Topic: Cato Publications

This Week in Government Failure

Over at Downsizing the Federal Government, we focused on the following issues this past week:

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Announcing Libertarianism.org

I’m pleased to announce the immediate launch of Libertarianism.org, a new project from the Cato Institute.

Libertarianism is more than a set of policies about education, health care, defense, and trade. Behind those, providing their foundation, are ideas and history, the writings and actions of great men and women who have argued and fought for liberty. The mission of Libertarianism.org is to express and discuss those ideas directly.

There’s a great deal to explore on the site. You can watch never-before-seen videos of talks by Friedrich Hayek, Milton Friedman, Murray Rothbard, and Joan Kennedy Taylor, and read the first in a new series of weekly columns from George H. Smith.

I’ve written an introductory blog post with highlights–but I encourage you to just click over and look around.

And over the coming days, weeks, months, and years, we’ll be adding much more to Libertarianism.org, including new videos, books, and essays. If you’d like to stay up to date, we’re on Facebook and Twitter.

So welcome to Libertarianism.org. I hope you’ll stick around for a while, come back often, and join us in exploring the theory and history of liberty.

The Euro Crisis in Prose and Poetry

The European debt crisis is inspiring public radio to literary analysis. Last week NPR’s Planet Money put the French-German relationship into a “threepenny opera”:

All

Everyone is counting on you
You’ve got the money
We’ve got the debt (Oh yes, we’ve got a lot of debt!)
And do we need a bailout—you bet

Germany

Zat’s it, I’ve had enough
Looks like it’s time now for me to leave…

France

Oh?

Germany

Vhy is ze door locked? You must let me out.

France

Dear when the times are tough
It’s better to give zan to receive

Then Monday Marketplace Radio turned to classics professor Emily Allen Hornblower and economist Bill Lastrapes to discuss Greek debt as classical tragedy—Oedipus? The ant and the grasshopper?

Loyal Cato readers will recognize Bill Lastrapes as the coauthor of the much-discussed Cato Working Paper “Has the Fed Been a Failure?

And then, if you prefer prose and sober analysis to literary analogies, let me recommend Holman Jenkins’s perceptive column on why Europe hasn’t solved its crisis yet, which unfortunately appeared in the less-read Saturday edition of the Wall Street Journal. (OK, not less read than Cato-at-Liberty, but probably less read than the weekday Journal.)

Neither leader has an incentive to sacrifice what have become vital and divergent interests to produce a credible bailout plan for Europe. To simplify, German voters don’t want to bail out French banks, and the French government can’t afford to bail out French banks, when and if the long-awaited Greek default is allowed to happen….

There is another savior in the wings, of course, the European Central Bank. But the ECB has no incentive to betray in advance its willingness to get France and Germany off the hook by printing money to keep Europe’s heavily indebted governments afloat. Yet all know this is the outcome politicians are stalling for. This is the outcome markets are relying on, and why they haven’t crashed.

All are waiting for some market ruction hairy enough that the central bank will cast aside every political and legal restraint in order to save the euro….

And then the crisis will be over? Not by a long shot.

All these “solvent” countries and their banks will be dependent on the ECB to keep them “solvent,” a reality that can only lead to entrenched inflation across the European economy. That is, unless these governments undertake heroic reforms quickly to restore themselves to the good graces of the global bond market so they can stand up again without the ECB’s visible help.

It’s just conceivable that this might happen—that countries on the ECB life-support might put their nose to the grindstone to make good on their debts, held by ECB and others. Or they might just resume the game of chicken with German taxpayers, albeit in a new form, implicitly demanding that Germany bail out the ECB before the bank is forced thoroughly to debauch the continent’s common currency, the euro.

Praise (Sort of) for Latest Cato Health Care Study

Physician assistant and health policy wonk Michael Halasy blogs about Shirley Svorny’s new study on medical malpractice liability reform:

Cato has truly shocked me….stupefied really…

Well, just the other day, I received an update from Cato. Now, Michael Cannon is a good guy, and while he and I simply don’t agree on … well much of anything from a health policy perspective, his colleague, Shirley Svorny, wrote this: “…Reducing physician liability for negligent care by capping court awards, all else equal, will reduce the resources allocated to medical professional liability underwriting and oversight and make many patients worse off. Legislators who see mandatory liability caps as a cost-containment tool should look elsewhere.”

I believe that I have been consistent with this…over and over…caps on noneconomic damages DO NOT WORK.

So, I have to (gulp) swallow some pride, and tip my hat to Cato…Now I need to go take a shower. I feel a little dirty.

It’s a good reminder that libertarians do not fit neatly into the usual political categories. We oppose direct government regulation of health care quality, such as through clinician licensing. But we support indirect regulation, such as through the medical malpractice system, and defend that system from critics who want to impose top-down rules on that system like mandatory caps on noneconomic damages. We prefer bottom-up approaches, like letting free individuals choose their own med mal reforms.

The CLASS Act: This Is Confidence-Inspiring?

In the Daily Caller, I explain how the failure of ObamaCare’s “CLASS Act” highlights the fatal flaws in the rest of the law:

As it turns out, CLASS collapsed even before its 2012 start date. The same thing happened when Obamacare imposed the same sort of price controls on health insurance for children in September 2010: the markets for child-only coverage collapsed in a total of 17 states, and are slowly collapsing in even more…

In the face of this setback, Obamacare supporters are naturally declaring victory. Jonathan Cohn of The New Republic sees “vindication.” Kevin Drum of Mother Jones proudly announces, “What happened here is that government worked exactly the way it ought to.” The Washington Post’s Ezra Klein instructs, “The CLASS experience should, if anything, make us more confident in the underlying law.” It’s hard to argue with such logic, but let’s try…

Obamacare inspires confidence in its supporters, then, because one part of the law throws a Hail Mary pass to prevent another part of the law from stripping Americans of the insurance that currently protects them from illness and impoverishment. Feel safer?

So if you’d like secure protection from illness and impoverishment, repeal ObamaCare. Or say your prayers.

Romney Supports National ID, Government Pre-Approval of Working

Speaking at a town hall meeting at Morningside College in Sioux City, Iowa yesterday, Republican presidential candidate Mitt Romney backed a national ID system and government pre-approval of all new hires in the country. It’s a stunning amount of power he wants the federal government to have.

Addressing a question about illegal immigration (starting at 30:40 in this video) he said:

You’ve got to crack down on employers that hire people that are illegal, and that means you have to have a system that identifies who’s here legally, with a biometric card that has: this is the person, they’re allowed to work here. You say to an employer, you look at that card, you swipe it in your computer, you type in the number, it instantly tells you whether they’re legal or not.

He’s describing an expanded E-Verify system, and the biometric national identity system that has been proposed for it. That system would not only be used for controlling employment, of course. Like the Social Security number did when it caught mission creep, the national ID Romney talks about would come to be used to control access to housing, to financial services and credit, gun ownership, health care and medicine, the list goes on and on.

It’s technically possible to have a biometric card that solely indicates one’s qualification to work under federal law, but as I wrote in my paper, “Franz Kafka’s Solution to Illegal Immigration,” there is almost no chance that the government would limit itself this way. E-Verify requires a national identity system, and Mitt Romney wants that national identity system.

Cato Study: Malpractice Insurance Markets Promote Quality Care, Mandatory Damage Caps Could Undermine Same

Today, the Cato Institute releases a new study:

Could Mandatory Caps on Medical Malpractice Damages Harm Consumers?

by Shirley Svorny

Shirley Svorny is an adjunct scholar at the Cato Institute and professor of economics at California State University, Northridge.

Supporters of capping court awards for medical malpractice argue that caps will make health care more affordable. It may not be that simple. First, caps on awards may result in some patients not receiving adequate compensation for injuries they suffer as a result of physician negligence. Second, because caps limit physician liability, they can also mute incentives for physicians to reduce the risk of negligent injuries. Supporters of caps counter that this deterrent function of medical malpractice liability is not working anyway—that awards do not track actual damages, and medical malpractice insurance carriers do not translate the threat of liability into incentives that reward high-quality care or penalize errant physicians.

This paper reviews an existing body of work that shows that medical malpractice awards do track actual damages. Furthermore, this paper provides evidence that medical malpractice insurance carriers use various tools to reduce the risk of patient injury, including experience rating of physicians’ malpractice premiums. High-risk physicians face higher malpractice insurance premiums than their less-risky peers. In addition, carriers offer other incentives for physicians to reduce the risk of negligent care: they disseminate information to guide riskmanagement efforts, oversee high-risk practitioners, and monitor providers who offer new procedures where experience is not sufficient to assess risk. On rare occasions, carriers will even deny coverage, which cuts the physician off from an affiliation with most hospitals and health maintenance organizations, and precludes practice entirely in some states.

If the medical malpractice liability insurance industry does indeed protect consumers, then policies that reduce liability or shield physicians from oversight by carriers may harm consumers. In particular, caps on damages would reduce physicians’ and carriers’ incentives to keep track of and reduce practice risk. Laws that shield government- employed physicians from malpractice liability eliminate insurance company oversight of physicians working for government agencies. State-run insurance pools that insure risky practitioners at subsidized prices protect substandard physicians from the discipline that medical malpractice insurers otherwise would impose.

This study’s findings suggest that supporters of market-based health care reform should ditch their support of mandatory damage caps, and embrace better med mal reforms. It also suggests that government should abandon direct regulation of health care quality, such as through medical licensing.