Businesses Should Discriminate!

President Obama on April 27th at Fort Stewart, Georgia:

You’re dealing with folks who aren’t interested in helping you.  They’re not interested in helping you find the best program.  They are interested in getting the money.  They don’t care about you; they care about the cash. That’s appalling.  That’s disgraceful.  It should never happen in America."

He's talking about for-profit Universities.  Of course, they're not interested in helping you find the best program.  They're interested in you attending their program.  That's how all for-profits work.  Maybe the most idealistic believe that for-profit enterprises should exist to help you find the good that is best for you, but I think almost everyone realizes that this is not the case.

Is he saying that businesses should always care more about the consumer than the cash?  That would be a weird way to run an economy.  Apple should no longer sell iPhones to people who would be better off with Androids.  McDonald's should ask people before they order why they've come and personal characteristics.  If the answers imply that the person would be better off cooking for themselves, McDonald's should refuse to serve them!  McDonald's and all other businesses in the US need to re-examine they're policy of conducting business with anyone who seeks their products.  Only then, will we have utopia.

Liberals Know Best

This blog post talks about how the Medical Loss Ratio has pushed insurers to spend more money on medicine instead of administrative costs.

What I see, though, is that insurers have decided it's better for them to directly pay their beneficiaries the difference than adjust their finances.

The medical loss ratio is basically the percentage of total insurance costs that go towards medicine instead of administration.  The Affordable Care Act mandated that if insurers had a MLR of less than 80%, they must refund the difference to their beneficiaries.  For example, if they spent a total of $1,000 but only $750 was spent on hospitals and drugs and $250 was spent on CEOs, advertising, etc. then they would have to refund $50 to the beneficiaries.

Liberals are of the mind that any money in excess of 20% spent outside of medicine is not socially good.  Nevermind that the insurance companies must believe it's profitable to do so, no, liberals know what's best for everyone.

Now they've mandated it, and insurance companies effectively have indicated that it's more profitable to continue spending on non-medicine despite the added cost of the refunds to its beneficiaries!

The Mother of All Inventions - Government

President Obama while decrying the Ryan budget proposed that Facebook and Google wouldn't exist without government.

For many liberals, the government is the supreme creator.  All the benefits we have in some way are derived from the government.

I don't know what line of reasoning President Obama uses for this claim--perhaps he's talking about government funding of the internet.  I don't think there was any specific funding to Google or Facebook.  Maybe he means that we should thank the government for not shutting down either of those two ventures or for closing down the internet like in other countries.

Maybe he means that the government provides us with services such as roads, and without those services there'd be no Google or Facebook.

Which is it?  What is the argument that in absence of government there'd be no Google?

Libertarian Nightmare

Steve Landsburg consistently provides thought-provoking, incredibly well-reasoned posts.  His post about lifeboats is especially so.

His point is that it takes several calculations to conclude that it's worthwhile to require ships maintain a supply of lifeboats to save all passengers aboard.

What I appreciated most was how he once again shows that we can apply economic thought to everyday situations with sensible results. I had never thought of the lifeboat calculus thus.

A point I'd like to add, though, is that Landsburg calculates that the cost to the ship of maintaining that lifeboat is about $4/passenger-trip.  This is a form of insurance that we are mandated to purchase.  He frames it as a choice to the consumer of whether or not to purchase this insurance, but in reality, ships are required to provide this, and presumably it's part of the ticket price we pay.

The question to a libertarian is should that be mandated?  It's unthinkable to have a world where everyone can individually buy the insurance, and in the event of an accident, only the insured can escape.  It's distasteful also for the government to require the purchase of a product with another.  What's the solution?

Still No Consistent Argument

One way to tell that Democrats are wrong about the constitutionality of the mandate is by the inconsistency of their argument.

Before constitutionality was being argued, they fought the idea that mandate was a tax.  Here's a clip from This Week with George Stephanapoulous. (To be fair, some Republicans were arguing that it was a tax).

Then they argued that it was a tax, and since Congress has the power to tax, Congress has the power to mandate insurance. No Democrat disputed this logic.

Liberal judges didn't agree, but offered their own defense.  Health care significantly affects interstate commerce, and since Congress has the power to regulate interstate commerce, Congress has the power to mandate insurance. No Democrat disputed this logic.

It was appealed.  Republicans countered that this was unprecedented because never before had Congress mandated citizens purchase a good (and later pointed out that it wasn't even a single good, but a long-term contract).

Then Democrats counter-countered that Health Care Insurance is different.  Now there are two arguments offered by different people.

1) Health Care is a large part of the US economy and is therefore interstate commerce. Therefore the government can regulate it.  Regulate it means it has nearly unbound power to affect the market. (If there is a bound, it hasn't been mentioned).
2) Health Care insurance is different because there is adverse selection which leads to healthy people avoiding the market and raising prices, therefore Congress has power to regulate it.

Neither of these arguments is complete, however in arguing constitutionality.  The problems:

1) Is there a minimum size of the economy a sector must makeup before it's large enough to fall under the interstate commerce description?  Anything defined broadly enough can fall into this category and therefore all activity is fair game.  Is that the case?
If something is interstate commerce, can Congress regulate it in any possible way?  Are there any constraints to what powers Congress has when regulating?  Can Congress force everyone to buy an airplane?  Broccoli?

2) Why is this difference constitutionally relevant? Where in the constitution does it say outright or even imply that if there's adverse selection, then Congress has additional powers to regulate?

Sophomoric Logic

Arguing with Steven Pearlstein - Part 2

His next point disputes the conservative justices blaming government for the problem.  Pearlstein's version of the conservative argument: "There is a free-rider problem wherein people don't have to purchase insurance, then when they get sick they go to the emergency room which is legally obligated to provide service regardless of their ability to pay.  Therefore it's the government's fault. If they removed that obligation, then there would be no free-rider problem."

Pearlstein then says this is "sophomoric" reasoning.  Admittedly, I believe this to be a cogent argument, and I'm unsure why Pearlstein calls it sophomoric.  It may not be popular, but it is what leads to the free-rider problem.  Of course, maybe his point is that we as a society would not be willing to deny service so there's an unavoidable free-rider problem.  Regardless, I think it's sophomoric to ridicule an argument or the people who make it.

Silent bleating

In this column, Steven Pearlstein says that Clarence Thomas's "blatantly partisan bleating" indicates he will "[do] whatever it takes to impose [his] conservative, free-market, nothing's-changed-since-1788 agenda on the country."

However, in this post at The Monkey Cage, John Sides breaks down how many words each justice addresses to each side of the argument.  The data indicate that Clarence Thomas asked no questions at all.

How could this be?  Of course, it could be that Thomas just opined without asking any questions.  Is that the case?