This is exactly the kind of comment that I feared we would see when articles like this start gaining traction. It's a cheese puff comment: it's got some taste, but it's empty. It has nothing to back it up, no content, no reasoning, no well crafted argument. It's just an empty "rah rah" type of slogan of the type that politicians regularly regurgitate. There is nothing new or clever about the comment, it's the sort of thing that's made the rounds elsewhere 100's of times. Being such a cheap, throwaway comment, it mostly/usually doesn't lead to particularly interesting discussions, as we can see here, despite a few good comments, but more zingers, one liners and similar "go home team!" cheering for one political side.
My comment was one of the first reaction to the post (16 hours ago) it was a spontaneous reaction to the somehow shocking news that the US government is taking (again) over a private company in the financial sector.
When I wrote "socialist" it was for the irony of the situation, the financial market in the past has been very hostile to any regulation and it is the most visible flagship of liberalism as we know it since Reagan.
People who read about economy (check comments bellow) know exactly what I was talking about, this is a well known topic about the contradiction between "less government, less regulations" and "the need of government help in time of troubles". Some more clever and much more articulate people wrote about it and their conclusion is the the current crisis is a direct consequence of lack of proper regulation in the first place. Go read the source it's free, it's online, it's better than expecting Techie guys to spend 30 minutes of their precious time writing a "reasoning" and "well crafted" comment a topic which is only one of their many "hobbies"
They are getting the loan at LIBOR + 8.5%. That's downright punitive.
LIBOR + 8.5% is not a rate at which a company with AIG's business model could survive at. AIG lends to people at around LIBOR + 4% for mortgages or LIBOR + a lower % to insure BBB to AA rated borrowers.
They'll probably have to sell off their assets in a hurry at below fair value. The longer they wait, the more pain the high interest inflict on them.
Well, thanks to you I just learned something. I had no idea the US government used the London index to figure out rates for loans. I actually went and looked it up; and you're totally correct.
When I worked at a pharmacy I regularly saw people choosing which of their prescriptions they would actually fill based on what they could afford. If these were life-saving drugs, as they were supposed to be, I would have to assume that some of them did or will end up dying prematurely.
Now for the first one, there is a clear and self-interested argument for public health measures that even the most laissez faire libertarian could get behind. Namely, that the prevalence of flu amongst the lower classes means that you and your precious sprogeny are more likely to die of it.
For the other two we have to rely on those outmoded and declassé ideals about compassion and bettering the human condition, and the tediously earnest argument that the less suffering there is in a society, the better off everyone in that society is...
But, really who cares; I mean you've got yours, or you are on the way to getting yours and the rest of the human race is of no concern to you other than as service providers or as customers right?
Smoking, obesity, drug use, and general poor lifestyle also correlate highly negatively with income, and can increase infant mortality. Being a Black American correlates negatively with income, and positively with low birth weight and infant mortality (note that Black Americans have an infant mortality rate of 16/1000, vs about 7/1000 among White Americans).
With such large confounding factors, how can you draw the conclusion you seem to be implying?
I think people are talking past each other at this point.
When you say "socialism" what exactly do you mean? I think it is one of those words that has lost its meaning since there are so many different definitions of it and we're not always on the same page.
If you're upset about being downmodded, I'd suggest
1) Carefully re-read your comment, looking for ambiguities or excessive partisanship.
2) Look for patterns in the rest of the comments--I'd expect downmods on a "government actually handles [common scenario] pretty well" post in a thread full of mises.org and lew rockwell references; and just resolve to live with it.
3) Just wait. Sometimes there's two or three quick, reflexive downmods that can dent your self-esteem, but often your comment's opinion-o-meter will rise hours later, and leave you feeling rather silly if you added another comment just to complain about downmods.
I'm not saying you're wrong that socialism is better than this mess but I will say that capitalism is better than this mess and better than socialism too.
Having health insurance provided by the State (i.e. you through your tax dollars after several layers of corruption and bureaucratic waste) does not guarantee quality of care. A competitive free market is more likely to develop better medicine.
I think that empirical evidence is against you on this one. The US has one of the highest spendings on healthcare per capita in the world, while average life expectancy (one of the measures of a good health care system) is on par with Cuba. US yearly expenditure on healthcare per person is $4.500. In Cuba it's $100.
The American freemarket system clearly doesn't work very well.
The graphs alone should open the eyes of any who defends the current US system.
Of course Cuba and the US are both outliers. But realistically the US should be able to get results that are much closer to other first world countries.
While spending per person in dollars may be higher, there is gross gross inflation in the health care sector, resulting in the hospital charging you $100 for a pack of Kleenex, because it's usually the insurance company that pays it.
Honestly, I haven't heard the rationality factor applied in the case of healthcare so I won't try to answer you question but I don't want to duck it entirely because it's an interesting point. I know that children and the mentally disabled are handled specially in other cases for that reason. However, could you not apply the same argument to food (hungry people), shelter (exposed people), etc?
I think those who want socialized medicine have to justify aggression (initiating force through taxation, regulation, etc.) They also have to convince us that the masses (in the case of a democracy) can make better decisions than the individuals directly involved in each particular situation. They have to explain how people would be motivated to innovate in a system lacking competition and guaranteeing equality of outcome (this, is what I'm assuming is meant by "socialism", by the way).
I think these questions are of interest to us and the "hackers" of other disciplines... we want an environment where people are free to try new things. Mitigating the risk of failure should can also be managed by the market through insurance, which, getting back to the original point is privilege not a right because one has no "right" to the goods/services of another.
So, sure, it would be a great idea for everyone to contribute to a large pool for health insurance... but on a voluntary basis. Those who decline to or cannot pay will have to rely on charity if something happens. I can feel bad for them but I would not feel justified in putting my gun (or a tax collector's) to someone else's head to make them pay for it.
This is all assuming that both insurance and healthcare costs will both decrease dramatically when America rids itself of the heavy regulation of and handouts to the respective industries by going to either a completely socialist or capitalist system.
I'm all for a 'big pot' and that if you put money in, you can then get money out.
But at the same time, I think that people should HAVE to put into the pot, or you end up with a Tragedy of the Commons. No-one pays, because they don't like to think they'll get sick.
And then when they do, well, it's too late.
(I should note that I am biased towards socialized medicine, being an aforementioned sick person)
Rational actors are more of an assumption then a requirement. Used in conjunction with carefully defining terms, this a powerful way that economists hermetically seal their theories.
rational = utility maximising
utility defined by consumer choice
Basically, they pay anything because it's worth anything.
All this really means is that preferences are transitive. I.e., if I prefer a puppy to a wii, and prefer a wii to cabbage, then I prefer a puppy to cabbage. That's not an unreasonable assumption.
It's an easy topology exercise to prove that if preferences are transitive, then a utility function exists (I think you may also need to assume a countable number of goods/services).
A competitive free market is more likely to develop better medicine.
Well, yes & no. A free market does develop good medicine in much the same way as it develops good everything else. But what you are usually measuring something essentially different when evaluating medicine.
You could say that a free market system should produce more medicine. But (as free markets do) this is distributed unevenly among the population. that's OK when you are talking about shoes. Your free market will produce more shoes then a nationalised shoe industry. But a lot of those will end up in the closets with 20+ pairs or in the form of $500 shoes. Same with medicine.
The US is a good place to go if you want $10m surgery. But if you are measuring public health: life expectancy, infant mortality, death from preventable diseases, & such a $1 at the bottom goes a lot further then $1 at the top. The gains made from flattening the system, generally outweigh the lost effeciency.
Hmm I've thought about this a bit, and it strikes me that while yes, it does seem to make sense that we should have medicine for everyone, we should also have an area where there is pressure to perform. Essentially what I am positing is that the US should remain a nonsocialist area so that we innovate and provide the necessary advances because eventually they will filter down and become affordable by the average person. In the meantime we could make it easier for people to leave the country if they prefer to live under a socialist system.
This would be counterbalanced by most of the rest of the world having that flat system you referred to. It's a compromise. On the other hand, let's assume that my dear reader has no soul and will thus not vituperate me for the following idea:
Modern medicine has been around for like 60-80 years which is essentially no time at all. In the space of that time, major advances have been made that have not yet filtered down to the bottom. If you take the long view, in 100 years the stuff we thought was a $10M miracle today might be a trip to the doctor's office with a 20 dollar
copay then (think robots). So what's really important is not curing every poor person today, but advancing the field to cure the poor people of the future. The trick to surviving is to try not to be poor and/or get insurance.
Essentially, this is a highly tangled problem and a simple solution won't do.
> Essentially, this is a highly tangled problem and a simple solution won't do.
Bingo. There's a nice discussion of just a bit of the economics involved in health care in "The Undercover Economist". It's really a very complicated subject because it is not your typical market for something like shoes, to use someone else's example. Pure capitalist systems will leave at least a few unfortunate individuals to die or suffer from easily/cheaply curable diseases. Pure state run systems throw out all the useful information that a market provides and introduce inefficiencies of their own.
a few unfortunate individuals
What percentage of Americans do not have access to adequate health care?
You guys keep thinking about this as if the economy existed in a world where buzzwords & their associated connotations are absolute. You are not choosing between US 2008 & 1963 Soviet Russia. The most radical model likely to ever be proposed in the US is something like the UK's.
The system tries to provide internal pressure to reform (just like big companies do). There will probably be a decline in mean medical care from an economic utility standpoint (to the extent that term has any meaning - I think very little) There will be a dramatic improvement in health to the bottom 25% -30% resulting in huge gains to life expectancy & similar indicators.
As a bonus that the fear Americans have of being left without health cover will lift.
Capitalist evangelists of various sorts are always quick to point out there are no good example of command economies performing well. That's fair.
But there are plenty of examples of 'socialist' health care systems that work. They perform well on any meaningful scales at a cost lower then the US's. From Cuba (an outlier but a very interesting one) to the UK to Japan. Pick one.
Read the book. It's highly recommended, and makes all the points you do and then some, and even points out an interesting compromise model that attempts to cover everyone, but still maintain some of the good effects of having a free market.
I'm not going to get into this debate here, I'd suggest checking out some info and then seeing if it fits with your assumptions. Page 200 here ranks worth health systems:
I don't think that table means what you think it means.
Table 10 on page 200 measures "attainment", which is something along the lines of (actual health improvements due to health care) / (best possible health improvements given spending level). That's a very different quantity than quality of care, which is what the original poster was talking about.
(It's actually more complicated, education levels are somehow worked in and details are described elsewhere.)
Rankings and indices are great, but it helps to know what you are actually ranking.
I think it's important to clarify that there are two layers in this. Paying for health care and providing health care.
IMO, there's a good case to be made for a baseline of mandatory basic healthcare (i.e. no dying in the streets, no choosing food this week over a visit to the doctor), which should be tax-funded for families below a certain income threshold.
The other end of the stick is the hospitals and doctors themselves, and there is absolutely nothing that suggests that they become more efficient or cheaper, if they are made public employees. Quite the contrary, I'd argue.
I don't know the answers to our questions. What I do know is that developing effective treatments that are initially affordable only to a few is better for our species than accepting mediocrity across the board.
I would rather die form cancer at home with my family than in a hospital with people who are only pretending to treat me.
You obviously missed the LCTM bailout ten years ago. Also the S&L and the Continental Bank bailouts of the 80s. Also the Lockheed and Chrysler bailouts of the 70s.
...used the phrase when he accused the Jacobo Arbenz Guzmán government of being Communist. Patterson explained his reasoning as follows:
Suppose you see a bird walking around in a farm yard. This bird has no label that says 'duck'. But the bird certainly looks like a duck. Also, he goes to the pond and you notice that he swims like a duck. Then he opens his beak and quacks like a duck. Well, by this time you have probably reached the conclusion that the bird is a duck, whether he's wearing a label or not."
The US has actually had a much more mercantile approach to business than socialistic. They are capitalistic up to a point, but the governent tends to step in and manage, regulate, bailout, give tax cuts to companies and industries when they deem necessary.
There are entire industries that are heavily subsidized and regulated, Telecom, Healthcare, Energy, Transportation, etc... Our countries national roadway system came about more or less as an assistance to the automotive industry. The 401k laws have been a huge boon to the stock market.
And, now, the government is making a big move into finance and investment banking.
Obviously, it's impossible to determine the effect of any one action on the economy -- but if this $85b prevents the markets from crashing, I'd argue its money well "spent." U.S. market cap has already fallen $4t in the past year. Do you really want to risk losing considerably more?
You're ignoring the question of whether or not the market should crash. If stocks are overpriced, then intervention like this just means we'll spend more time acting as if they are not overpriced, and that would be awful.
For what it's worth, my day job and my main part-time job are both entirely dependent on the market, so I sure hope the market doesn't need to crash. I agree with David Einhorn (who, by the way, has been short Lehman for a while): the stock market is okay, but the credit market is way overpriced.
You don't think the Fanny bailout "worked"? We don't have the luxury of seeing what would have happened if we hadn't bailed them out.
To make the pro-bailout argument more clear, here is one reputable economist predicting that if we had let the FMs default, the dollar would drop about 30% and unemployment would double, in about a week.
So it would be like a 19th-century panic/recession, without hard money. He's omitting the part where, since we aren't subsidizing stupid decisions, stupid decisions don't get made and the economy recovers very quickly.
Just to clarify, I meant that the other course might result in much more massive decline than has already happened. Think 22 sigma level -- like the '87 crash. Bailing out distressed financial firms is almost expected now. Thus, if it doesn't happen, then a lot of market participants may reevaluate their choice to invest in firms with heavy debt.
Obviously, these bail outs have their costs, such as the value of money lent as well as increased moral hazard, but it's worth considering whether this is worth the potential cost of a market collapse to the whole economy.
In the short term the lack of credit availability could dent manufacturers, but those businesses that make real things that people want should be ok if they can survive until credit is again available to their customers.
because they are part of an integrated economy. where will google's advertizers find their ad budgets in a stagnant economy? boeing is no different. would these firms be as adversely impacted as wamu? no. but everyone suffers.
but if this $85b prevents the markets from crashing
it won't. this loan doesn't unwind the terrible decisions aig (and others) made, nor the hedges they tied to those decisions, and the hedges they tied to those hedges, and the hedges they tied to those hedges.
the derivatives unwind cannot be stopped short of a repudiation of all global currencies. the amount of leveraged capital in hedge deals is still north of $100 trillion. no one has the money to pay that out. it would be easier just to erase the USD dollar than to circulate $100 trillion in new fiat wealth...the effect would be the same anyway...worthless dollar
Hasn't the USA been engaged forever in heavy market protection, tariffs for imported goods, and heavy subsidies to internal industries like metal foundries, the car industry and particularly agriculture?
Hasn't the USA at the same time demanded open markets of all other economies in which it invested or participated in some way?
Hasn't the USA's tax dollars funded most private research, yet the economic benefits have been ripped by private industry?
The double standard is just showing a bit more than usual at the moment, but nothing has changed.
When you have a $3 trillion entity in an economy, people have the incentive to petition it for favors. Even when the government's budget was a lot smaller, businessmen could still finagle for tax breaks and the like.
