comment with my thoughts, but it was getting way too long for a comment so I’ll post a full post on it instead.

      Stay tuned.

      Reply
8. 

   Charles D

   2009-12-14

   I think we agree basically, but I do believe there are situations in which a sudden cut in government spending could be very detrimental to the nation as a whole – like now for example. Of course it would depend on what spending is cut. We could tolerate a complete halt to the giveaways to Wall Street (TARP, TALP, and whatever the Fed is doing) with no deleterious effect on the economy as a whole, but if we started cutting infrastructure spending, or social security or medicare, we could forget about a recovery.

   The solution to our current economic malaise is to get Americans back to work at decent jobs. If people are earning money they will spend it, banks will lend them money for cars and homes, and we will be back on the road to recovery. We can’t put the economy back on track by preventing Wall Street speculators from confronting the consequences of their actions. Without bank lending or government spending, it’s hard to envision how jobs might get created.

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9. 

   Charles D

   2009-12-14

   All we have to do to keep private industry out of the welfare state is pass a law that they can’t get involved in it. As for vouchers, I have no particular problem with that kind of approach, assuming that it is managed simply and directly like Social Security. The current Earned Income Tax Credit is not a bad solution, but it only works if you are earning income. I don’t like systems like Food Stamps that both stigmatize their users and burden businesses with enforcement of sometimes arcane government regulations about what can and cannot be purchased. If you want to give individuals responsibility, then simply hand them an ATM card and put money in their account every month. Of course, then they might go get cash and buy drugs or booze, but that’s a risk you would have to take.

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   1. 

      David

      2009-12-14

      I don’t think it’s quite that simple. We have to decide that constitutes involvement. Take rental assistance for example. Is private industry involved simply because they own the properties that are being rented or do they have to be actively helping their renters get assistance to be “involved” in the system?

      I think your ATM card illustrates why the government avoids the voucher approach so much of the time. We don’t really want to subsidize drug use or alcoholism. Personally I’m not sure that having a stigma attached to receiving a government handout is such a bad thing. That would encourage people to pull themselves up and quit leaching on society. One of the big problems we face is that there are areas and industries where the is no such stigma. Virtually everyone in the agriculture industry takes large government subsidies so there is no stigma for doing so. Consequently they have no compunction against taking that money and even asking for it to be increased all the time.

      I would rather say that we do simply give ATM cards with whatever aid money to those needing assistance and then tell them that the use of drugs or alcohol will result in an end to their assistance for a period of time (3 months for a first infraction, 1 year for a second infraction and permanently for a third infraction for example) and placement of their children (if any) with some other caregiver during that time.

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10. 

    Charles D

    2009-12-14

    Your rental assistance example is a good one. I would say that private industry is only involved if they are assisting potential renters to get vouchers, but that system isn’t working so well either.

    There is a difference between a farmer and a poor person. The farmer chose his profession and chooses whether to take government subsidies. The poor person may simply be a victim of circumstances and really cannot choose to go hungry. I don’t think there are that many poor people who really enjoy being on the dole. The welfare queen was mostly a figment of the imagination. What we have however is a situation where the available jobs for unskilled workers don’t pay enough to cover transportation, rent and child care. We have addressed that problem by eliminating welfare as we knew it, and too often the victims of that policy are children.

    If we are going to have personal responsibility, that has to include the potential that the person could make bad decisions. Rather than trying to enforce a policy preventing drug and alcohol use, why not try to find a positive to enforce? For example, if you are getting the ATM card, you need to be either enrolled in a training program (now there’s a subject for a long discussion!) or employed – even if it is a make-work job. If you are unable to carry out your job or training due to substance abuse, then you belong in a substance abuse program and your kids need to be placed somwhere safe. We could discuss drug policy too but that seems a bit far afield for this topic.

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    1. 

       David

       2009-12-14

       I hope I did not give the impression that I thought the rental assistance program was devoid of abuses. I consider it yet another instance of the way government assistance is prone to exploitation.

       I think you are oversimplifying. How many people choose their profession simply on the basis of “what daddy did.” Many farmers chose their profession because it is what they knew, and part of what they grow up knowing is how to get government farm subsidies. The same is true of the poor. Many grow up and the only thing they learn is how to visit their case-worker to receive food stamps etc. I don’t know if you have ever lived in an area with high rates of government assistance, but I can tell you that there are areas where it has zero stigma and people have no motivation to get off the program and get on their own feet. I’m not talking about the image of the unwed mother having another baby to increase the size of her monthly benefit – I’m talking about those who don’t need to do anything except hang out in front of the television or playing hoops at the nearest park because they have no incentive to do more than pick up their monthly check. I’ve met some of those people. I don’t claim that all welfare recipients are like that, but you can’t say that they don’t exist or that it is a problem too small to ignore. Any place where living on government assistance is seen as normal is a breeding ground for dysfunctional society.

       By the way, I like the program you outlines where assistance is dependent on participating in some kids of job training or low level job and then having consequences of substance abuse etc only if it interferes with those requirements.

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11. 

    Charles D

    2009-12-14

    Well David, I would say that any place where it is necessary to rely of government assistance for the basics of life is a breeding ground for dysfunctional society. Flip side of the coin perhaps. Again we run into the same brick wall. We haven’t yet found an ideal government intervention to solve poverty and we probably never will. However, we cannot in good conscience tolerate an economic situation in which a large portion of the population is going to bed hungry, live in substandard conditions and have no hope of finding a job. Sure there are people who cheat what remains of the welfare system just like there are people who cheat the financial system. The big difference is that bail out the latter when they make poor decisions.

    I lived in New York City for over 10 years, which I suppose qualifies as having a high rate of government assistance. While there were certainly people who had never known a life without welfare, for most it was a simple economic decision. If I have food assistance, housing assistance, free medical care and can stay home with my kids, you won’t convince me to take a job unless I know that employment will not threaten food security, shelter, my family’s health, or put my child at risk. We answered that issue during the Clinton years by making all the welfare programs temporary. That didn’t address the problems, but it wasn’t designed to do anything other than score political points.

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    1. 

       David

       2009-12-14

       any place where it is necessary to rely of government assistance for the basics of life is a breeding ground for dysfunctional society.

       Agreed. And I agree that we cannot in good conscience tolerate an economic situation in which a large portion of the population is going to bed hungry etc. The question is, is it the job of government to address these needs, or is it the job of communities (church communities, neighborhoods, clubs, non-profits, or any other real community where people have united goals – that excludes government).

       As for New York, I don’t think that New York City can be treated as a homogeneous entity but I have no doubt that it houses multiple areas similar to the ones I have experienced and referenced. THe way government answered the issues you brough up is further evidence of how ill suited government is to handle these tasks.

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12. 

    Charles D

    2009-12-14

    David, I don’t ask the question of whether it is the job of one entity or another to address this issue. I’m more interested in what entity can be successful over the long-term. You do bring up another point of dysfunction. If people don’t have united goals, then how can they have a democratic government in any sense? If I have a totalitarian government, or a pseudo-republic then I can force things to happen regardless of the people’s goals, desires or needs. In our case, we have a government that can successfully ignore the goals, desires and needs of the people. Even when churches, neighborhoods, clubs, non-profits and individuals are incapable of meeting a societal need, the government’s lack of connection to the people renders it incapable and thus we are solution-less.

    There is a current of optimism/pessimism here regarding government that may not be accurate. I think we both despair of government being able to address systemic problems in our economy and society. I just don’t see an acceptable substitute in most cases.

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    1. 

       David

       2009-12-14

       I don’t believe that any entity can be successful over the long term at accomplishing a task it is unqualified to address – that’s why I don’t believe government can solve these problems. I had come to the conclusion that you do not see any acceptable substitute. The only substitute I see is a lot of hard work by a lot of people, no easy tax taken from our paycheck and somehow magically delivered to those in need.

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13. 

    Ronald D. Hunt

    2009-12-14

    The welfare state should work to the extent of preventing cost shifts and cost externalization. I don’t like direct welfare just handing poor people a check for being poor is a bad idea. Food Stamps actually probably saves us all money by keeping people and their children out of the ER for malnutrition and keeps crime rate down, certainly either could be consider cost shifts that would cost more then the food stamps to begin with. Medicaid benefits bigger states a lot more then smaller states, but still prevents the transmission of commutable diseases, and likely prevents crime from people seeking funds to pay for the illness of their loved ones.

    In our currently privately ran health care system we have huge amounts of cost shifting going on, 78% of all medical bankruptcy’s are from people who had insurance at the onset of their disease. Government ran financing in this area would put a complete stop to the entire idea of a “medical bankruptcy”, The cost shift from this is well over $150 Billion dollars per year(only counting those that had insurance). You can see this from what the private industry will cover as well, preventive care provides little benefit to the insurance company because their is a high probability that by the time the cost savings from that preventive care would make an effect to their costs that the person is no longer their customer.

    Pension plans have had problems with this, Their have been company’s that purposely go into bankruptcy just to dump pension obligations(airline industry), this is a form of cost externalization as part of the bankruptcy process allows them to cut benefits to the pension plan and dump some of its costs onto the Federal Pensioners insurance corporation. Unions and Employee’s in general have been unable to fight this bankruptcy tactic due to reforms in corporate bankruptcy law passed by Reagan that makes bank loans during a bankruptcy a “super priority” to be payed back first before all other obligations creating a sort of executive nuclear option if the union and employee’s don’t play along and agree to nearly every demand. This is also why you have seen unions fighting to run the pension plans themselves so that this tactic doesn’t work.

    Now I won’t advocate that SS should be expanded, its the floor its working rather well really. Private industry retirement savings does need some reform however. Employers hate guaranteed benefit plans and very much like the simplicity of 401k’s and relief from pension plan liability’s, what should likely be done is that we stay with the employer benefit contribution model(401k) and have half the interest gain passed a certain threshold(6% would be good number) used to purchase some sort of insurance against the account which could be privately ran. It would be in the account insurance providers interest to make sure that the account manager didn’t get stupid with the investment so would solve many of the problems with 401k’s. This would create a partly guaranteed benefit rate that would allow retires to have a better means of planning their retirement spending, while not shifting burden of failed retirement plans onto business and government. This would need some regulations and government rule making to work but wouldn’t be hard to pull off, this might be something that a state could do by itself as well.

    “The idea of government subsidizing the welfare state would not be so unpalatable to me if it were done like Social Security and if it did not induce any mental complacency in the populace wherein they begin to act foolishly for themselves because they expect that the welfare state will prevent them from feeling the effects of their foolish choices.”

    I would agree that life insurance(exempting disability which is covered by ss), housing(homeless shelters don’t count), and direct welfare would induce “mental complacency” if simply provided for “free”. However I don’t see retirement savings, health care, unemployment, disability, education(in fact I see this as causing the opposite of “mental complacency”), and food stamps(to some extent) as causing “mental complacency”.

    Direct welfare is little more then a cost shift onto tax payers where tax payers get no benefit from the service. A proper retirement savings system, health care, unemployment, education all have huge benefits to every tax payer and the overall economy as a whole.

    So I will qualify any part of the welfare state ran by government has to fit 3 basic rules,

    1. That it must be put into place under the idea of removing a greater cost shift then it is itself(as I am sure you will argue that tax payer involvement is a cost shift)

    2. It must reduce the overall total spending/cost level of that service or have a large economic benefit or economic stabilizing effect

    3. it has to have direct benefit to at least 90% of tax paying citizens or be a moral imperative that 90% of tax paying citizens can agree on.

    Reply
14. 

    Charles D

    2009-12-15

    Ronald, while I agree with some of your observations, I don’t agree with your conclusions. Programs that provide for the general welfare in a rather direct manner, should first of all be a response to an actual need. They should be morally driven, not merely viewed as a matter of cost saving or shifting. Second, in our economic system they should be a response to a market failure. If a properly regulated private market cannot deliver the service to all who need it at a price they can afford, then government can be considered as a solution. Often this is the case because services to poor people are never profitable without government intervention, unless you want to count usurious payday loans. Parenthetically, the late, lamented 401K is a great example of corporate capture of the government. This was never a good idea, it merely shifting the investment risk from full-time professionals to part-time amateurs. As long as one or another stock bubble could be kept inflated, everyone was happy but when the inevitable busts came along, the corporation would be free of debt and the retiree would be free of income.

    As for the 90% rule, I doubt government could ever accomplish anything if it required 90% of the taxpayers to agree. Certainly we would have to cut our military budget by 80% or so, because there are at least 11% of Americans who don’t want to spend their money that way. The legitimacy of government rests on their ability to carry out programs that a significant portion of the populace do not support. Once the public loses confidence in government’s ability to tell the truth, the government’s ability to legitimize its actions is gone. That’s where we are now. We don’t believe the government is telling us the truth about anything anymore. Regardless of the administration in the White House and the majority in Congress, we can be confident that on key policy matters – national security, the economy, foreign policy, domestic programs, and even law enforcement – our government is not telling us the whole truth or nothing but the truth.

    Reply
15. 

    David

    2009-12-15

    I really enjoyed the idea of “our currently privately ran health care system.” I only wish we had one. What we have currently is a privately managed and publicly manipulated health care system. A fully publicly managed system might be better than our current monstrosity. A fully private system would be better than that. None of the options listed would be anywhere near perfect.

    I also liked Charles’ statement that government could be considered a solution in cases where a properly regulated private market failed to deliver. I’d be happy to entertain suggestions for meeting needs that have not been met by a properly regulated private market – first you have to show me an area where we have a properly regulated private market. (Generally speaking our private markets have not been properly regulated because Congress seems to prefer manipulation more often than proper regulation.)

    Personally I really like the 90% rule Ronald suggested precisely because there is virtually nothing that we have 90% agreement on as Charles pointed out. Charles did seem to miss that direct benefit to 90% was sufficient even when we lack 90% agreement – that would save the military (probably more than it should) because 100% of taxpayers are directly protected by the military. On the other hand nowhere near 90% of the nation is directly benefited by health care reform. Right now 85% of the nation has some insurance, if we assume that only half of those are personally satisfied with what they have then the most that can directly benefit from reform is 58% – nowhere near the 90% threshold that was recommended.

    Reply
16. 

    Charles D

    2009-12-15

    David, aside from Medicare and Medicaid there is little public manipulation of the health care system. Medicare and Medicaid function within the private model and to a great extent with privatized components (Medicare [Dis]Advantage). They each carve out a portion of the market that private insurers don’t want anyway so what effect the have should be helpful to the remaining private market. It should reduce costs by removing the highest-risk groups from the pool. I fail to understand how a private for-profit market can provide goods and services to people who have no ability to pay for those services in an effective way. That’s the current situation.

    Is the military directly protecting us David? They don’t need $1T a year to protect the United States from attack by small groups of fanatics hiding in caves with Kalashnikovs. There’s not a direct benefit there, at least for most of that expenditure.

    I would wager that most of the people who report they are satisfied with the current private health insurance plans haven’t had the unfortunate experience of needing to use the policy. Once you’ve discovered how difficult it is to get them to pay the significant amounts of money promised in the policy, you tend to be less satisfied. Customer service, such as it is, is quite varied because the customer is the employer, not the insured. If you are employed by a big corporation you get pretty decent service, but if your employer is a small business or if you have an individual policy then you should reserve at least an hour for any phone call to the insurer and make sure you listen carefully because our menu has changed.

    Would this improve if we eliminating employer-based insurance? Hardly. Employers are picking some percentage of the cost and they wouldn’t be passing that on to their employees as wages if we switched. They’d pocket that money and the insurers would give us a choice of premiums that take a huge chunk out of our income or benefits that expose us to the risk of bankruptcy if we get sick. And while Oracle Corporation, for example, might have the leverage to get good service and prompt payment, David and Charles acting alone would get bubkes.

    Reply
    1. 

       David

       2009-12-15

       I think you are generalizing too much to say that the private health care market has no interest in the recipients of Medicare and Medicaid. Even if they didn’t have any interest you have understated the effect that Medicare and Medicaid have on the rest of the health care industry. They dictate their own prices to providers and they cover enough of the population that what they do has a massive effect on the private market. They have two choices when setting their prices, they can pay more than a service costs (why would they do that) which would drive up the cost of health care overall, or they can pay less than a service costs – and the extra costs are passed on to the rest of the health care customers thus driving up costs in the private market. That’s the current situation.

       A much better approach to a government option would be to only offer it to those who have evidence that they have been rejected by multiple private insurers. For those who can’t afford the premiums but are otherwise accepted for insurance coverage they should provide a voucher that the individuals could spend on the plan of their choice.

       I said in my comment that the 90% would save the military more than it should. This would get me in trouble with my Congressman, but we spend too much on our military and we demand too much from them (spreading them across the globe in combat missions and in maintaining far flung bases in non-combat situations. I would argue that the benefit is direct even if the cost is exorbitant. We should be cutting the costs, but the 90% benefit rule is sufficient to ensure that the military itself would not be eliminated.

       Reply
17. 

    Charles D

    2009-12-15

    You have a point on price pressure, but I have to think that there is enough political pressure from providers to insure that pricing is not actually below cost, merely below what the market would normally pay. Even if there is some cost recoupment going on, it’s hard to imagine that this is a key cause of the high cost of medical care. The problem with your suggestion is that government would simply end up with the sickest people, the highest cost segment of the market. Unless we move to the kind of tight regulation of private insurance that characterizes the German plans for example, that will just increase insurer’s profits.

    Reply
    1. 

       David

       2009-12-15

       I have no doubt that some of the prices they pay are below cost although I agree that it’s not enough to be the driving force behind our skyrocketing costs of care. A bigger cause of those high prices is the way governments mandate coverage for specific procedures thus contributing to higher use of those procedures (because they’re covered, unlike some alternatives) as well as the disconnect between usage and payment. Because people already feel the financial pain of payment through premiums or taxes they are more inclined to make use of services for he marginal cost of those services to get the most out of the payments they have already made. This perverse incentive applies to those with private coverage at least as much as those with public coverage.

       I admit that my suggestion leaves government in charge of the sickest people, but as I understand it they are already caring for the sickest people plus others so it’s still lowers total taxpayer cost to remove the poor but not particularly sick from the government insurance rolls. Your assumption that this would simply lead to increased profits for the insurance industry suggests that you view insurers like a cartel. If they are freely competing with each other then as soon as one insurer decides to use part of their profits to lower the cost of their plans it would encourage the rest to do the same in order to stay competitive.

       Reply
18. 

    Charles D

    2009-12-15

    I suppose we could run through the arguments pro and con on health care reform but I doubt we’d find complete common ground. Clearly if you and I were sitting in a room trying to figure this out instead of Reid, Lieberman, Collins, et.al, we’d make a lot more progress than they are likely to do.

    What I have learned through the last year is that the Congress is not capable of producing worthwhile legislation on anything beyond naming of buildings. They will react to serious pressure from an administration determined to accomplish a goal (like when they passed TARP or the stimulus bill), but if asked to perform their Constitutional function of originating legislation, they are incapable of action. The only exception is when action can benefit large corporations or banks – the ones funneling millions into their campaign funds and surrounding them with lobbyists every moment of the day. I wish I had learned how to turn that situation around, but so far I haven’t heard a viable suggestion from any quarter. Obviously turning power over to the other political party isn’t the answer.

    Reply
    1. 

       David

       2009-12-15

       I wonder if there’s any way that we could restrict their responsibility to naming buildings and roads . . .

       Truthfully, so long as they receive the quantities of money they receive it will be those with the deepest pockets who will find a way to benefit from the government coffers.

       Reply
19. 

    Charles D

    2009-12-15

    LOL

    I don’t mind if they find a way to benefit, I just don’t want them involved in the governing process. There’s a group called Reclaiming Democracy that proposes we amend the Constitution:

    An Amendment to Preclude Corporations from Claiming Bill of Rights Protections

    SECTION 1. The U.S. Constitution protects only the rights of living human beings.

    SECTION 2. Corporations and other institutions granted the privilege to exist shall be subordinate to any and all laws enacted by citizens and their elected governments.

    SECTION 3. Corporations and other for-profit institutions are prohibited from attempting to influence the outcome of elections, legislation or government policy through the use of aggregate resources or by rewarding or repaying employees or directors to exert such influence.

    SECTION 4. Congress shall have power to implement this article by appropriate legislation.

    Obviously a corporate-controlled legislature is really, really unlikely to pass something like this, so back to the conundrum.

    Reply
    1. 

       David

       2009-12-15

       Aside from Section 2 – which appears vague enough to be ripe for abuse – I like the sound of that.

       Reply
20. 

    Ronald D. Hunt

    2009-12-15

    “Right now 85% of the nation has some insurance”

    Every last person in that 85% would benefit from lower costs and the public health benefit of 100% coverage. To say nothing of the abuse they are exposed to from their current insurance company’s.

    “I think you are generalizing too much to say that the private health care market has no interest in the recipients of Medicare and Medicaid.”

    Being old is considered a “pre-existing condition”. Being poor means you can’t pay a premium, hell being lower middle class generally means you can’t pay a premium. Hell a family of 4 who makes less then $80,000 will pay more for Health insurance/co-pays/deductibles then All Federal tax’s, State tax’s, and food costs COMBINED. And though co-insurance will still go bankrupt from any major health events.

    The second flaw with this statement is the idea that Health care functions like any other market, It doesn’t. Health care suffers from 2 huge distortions that no one so far has been able to explain their way out of,

    1. Dysfunction of supplie and demand, in that demand is set by the disease rate not the price or availability of a certain curative.

    2. Cost vs Risk ratio, 90% of health care costs are from 10% of people and the costs on those 10% are huge, so much so that most of that 10% can’t afford those costs and nobody knows if they will enjoy the pleasure of being in that 10% so the only reasonable solution is some sort of “risk pool” insurance if you will. These third party systems will always have distortions inherent in what they are.

    I have seen a few non-functional attempts at devising systems of savings accounts, and medical loans. I have yet to see a libertarian system that would actually work, at least without leaving huge swaths of people out and having enormous negative economic effects in the process.

    “Programs that provide for the general welfare in a rather direct manner, should first of all be a response to an actual need.”

    This is where liberals and third-wayists disagree, its one of the things that makes the left so mad at Obama right now. Dems are going to have a bumpy ride in 2010 is Obama doesn’t stop ignoring the base of the Democrat party. We third-wayists are in that magic spot between ideology’s that seems to piss everyone off =p.

    Reply
    1. 

       David

       2009-12-15

       Every last person in that 85% would benefit from lower costs and the public health benefit of 100% coverage.

       That assumes that there will be lower costs as a result of this reform – which is pure speculation at this point. I won’t pretend that you and I agree with the same version of the facts that are being presented, but I contend that neither of us is omniscient so neither of us is bound to accept the assertions of the other without any further evidence.

       Perhaps I should clarify my statement about the private health care market having an interest in recipients of Medicaid and Medicare. I did not mean to suggest that private insurers would insure all those people if the programs did not exist (clearly they wouldn’t) but I’m confident that they would insure some of them if it did not mean competing with Uncle Sam. That does not mean that I think there would be no problem without those programs, it just means that the original statement was too general.

       As for the two distortions of the health care market:

       1. Demand is not strictly a function of disease rate. Multiple people afflicted with the same disease in the same market will almost always have multiple available options for treatment and the different treatment options will have different costs. I have a friend who was diagnosed with cancer in the last couple of weeks and even with a disease that serious he had a variety of treatment options to consider.

       2. Risk pools work for insurance, but its almost impossible to find health insurance that doesn’t also cover a huge assortment of treatments that have nothing to do with those 90% of costs and which are used by much more than 10% of the population. In other words we have mixed insurance risk with routine maintenance costs. The result is a completely warped system. This is an industry problem, not a government problem, but Congress is not even pretending to address the underlying causes of systemic failure – they are just trying to take over the system in the vain hope that their altruistic, not-for-profit motives will magically erase the underlying systemic problems which they have not even bothered to acknowledge, let alone solve.

       Reply
21. 

    Ronald D. Hunt

    2009-12-15

    “That assumes that there will be lower costs as a result of this reform.”

    I suppose the lower costs of Canada, France, Japan, Britain, Sweden, hell EVERY country that has universal coverage isn’t enough to prove it then? The fact that the United States costs more then every country in the entire world isn’t enough to prove that public health systems work? The longer life spans of most European country’s, Japan, and a few South American country isn’t enough to prove we ain’t getting our money’s worth with our broken private care model?

    Ok that’s fine everyone is entitled to their opinion.

    1. Ok I will admit a cancer patient has the choice between multiple unaffordable treatment options. Treatment options are generally limited and have no effect on the occurrence rate of that disease. If you have x number of cancer cases you are going to need x number of cancer treatments. No amount of changes in price or supplie is going to change this.

    2. fee for service modeled private health insurance will always be warped. Only health system model I have seen that removes the distortions you complain about is Single Payer or NHS. These problems can’t be solved by private industry and congress can’t legislate these problems out of a multi-payer system.

    “In other words we have mixed insurance risk with routine maintenance costs.”

    Actually the reason those are provided is because that is one area of preventive care that saves the insurance industry a lot in the short term perspective that they are in. Stage 1 to Stage 3-4 Cancer treatment cost differences are huge. Your insurance company would much prefer to catch this sort of thing early on, but only if they think it is a disease they would end up having to cover, aka breast cancer screenings are often covered fully but colonoscopy’s are generally expensive because their is a good probability that it won’t be their problem. The insurance industry will even do PSA’s and push for government screening programs of costly diseases, that they are likely to have to cover.

    Doctor visits all of them not just primary care only around 10% of total system costs, so no this does not make a big difference on your insurance premium.

    Reply
    1. 

       David

       2009-12-15

       Glad to know I’m entitled to my own opinion on my own site. By the way, we do not disagree with each other that our system is broken and in need of reform. We do not disagree that we are not getting our money’s worth. Our disagreement is about the underlying causes and the proper solutions.

       It’s not true that X number of cancer cases means X number of treatments – some people choose not to treat it (my friend seriously considered that for completely non-monetary reasons). Even more than that, X number of cases does not determine how many people will try to treat through surgery, or how many will use chemo, or how many will try radiation, or how many will opt for an herbal approach to treatment. If the government mandates that chemo be covered, but insurance doesn’t cover radiation then people will be more likely to use chemo even when radiation makes more sense and the costs of chemo will rise with an unnaturally high demand.

       I understand the value of preventive care, and I know why insurance companies have a vested interest in covering those things. (I notice in your example that the insurance companies are responding to government manipulation.) However, I’m not aware of any preventive care for accidents or medical errors. Accidents can easily be as expensive to treat as cancer. Not only that, but just because insurance covers preventive care does not mean that people actually take the time to get that preventive care.

       Besides, I made no claim that the cost of covering preventive care had a large impact on premiums (although look at the difference between plans with small co-pays and plans where the patient has to pay for preventive care themselves through large deductibles). My claim was that high premiums encourage people to use extra care in order to “get their money’s worth” since they have already spent so much. Of course they do that through lots of little procedures, medications, doctor’s visits etc. because nobody plans a major illness or accident. This drives up the cost of those services because people will go to the doctor for $25 rather than make a phone call or ride out a minor fever – after all, they are already paying $300 this month, they might as well get some benefit.

       Reply
22. 

    Ronald D. Hunt

    2009-12-15

    “(I notice in your example that the insurance companies are responding to government manipulation.)”

    This would be the case with or without Medicare as Health insurance is tied to the employer and is a cost that grows with high inflation(Medically high inflation) making it unaffordable to people on a fixed income as are all retired people. Without Medicare the situation would still be the same as after retirement you are no longer the private providers problem.

    Further in the modern day the average person will change jobs 4-6 times in their life and through manipulation of risk pools to smaller sizes can often cause small company’s to have to switch insurance company’s every few years weeding out pre-existing condition patients in the process, which further incentives the insurance company’s to push problems into the next insurance company or the government.

    “Besides, I made no claim that the cost of covering preventive care had a large impact on premiums (although look at the difference between plans with small co-pays and plans where the patient has to pay for preventive care themselves through large deductibles).”

    My Dad’s insurance is $640 per month with a $3,000 dollar deductible, 20% co-insurance, and co-pays out the wazoo, He gets the group policy from his work. This policy only covers my parents, none of my siblings qualify for coverage on their plan anymore.

    My mom’s colonoscopy bill was $1,200 dollars, the government pays for her mammograms so that not a cost to the insurance company, the industry is completely out of control.

    “My claim was that high premiums encourage people to use extra care in order to “get their money’s worth” since they have already spent so much.”

    I disagree, nobody wants to be sick, nobody wants to be poked and proded with needles. Generally speaking most doctors will likely tell you that Americans don’t get enough Primary visit care, The cheapest end of the care spectrum.

    Reply
    1. 

       David

       2009-12-15

       I didn’t mean to imply that without government manipulation there would be no problem – I simply thought it was ironic that you used an example of government manipulation while arguing for more government involvement.

       As for your dad’s plan – what would his premium be with a $500 deductible?

       Reply
       1. 

          Ronald D. Hunt

          2009-12-15

          They didn’t offer him a lower deductible option, So I have no idea. Their where higher deductible options however. He opted against those as a $3,000 deductible is already idiotic enough. And through costs from Co-insurance he is still a single health problem away from losing everything, With as much as their charging him he should be at least free from this problem but no not in America.

          “I simply thought it was ironic that you used an example of government manipulation while arguing for more government involvement.”

          It may appear that way, but its to point out the cost shift that would happen at retirement with or without government. Medicare is really a red herring to this argument.

          Reply