Archives: June, 2010

Sure, You Can Get a Business License — If Your Competitors Approve

Our friends at the Pacific Legal Foundation have filed another important suit in the battle for the right to earn an honest living.  PLF senior attorney (and Cato adjunct scholar) Tim Sandefur has the scoop:

Michael Munie is a St. Louis businessman who’s been in the moving business since he was 16 years old. He has a federal license that lets him move people’s household goods from one state to another. And he has a state license that allows him to move things within St. Louis. But he’s not allowed to move things from St. Louis to anywhere else in Missouri unless he gets permission from his competitors first.

That’s right—Missouri law dictates that whenever a person applies for a license to run a moving business, the state’s Department of Transportation must notify all the existing moving companies and give them the chance to object. If they do—which, of course, they always do—the applicant must prove that there’s a “public necessity” for a new moving company. What does “public necessity” mean? Nobody knows. There are no standards, no rules of evidence, no nothing.

Read the rest and find out more here.  Cato doesn’t litigate, of course – other than filing amicus briefs – but we certainly support those that do, including PLF, the Institute for Justice, the Goldwater Institute, the Mackinac Center, and many others.

Rwanda and the Psychic Benefits of Universal Coverage

Last week, The New York Times published an article subtitled, “In Desperately Poor Rwanda, Most Have Health Insurance.”  The main theme was the contrast between Rwanda’s compulsory health insurance system and the as-yet-non-compulsory U.S. health insurance market:

Rwanda has had national health insurance for 11 years now; 92 percent of the nation is covered, and the premiums are $2 a year.

Sunny Ntayomba, an editorial writer for The New Times, a newspaper based in the capital, Kigali, is aware of the paradox: his nation, one of the world’s poorest, insures more of its citizens than the world’s richest does.

He met an American college student passing through last year, and found it “absurd, ridiculous, that I have health insurance and she didn’t,” he said, adding: “And if she got sick, her parents might go bankrupt. The saddest thing was the way she shrugged her shoulders and just hoped not to fall sick.”

I don’t see anything absurd here, but I do see something remarkable. Rwanda is so poor, its per capita income is about 1 percent that of the United States ($370 vs. $39,000).  Its health care sector is an international charity case: “total health expenditures in Rwanda come to about $307 million a year, and about 53 percent of that comes from foreign donors, the largest of which is the United States.”  That’s roughly $32 per person per year, which doesn’t buy much.  Dialysis is “generally unavailable.”  As are many treatments for cancer, strokes, and heart attacks, making those ailments “death sentences” more often than in advanced nations.  Life expectancy at birth is 58 years, compared to 78 years in the United States.  Rwandan children are 15 times more likely to die before their first birthday (7 vs. 107 deaths per 1,000 live births) and 25 times more likely to die before turning five (8 vs. 196 deaths per 1,000 live births) than U.S.-born children.  (If you want to meet some Rwandan kids struggling to make it to age 5, read my friend’s blog, Life of a Thousand Hills.)  And yet, the saddest thing is a healthy-but-uninsured American college student.

What the Times sees as a paradox isn’t really a paradox.  Yes, the poorer nation has a higher levels of health insurance coverage.  But the wealthier nation does a better job of providing medical care to everyone, insured and uninsured alike. The Times reports that Rwanda’s national health insurance system isn’t fancy, “But it covers the basics,” including “the most common causes of death — diarrhea, pneumonia, malaria, malnutrition, infected cuts.”  Surely, the Times must know that anyone walking into any U.S. emergency room with any of those conditions would be treated, regardless of insurance status or ability to pay.  The same is true of other acute conditions, like heart attacks and strokes, for which uninsured Americans receive better treatment than insured Rwandans.  True, some uninsured Americans end up filing for bankruptcy, but let’s be clear: while bankruptcy is no day at the beach, suffering bankruptcy because you got the treatment is better than suffering death because you didn’t.  (As for dialysis, the United States already has universal coverage for end-stage renal disease through the Medicare program.)  The Healthcare Economist puts it this way: “Would you rather be sick in the United States without insurance or sick with insurance in Rwanda?”  You get the point.  If there’s a paradox here, it’s that insurance status does not necessarily correlate with access to medical care: uninsured people in the wealthy nation actually have better access to care than insured people in the poor nation.

An even bigger paradox, though, is Rwandan attitudes toward the United States. The United States generates many of the HIV treatments currently fighting Rwanda’s AIDS epidemic, as well as other medical innovations saving lives there and around the world.  More than any other nation, we create the wealth that purchases those and other treatments for Rwandans and other impoverished peoples.  The United States is probably closer to providing universal access to medical care for its citizens – and, indeed, the whole world – than Rwanda.  Rwanda’s “universal” system leaves 8 percent of its population uninsured. Though official estimates put the U.S. uninsured rate at 15.4 percent, the actual percentage is lower; and again, uninsured Americans typically have better access to care than insured Rwandans.  The real paradox is here that Rwandan elites think the United States is doing something wrong. Why?

Here’s one answer: Rwanda’s government explicitly guarantees health insurance to its citizens, and for some people that guarantee has value apart from any health improvements or financial security that may result.  Dr. Agnes Binagwaho, “permanent secretary of Rwanda’s Ministry of Health,” illustrates:

Still, Dr. Binagwaho said, Rwanda can offer the United States one lesson about health insurance: “Solidarity — you cannot feel happy as a society if you don’t organize yourself so that people won’t die of poverty.”

Set aside that a (permanent) third-world bureaucrat is telling the United States how to keep people from dying of poverty.  Binagwaho cannot feel happy without that government-issued guarantee.

How might such a guarantee increase happiness? It could make people happier by reassuring them that they themselves will be healthier and more financially secure (self-interest), or that others will be (altruism).  Yet altruism and self-interest probably cannot explain the “happiness benefits” that people enjoy when governments guarantee health insurance.  As I have argued elsewhere, the jury is out on whether broad health insurance expansions like ObamaCare result in better overall health; they may, but it is entirely possible that they would not.  The jury is also out on whether ObamaCare will produce a net increase in financial security.  It will subsidize millions of low-income Americans, but it will also saddle them with high implicit taxes that could trap millions of them in poverty.  Meanwhile, ObamaCare’s new taxes will reduce economic growth and destroy jobs.  If such a guarantee doesn’t improve health or financial security, it’s not worth much in terms of altruism or self-interest.

But there’s another potential “happiness benefit” that might accrue to supporters of a government guarantee of health insurance: it could make them happier by allowing them to signal something about themselves – e.g., that they are compassionate.  If people use a government guarantee of health insurance in this way, that could explain why Rwandan elites feel bad for uninsured Americans.  They may feel empathy for uninsured Americans because they perceive the American electorate has not sent uninsured Americans a valuable signal (“We care about you!”).  Meanwhile, the act of expressing pity for uninsured Americans allows Rwandan elites to signal something about themselves (“We are compassionate!”).  Robin Hanson has a lot to say about why people might use health insurance and medical care to signal loyalty and compassion.

My hunch is that this is an under-appreciated reason why some people support universal coverage: a government guarantee of health insurance coverage provides its supporters psychic benefits – even if it does not improve health or financial security, and maybe even if both health and financial security suffer.

If that’s the case, then we’re facing the same problem that Charles Murray identified in Losing Ground, his seminal work on poverty:

Most of us want to help. It makes us feel bad to think of neglected children and rat-infested slums…The tax checks we write buy us, for relatively little money and no effort at all, a quieted conscience. The more we pay, the more certain we can be that we have done our part, and it is essential that we feel that way regardless of what we accomplish…

To this extent, the barrier to radical reform of social policy is not the pain it would cause the intended beneficiaries of the present system, but the pain it would cause the donors. The real contest about the direction of social policy is not between people who want to cut budgets and people who want to help. When reforms finally do occur, they will happen not because stingy people have won, but because generous people have stopped kidding themselves.

One thing is for certain.  When Rwandan elites pity uninsured Americans, there is something very interesting going on.

While I’m at it, the health-policy advice I offered to China and India also applies to Rwanda:

Does not the fact that “these countries lack the fiscal resources required for universal coverage because of their…low average wages” suggest that many residents have more pressing needs than health insurance? For things that might just deliver greater health improvements? In a profession where universal coverage is a religion, such questions are heresy, I know.

China and India are in the process of a slow climb out of poverty. It is entirely possible that the best thing those governments could do to improve [health care] markets and population health would be to enforce contracts, punish torts, contain contagion, and nothing else.

Of course, if Rwandan elites support universal coverage largely because they want to signal something about themselves, this advice may fall on deaf ears.

Paranoia Roundup

Last week, national standards super-advocate Chester Finn called me “paranoid” for arguing that “common” curriculum standards states adopt in pursuit of federal money will somehow end up being federal and, as a result, bad. Well it seems that Jay Greene and I – the two paranoiacs Finn identified by name – are not alone. Here’s a roundup of some recent rantings from other realists Finn would no doubt accuse of wearing tinfoil helmets:

  • The Heritage Foundation’s Jennifer Marshall, cutting through the joke of “voluntary” national-standards adoption and dispelling several of the shallow arguments trotted out by national-standards supporters.
  • The Home School Legal Defense Association, warning that “as homeschoolers know, if the federal government funds something, the federal government is going to control it.”
  • The Pacific Reasearch Institute’s Lance Izumi nailing the voluntarism deception; noting that national standards will have to be paired with national tests (indeed, they’re already in the works); and pointing out that the proposed national standards are likely worse than some state standards.
  • Ben Boychuk of the Heartland Institute going after the big voluntarism lie and explaining how much worse a process national-standards setting is than was even the Texas Social Studies Standoff of 2010.
  • The Pioneer Institutes Jim Stergios exposing the State of Massachusetts’ national-standards trickeration.

It looks like national-standards paranoia is starting to run kinda deep.

It’s Time for the Coalition to Step Aside

Today’s Washington Post reports that residents of Gizab, a village in southern Afghanistan, reclaimed their territory from the Taliban. One U.S. commander called it “perhaps the most important thing that has happened in southern Afghanistan this year.”

Gizab may eventually turn back to Taliban control, but at least for now, we can try and postulate as to why local residents successfully defended their territory, achieving what the coalition has been trying to do for years throughout the country but to no avail. Here’s a thought: allow Afghans to fight the Taliban themselves and slowly back away. Unfortunately, this story may reinforce the atrocious ”One Tribe at a Time” formulation, a strategy that entails coalition troops “going native” and unilaterally choosing tribes to side with against the Taliban–of course, without any proper understanding of tribal or community dynamics beforehand.

As I wrote several weeks ago, “merely increasing our knowledge of Afghanistan’s local politics will not guarantee success; presuming we can simply learn what ethnicities and communities can be ‘peeled off’ from militants does not necessarily mean we will reach the ends we seek or yield the outcomes we want.”

Many moons ago, Christian Bleuer over at The Ghosts of Alexander wrote about the follies of following the ”One Tribe at a Time” formula. “Seriously, go out and try to find the ‘tribal leadership.’ You will find that there is no clear, stable leadership. Things are in flux, and always have been. Especially since 1979. You will end up with a bunch of squabbling locals trying to call in air strikes on their rivals…. Please don’t let this anecdote draw away attention from how bad Gant’s paper is when considered in its entirety. The blind embedded, hyper-localized ‘adopted son’ mentality he shows should be a warning to all. Anthropologists do their best to not ‘join the tribe.’ So should soldiers.”

Indeed, Judah Grunstein wrote a while back in Small Wars Journal about this very same issue. “What’s also overlooked – by Gant [author of “One Tribe at a Time”], but also by more conventional COIN theory – is the fact that intervening in a social system creates both winners and losers. COIN bases its methodology in large part on the assumption that losers will shift loyalties in order to compete for the benefits on offer. Again, the lessons from the helping professions show that this is far from a foregone conclusion. The resulting power imbalances within the indigenous structure can instead lead to increased – and rigidified – resentment and hostility toward the helping professional.”

Most analysts in D.C. are waiting for that silver bullet, that one strategy that will help America “win.” But Afghans can “win” without our help, as villagers in Gizab have shown. It may not be easy, and Afghans will surely encounter setbacks, but coalition forces cannot continually recalibrate policy to accurately predict which areas of Afghanistan will prefer the corrupt centralized government we back and which ones will not. It’s time we get out of the way and let Afghans decide their future, Taliban or no Taliban.

Somebody Tell Serena Williams

Americans don’t curtsy to foreign monarchs.

Serena, who earned her third title by beating her sister in last year’s final, has tweaked her tournament preparation in anticipation of a visit Thursday to Wimbledon by Queen Elizabeth II.

“I’ve been working on my curtsy,” Serena said. “It’s a little extreme, so I’m going to have to tone it down. I was practicing it this morning.”

This is a republic. We do not recognize distinctions among individuals based on class or birth. We are not subjects of the queen of the England, the queen of the Netherlands, the emperor of Japan, or the king of Saudi Arabia. Therefore we don’t bow or curtsy to foreign heads of state.

Topics:

Our Fellows in the News

Cato fellows Nat Hentoff and Penn Jillette have just been profiled in major publications – Hentoff in the New York Times and Penn in Vanity Fair. Warning: the Hentoff profile is mostly about jazz, and the Penn interview contains lots of four-letter words, obscene imagery, and harsh language about religion. So if you have a low tolerance for jazz or for obscenity and blasphemy, be forewarned. But it’s no surprise that both of them talk a lot about the importance of free speech.