Max Borders

Dwarf Among Giants

I have an article coming out in an anthology called New Threats to Freedom. 

I am honored to have my piece included with the work so many incredible writers and thinkers. The editor is an easy person to work with and is as much an editor as a mentor to young writers. Getting to participate in this project rescued 2009 for me, I think. The anthology comes out in May 2010. 

Next year, folks, is going to be a good year. Let's make it happen.

Healthcare Prices! What a Novel Idea

Posted at the Opinion Zone. A sliver:

These guys [out-of-pocket docs] are lowering prices, increasing quality and refusing the bureaucratic, ballooning, cost-shifting third-party system the government has created here in the US. I pay $40 for a visit and I shift $0 to you. PPO/HMO folks pay a $30 copay and shift $100 or more to the risk pool (and wonder why premiums go up). Perverse.

Healthcare Reform: Cost the Symptom, Government the Disease

Grudgingly, pundits on the left - including Ezra Klein - are starting to admit that Obamacare 2.0 "can't control costs."

The base insight is that providers -- doctors and hospitals, mainly -- have most of the leverage in the battle with insurers. If there's one hospital in town, then either your insurer cuts a deal with them, or you get another insurer. What you don't do is get another hospital.

The problem [of doctor and hospital "leverage"] is exacerbated by the fact that the insurer doesn't really care to negotiate lower prices. They tried that in the late ’90s, and everyone hated them for it. It turns out that workers don't feel the cost of their health care because they think employers pay it, and employers don't care that much about cost increases because they take it out of wages. Neither group likes premium increases, but they don't really care. But everyone screams if you tighten networks and review care. As such, providers have pretty free rein. That's part of why we pay so much more than any other country per unit of care.

Additionally, health-care reform is going to great lengths to avoid touching providers. Hospitals and doctors are simply too powerful to seriously anger. Insurers aren't. 

Candid, but only part of the picture. Klein ends up concluding all this makes the "original public option" essential, as if such a beast would have some magical, para-market properties. His desire to "tighten networks and review care" is, of course, doublespeak for state price controls and rationing a la mammogate. But I'm still happy to see acknowledgement of a) the cost symptom and b) this bill's inability to treat it.    

The cost problem is the big healthcare reform problem. And if Obamacare 2.0 isn't going to solve this problem, what does it amount to? Little more than a special interest bonanza loaded with mandates (public option or no). Klein, closing his eyes to the possibility that a freer market may be the only cure for current healthcare distortions, fails to diagnose these real problems. He focuses instead on an expensive government band-aid -- the public option -- and a rather septic one. Cost spirals are always a symptom of a government meddling. But in the timeless logic of the left, more government (i.e. more of the disease) will do the trick.  

Take Klein's first point above about hospital and doctor "leverage". He points to an urban institute paper, which figures out the symptom of provider leverage, but fails to diagnose the diseases: Certificates of Need. These state policies give hospitals considerable anti-competitive power--because it's pure, government-created protectionism. And, of course, doctors are a licensed, protectionist guild. Instead of abolishing bad regs that give undue power to providers, Klein and the Urban Institute want a government panacea.

Atypically, they underplay insurer "leverage". But why? Health insurers do enjoy undue power due to government-created in-state monopolies. That doesn't make them evil, just protected. And yes, it's also easier for a monopoly to jack up a premium than negotiate a lower rate with a provider. But the reason we have dominant health insurers is still due to a lack of interstate competition and a crazy-quilt of state insurance regs (i.e.: government pathologies). Insurance monopolists use state mandates to create barriers to entry for market entrants in that area. Premiums go up. 

The price of goods and services also gets distorted because of our preoccupation with third-party payment versus out of pocket. As David Goldhill points out so eloquently here, people who pay copays aren't bargain shoppers, they're cost-shifters. But if they were buying more plans on the individual market, they might not want Cadillac Cost-shifting Plans. (They'd be much more likely to choose HSAs and HDHPs, which control costs better than any other form because they're patient-driven plans.) 

Providers and insurers - though they "negotiate" rates - are sort of like industrial colluders dividing the spoils of the economic distortion. These spoils come from the system of government design. And when consumers don't feel the full impact of their purchasing decisions, they don't shop. Prices go up. Premiums go up. We might gripe about premiums. But we'll go on shifting costs of Viagra and Nexium onto the risk pool, or paying for a $2000 CT scan that should probably only cost $400 if we had the incentive to shop. These system, and it's distortions, are government induced.

The distorting tax treatment of health insurance that encourages people to take employer health plans, makes things even worse, not only because it subsidizes wealthy employed people on the backs of the marginally employed, but it reduces competition and means people lose their insurance when they lose their jobs. From our WWII job-based, third-party-payer system, to the fact that I can't legally buy a cheaper policy in Idaho... government is the problem.

This healthcare debate shows that posturing against "corporate interests" is so often a convenient moralism to pepper on a weak argument. In fact, almost every major element of Obamacare works in the service of Big Pharma, Big Doctor, or Big Insurance. A 2000-plus page bill can only be filled with more distortions and more rent-seeking opportunities. It cannot control costs. It's refreshing, at least, to see the left is starting to admit this much, at least. 

A Separation of Science and State?

Here's my debut blog post for the Washington Examiner's Opinion Zone. I'll be doing more for them in the coming year.

University of North Carolina School of the Arts - Full Paper

UNCSA: Should it be self-sustaining? Full paper here. (I even quote Bastiat.) Thanks to Jane Shaw and the Pope Center for Higher Education Policy for giving me the opportunity to write this report.

Bryan Caplan, Dualist? (Weighing in on a Hanson-Caplan Debate Uninvited)

I just came across an ongoing debate between Bryan Caplan and Robin Hanson. The usually razor-sharp Caplan may be out of his element on this one, as he responds again to Hanson's response here. It will be fun to share some thoughts on this. First, here's a sliver of Caplan's position: 

In any case, suppose we took neurology as seriously as Robin claims to. The right lesson to draw would be that thoughts and feelings require a biological brain. There's no way you can dissect a brain, then infer that a computer program that simulated that brain would really be conscious.  That makes about as much sense as dissecting a human brain, then inferring that a computer program that simulated a brain could, like a real brain, be poured over a fire to extinguish it.

Philosophy is not for everyone. Nor is it, generally, for economists. But let me see if I can offer a few pointers to those, like Caplan, who would wade into these debates:

First, if you believe in disembodied souls, this is not the debate for you. Why? Because a commitment to the existence to non-physical substances is not something we can argue about unless we can agree on the meaning of terms like 'physical' and 'substance'--i.e. a basic agreement on what it means to be physical. A substance is a) something that exists, and b) something that is causally efficacious. Turns out both of these are necessary properties of physical things. The Cartesian would disagree with such tautologies for reasons of faith in souls. And faith is usually a philosophical conversation killer.

Now, let's see if I can dredge up basic criteria for physicalism (that way we don't have to trifle with lingering Cartesianism) and let the debate be about the relationship between mental and physical properties. I seem to remember some criteria, though admittedly it has been over a decade since I did any work on this:

I) That which exists, is physical, which is also to be causal. For something to be physical is to exert itself causally in the universe -- some how, some way. Descartes spoke of "substances" that were non-physical, causally interacting with the world through the "penial gland". But as we said above, this is absurd. That which exists is physical. Similarly, the universe is causally closed--that is, no physical event has a cause outside of the physical domain (e.g. what's wrong with Cartesianism). Ps can cause Ps and Ps can cause Ms. But no Ms can cause anything.

II) Supervenience.The mental supervenes on the physical. The relationship of supervenience is critical because it unpacks the tight ontological connection between some mental state M and the underlying physical state P (for, say, experience z). Any change in M will necessitate a change in underlying P, but not the reverse. The supervenience relationship is asymmetrical for the reasons Hanson suggests. (For example: silicon or other substances could instantiate certain causal-physical properties normally instantiated by biological gray matter. Bryan's software example is unideal because it intuitively distracts us from how M would be instantiated in the new P stuff (call it P'.) After all, lines of code are not instantiators, but information about what is to be instantiated in some physical stuff--like an android. 

III) Dependency. The mental is dependent on the physical in the sense that no mental event can arise independently of some causal-physical substrate. 

It may seem as if I'm being unfair with these criteria. But these seem to me to be basics of any respectable mind-body physicalism. So, Hanson may be correct that life extension is possible through replicating causal-physical processes a la functionalism. In fact, the real arguments lie in questions of whether mental properties are identical with causal-physical properties of the brain (rather than m/p identity of early physicalism). Hanson's life extension is basically a functionalist view, where the causal-physical properties of, say, "Bryan Caplan" are preserved (where "Bryan Caplan" is the sum of all the M(s)).

Now, there are associated problems of identity -- such as the persistence problem Hanson highlights in this video. But these are mostly separate problems. We may have to live with the fact that the referent "Bryan Caplan" is a collection of mental properties that are identical with certain causal-physical processes--all of which can be duplicated (even replicated time and again) in other forms of matter. (Imagine a bifurcating tree of Bryan Caplans, each of which will have their own superscripts (prime, double-prime, etc.) after replication.) In any case, I think all this boils down to the fact that Robin Hanson is a functionalist and Bryan Caplan is a dualist, who, unless he espouses some slippery (and obscure) form of dualism (like Chalmers's) believes in, well, spirits in the material world.

North Carolina School of the Arts

This Thursday, I'll be on a panel with John Hood and J. Peder Zane discussing my Pope Center paper on the University of North Carolina School of the Arts (the paper is not yet available). The lunchtime event will be held at the Renaissance Hotel, Six Forks. If you're in the Triangle, please come out. We'll be talking about the cost and justification for subsidy of UNCSA. I'm sure the conversation will degenerate into a discussion of arts subsidy, in general. Should be fun.

Panarchy

The original essay on Panarchy:

My panacea, if you will allow this term, is simply free competition in the business of government. Everyone has the right to look after his own welfare as he sees it and to obtain security under his own conditions. On the other hand, this means progress through contest between governments forced to compete for followers. True worldwide liberty is that which is not forced upon anyone, being to each just what he wants of it; it neither suppresses nor deceives, and is always subject to a right of appeal. To bring about such a liberty, there would be no need to give up either national traditions or family ties, no need to learn to think in a new language, no need at all to cross rivers or seas, carrying the bones of one's ancestors.It is simply a matter of declaration before one's local political commission, for one to move from republic to monarchy, from representative government to autocracy, from oligarchy to democracy, or even to Mr. Proudhon's anarchy - without even the necessity of removing one's dressing gown or slippers. 

So simple and so brilliant. Where has this been all of our lives? (Thanks to Gian Piero de Bellis and Adam Knott.)

Olson, Organizations and the Red Queen Effect

I have another guest post over at A Thousand Nations. Here's a sliver:

If people like Shirky are right, it’s getting cheaper both to monitor and to organize against special interest groups—at least select ones. I’m not saying we’re anywhere near being able to fight them at parity. Perhaps we’ll never be. Nor are we likely to see the immediate effects of our new distributed, organization tools. But we may soon be equipped at least to slow the process of “demosclerosis.” We may already be. And as long as our collective productivity gains outpace the growth of the deadweight state, we’ll be okay—at least in some less-than-savory utilitarian sense. We’re also going to be better equipped to drive creative destruction and out-compete the government in some of its historic monopoly areas, such as education. (We might even unleash the forces of social entrepreneurship if you believe folks like Michael Strong.)

My optimism ends there, however. Read the whole post.

Destroying Wealth: One Special Interest Group at a Time

This is an awesome lesson bout the political economy of lobbying.         

  

 

If you want even more excruciating detail about the vortex that is Washington, DC, check out Jonathan Rauch's book Government's End. When you think about the fact that lobbyists are non-productively bidding for one competitor to put another competitor out of business (by distorting the market through legislation), your understanding of the true magnitude of the waste just piles up like one steaming turd atop another. You'll never think about the right to redress grievances the same way again. (See also classics of Public Choice Theory.)