Topic: Cato Publications

The Government’s Surveillance-Security Fantasies

If two data points are enough to draw a trend line, the trend I’ve spotted is government seeking to use data mining where it doesn’t work.

A comment in the Chronicle of Higher Education recently argued that universities should start mining data about student behavior in order to thwart incipient on-campus violence.

Existing technology … offers universities an opportunity to gaze into their own crystal balls in an effort to prevent large-scale acts of violence on campus. To that end, universities must be prepared to use data mining to identify and mitigate the potential for tragedy.

No, it doesn’t. And no, they shouldn’t.

Jeff Jonas and I wrote in our 2006 Cato Policy Analysis, “Effective Counterterrorism and the Limited Role of Predictive Data Mining,” that data mining doesn’t have the capacity to predict rare events like terrorism or school shootings. The precursors of such events are not consistent the way, say, credit card fraud is.

Data mining for campus violence would produce many false leads while missing real events. The costs in dollars and privacy would not be rewarded by gains in security and safety.

The same is true of foreign uprisings. They have gross commonality—people rising up against their governments—but there will be no pattern in data from past events in, say, Egypt, that would predict how events will unfold in, say, China.

But an AP story on Military.com reports that various U.S. security and law enforcement agencies want to mine publicly available social media for evidence of forthcoming terror attacks and uprisings. The story is called “US Seeks to Mine Social Media to Predict Future.”

Gathering together social media content has privacy costs, even if each bit of data was released publicly online. And it certainly has dollar costs that could be quite substantial. But the benefits would be slim indeed.

I’m with the critics who worry about overreliance on technology rather than trained and experienced human analysts. Is it too much to think that the U.S. might have to respond to events carefully and thoughtfully as they unfold? People with cultural, historical, and linguistic knowledge seem far better suited to predicting and responding to events in their regions of focus than any algorithm.

There’s a dream, I suppose, that data mining can eliminate risk or make the future knowable. It can’t, and—the future is knowable in one sense—it won’t.

This Week at Libertarianism.org

Libertarianism.org keeps adding new stuff, so if you’re not a regular reader, now’s a great time to become one. This week we added the following:

This Month’s Cato Unbound: What Is Due Process?

What is due process?

Virtually everyone would agree that “due process” refers to a set of judicial procedures that create at least a strong tendency toward fair results.

But why do we have these procedures and not some others? Why do we have trial by jury, and not trial by fire? Why not just flip a coin? In this month’s Cato Unbound, our lead essayist, Timothy Sandefur, says that we have the procedures we do for one very simple reason: We recognize them as fair.

In other words, “due process” ultimately points back at a larger – and much thornier – legal and philosophical issue, that of fair treatment itself. If it didn’t, “due process” would just guarantee some empty (or possibly harmful) rituals.

So far, so good. Sandefur doesn’t stop there, however. He adds that the Fifth and Fourteenth Amendments’ guarantees of due process mean “not only that government must take certain procedural steps (hearings, trials, and so forth) when it imposes a deprivation, but also that some acts are off limits for government, “regardless of the fairness of the procedures used to implement them.”

In other words, due process is a check both on the procedure of the judiciary and on the substance of legislation. Some kinds of laws, Sandefur argues, cannot be implemented by any fair process – there’s no good reason for them, and there’s no lipstick enough for pigs like these. In such cases, the guarantee of due process is either a mockery of itself – or it’s enough to strike down the law. Sandefur picks the latter.

Is he right? Professor Lawrence Rosenthal of Chapman University disagrees, writing:

Deciding whether a law is supported by “good reason” is the essence of policymaking. Our Constitution guarantees a republican form of government, and in a republic, policy is made by those who are politically accountable for their decisions. Sandefur’s conception of due process of law, however, creates a judicial platonic guardianship that must approve every policy decision.

One side risks judicial overreach. The other side risks the tyranny of the majority. Which one is right? Stay tuned for the rest of this month’s Cato Unbound, which will also feature commentary by legal scholars Ryan Williams of the University of Pennsylvania and Gary Lawson of Boston University. Legal scholars will also want to review Sandefur’s paper in the Harvard Journal of Law and Public Policy (pdf), which develops the argument in fuller detail.

This Week at Libertarianism.org

It’s been a busy week over at Libertarianism.org. We began with a new Excursions essay from George H. Smith. Provocatively titled “Fingering the King on the Road to Independence,” Smith’s piece examines how the pre-Revolution Coercive Acts led Americans to blame the king for the conspiracy to strip them of their rights and liberties.

We posted two new videos featuring the philosopher Douglas Rasmussen, one to our Libertarian View series and the other of a lecture he gave in 1991 on morality and capitalism. Here are embeds of those videos:

We also added a speech by Ted Galen Carpenter dealing with the impact of a country’s foreign policy on its domestic policies.

Libertarianism.org’s magazine section grew with the addition of Literature of Liberty, published from 1978 through 1982, first by the Cato Institute and then by the Institute for Humane Studies. Each issue begins with a long essay exploring and analyzing the literature and thought in a particular field, such as Eric Foner discussing “Radical Individualism in America: Revolution to Civil War” or John Hospers writing about “The Literature of Ethics in the Twentieth Century.” The second half of each Literature of Liberty contains a wealth of summaries of academic articles and books of interest to libertarians.

Finally, the Exploring Liberty series of introductory lectures on libertarian theory and history is now available in podcast form, so you can listen on the go. It’s on iTunes as well as direct from the Exploring Liberty podcast feed.

As always, you can keep up to date with Libertarianism.org on Facebook, Twitter, via RSS, or by visiting the site.

Romneycare & Free Riders

During last night’s GOP presidential debate, Rick Santorum and Mitt Romney had a polite disagreement over Romneycare’s impact on free-ridership in Massachusetts. The short version: Santorum was right. Romney and even FactCheck.org disputed Santorum’s claim, but they misunderstood it.

The exchange comes 2:15 into this video from Kaiser Health News:

Here’s the Kaiser Health News transcript:

SANTORUM: Just so I understand this, in Massachusetts, everybody is mandated as a condition of breathing in Massachusetts, to buy health insurance, and if you don’t, and if you don’t, you have to pay a fine.

What has happened in Massachusetts is that people are now paying the fine because health insurance is so expensive. And you have a pre-existing condition clause in yours, just like Barack Obama.

So what is happening in Massachusetts, the people that Governor Romney said he wanted to go after, the people that were free-riding, free ridership has gone up five-fold in Massachusetts. Five times the rate it was before. Why? Because…

ROMNEY: That’s total, complete…

SANTORUM: I’ll be happy to give you the study. Five times the rate it has gone up. Why? Because people are ready to pay a cheaper fine and then be able to sign up to insurance, which are now guaranteed under “Romney-care,” than pay high cost insurance, which is what has happened as a result of “Romney-care.”

ROMNEY: First of all, it’s not worth getting angry about. Secondly, the…

(APPLAUSE)

ROMNEY: Secondly, 98 percent of the people have insurance. And so the idea that more people are free-riding the system is simply impossible. Half of those people got insurance on their own. Others got help in buying the insurance.

FactCheck.org writes:

Romney is right. The percentage of insured residents in the state went up from 93.6 percent in 2006, the year the law was enacted, to 98.1 percent in 2010. And data from the state Division of Health Care Finance and Policy show a 46 percent decline in the number of free care medical visits paid for by the state’s Health Care Safety Net. The number of inpatient discharges and outpatient visits under the program went from 2.1 million in 2006 to 1.1 million in 2010 (see page 12)…

A Santorum campaign spokesman pointed us to a Wall Street Journal column by Michael F. Cannon of the libertarian Cato Institute, who stated that “Massachusetts reported a nearly fivefold increase in such free riding after its mandate took effect.” But that doesn’t square with official data just cited. Cannon didn’t specify the time period and so may have referred to some temporary or transitory bump in free riders. We will update this item if we are able to get more information from Cannon.

Speaking of facts, here’s a fun one: both Kaiser Health News and FactCheck.org unnecessarily flank “Romneycare” with quotation marks when it appears within a quote from Santorum. As if Santorum had used quotation fingers. Adorable. But I digress.

Romney and FactCheck.org failed to consider that there are different types of free riding. One type happens when government guarantees access to emergency-room care: people show up to get care, and they don’t pay. Another type happens when government guarantees people the ability to purchase health insurance at standard rates no matter how sick they are: people wait until they are sick to purchase health insurance and drop it right after they get the care they needed. These free riders pay far less than they would in a free market, which would not allow such behavior. Romney and FactCheck.org assumed Santorum meant the former type of government-induced free riding, when he was clearly talking about the latter.

The data that Santorum and I cite come from a report by the Massachusetts Division of Insurance. See this June 2010 blog post, where I quote the Boston Globe:

The number of people who appear to be gaming the state’s health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance.

The result is that insured residents of Massachusetts wind up paying more for health care, according to the report.

“The active members subsidize some of the costs tied to those individuals who terminate within one year,” the report says…

The number of people engaging in this phenomenon — dumping their coverage within six months — jumped from 3,508 in 2006, when the law was passed, to 17,177 in 2008, the most recent year for which data are available.

Actually, it more than quadrupled: 17,177/3,508≈4.9. But whatever. Santorum was right.

One might object that these numbers seem like small potatoes compared to the apparent drop in visits paid from the Commonwealth’s Health Care Safety Net program. Fair point. But the type of free riding Santorum identified is incomparably worse than the kind that happens in hospital emergency rooms. When people can wait until they are sick to purchase insurance, overall premiums rise so high that the health insurance market collapses in an “adverse selection death spiral.” That’s how Obamacare destroyed (and is destroying) the market for child-only coverage in dozens of states. It’s why Obamacare’s CLASS Act collapsed years before it collected a single premium. It’s happening very slowly in Massachusetts, but it is happening. And it will happen to all private health insurance under Obamacare. In contrast, as I mention in my Wall Street Journal piece, the ER-type of free riding increases health insurance premiums by “at most 1.7 percent,” according to the Urban Institute. That’s not ideal, but it’s not catastrophic.

One might also object that this latter type of free riding can’t be a problem since Romneycare has increased the number of Massachusetts residents with health insurance coverage. Also a fair point. But not only can adverse selection occur at the same time that coverage is expanding, it has the potential to completely undo those coverage gains over time. Moreover, some of Romneycare’s supposed coverage gains might be people who are actually uninsured but conceal that fact from government surveys rather than admit to unlawful behavior. These are the ultimate free riders: they’re not even paying the fine. In this Cato Institute study, Aaron Yelowitz and I found evidence consistent with such concealment behavior in the Census Bureau’s Current Population Survey.

Personal Accounts—for Medicare

Last night, Newt Gingrich praised the Chilean Social Security system, which allows workers to save for their retirements in personal accounts, rather than contribute to the government pension scheme. Several of my Cato colleagues are far more qualified than I am to comment on that system, including Mike Tanner, Jagadeesh Gokhale, and Jose Pinera–who designed and implemented it. But personal accounts are as important for reforming compulsory health insurance schemes like Medicare as they are for reforming compulsory pension schemes.

In 2010, I traveled to Chile to deliver an address to the International Federation of Pension Fund Administrators (FIAP).  I detailed the harms caused by compulsory health insurance schemes and explained how personal medical accounts would improve health care and generate wealth even for the poor:

In designing health care markets, perfection is not an option. Under any system, whether state-run or the free market, some patients will inevitably fall through the cracks.

Personal medical accounts can help fill in those cracks by enabling innovations that improve medical care and bring it within reach of the poor. Yes, some will not earn enough to provide for themselves. And when we are free to make our own decisions, a small number of people will make poor decisions. I believe we have a moral duty to care for patients who could not or would not provide for themselves. Personal medical accounts will make it easier for us to meet that moral duty.

Under compulsory health insurance schemes, those cracks widen, and more people fall through. Price and exchange controls block innovation. Governments waste resources on low-value medical care. Some would describe these as the unavoidable costs of creating an equitable society. But those wasted resources do not purchase solidarity. They purchase sickness and poverty.

FIAP turned my address into this book chapter, which also explains how to craft a system of personal medical accounts.

For current enrollees, who have not built up savings in a personal medical account, Congress should make Medicare look more like Social Security. That is, the government should subsidize Medicare enrollees by giving them cash, rather than creating a complex health-insurance scheme that effectively lets government officials shape the entire health care sector.