Topic: Government and Politics

‘Crony Capitalism’ Is Not Capitalism

By
Roger Pilon

David Brooks has a piece in the New York Times this morning that’s worth reading, “Health Chaos Ahead,” even if it misses a crucial aspect of its subject. Obamacare is off to a rough start, he argues, and it’s only going to get worse. He says he’s talked to a bipartisan group of health care experts, and even some of the law’s supporters “think the whole situation is a complete disaster”—many predicting that it will collapse. Yet “a clear majority,” he adds, including some of the law’s opponents, believe that after a few years of messiness we’ll all settle down to a new normal.

That’s hard to believe, given the “cascades” of problems Brooks goes on to discuss: structural, technical, cost, adverse selection, and provider concentration cascades. That last one is especially noteworthy because, as Brooks says, “the law further incentivizes a trend under way: the consolidation of hospitals, doctors’ practices and other providers.”

That it does. So why does Brooks himself seem to believe that the system will survive? It’s because, even if the law’s unpopularity costs President Obama and the Democrats control of the Senate in 2014, the giant insurance companies and health care corporations spawned by Obamacare will come to the fore to defend it. “Having spent billions of dollars adapting to the new system, they are not going to want to see it repealed or replaced.”

He’s doubtless right about that, but it’s not simply because they want to preserve their “sunk costs” in the new system that these “rent seekers,” as economists call them, are and will continue to be the system’s biggest defenders. These are the same institutions, after all, that were onboard with Obamacare from the start. And they were onboard because, working hand-in-hand with government, they sought to gain advantages over smaller competitors that invariably find it difficult and often impossible to compete in so highly regulated a market as we have here.

Call it “crony capitalism,” yet it’s not capitalism at all. Labeled most charitably, it’s cartelism. But the root of the problem is not with the corporate importunings of Congress. It’s with congressional acquiescence. They’re the people who take an oath to uphold our Constitution for limited government. I’ve always thought that the snake, in the Garden of Eden, got a bum rap. Yes, he was tempting Eve, but she could have just said “no.” Maybe the 114th Congress will have enough members, viewing the health care disaster unfolding before them, who will just say “no.” Then we might start returning to real capitalism.

Topics: 
Government and Politics, Health Care, Political Philosophy

‘Why Indiana Shouldn’t Fall for Obamacare’s Medicaid Expansion’

By
Michael F. Cannon

My latest oped, in the Indy Star:

Meanwhile, many [Medicaid] enrollees can’t even find a doctor. One-third of primary care physicians won’t take new Medicaid patients. Only 20 percent of dentists accept Medicaid. In 2007, 12-year-old Deamonte Driver died — yes, died — because his mother couldn’t find one of those dentists.

For more on why states should reject ObamaCare’s Medicaid expansion, read my latest Cato white paper, “50 Vetoes: How States Can Stop the Obama Health Law.”

Topics: 
General, Government and Politics, Health Care

Labor Nominee Exemplifies All That Is Bad with Government

By
Ilya Shapiro

Thomas Perez, the assistant attorney general for civil rights who personifies both the Peter Principle and this administration’s flouting of the rule of law, is due this week for a vote in the Senate Health, Education, Labor, and Pensions Committee on his nomination to be Labor Secretary. If senators who understand how destructive he is don’t do more than simply vote against him, they will have missed a key opportunity not just to stop a bad nominee, but to score easy political points too.

Quin Hilyer provides a useful recap of Perez’s nefarious dealings:

  • Interference with the Supreme Court case of Magner v. Gallagher, getting the City of St. Paul to dismiss its appeal to prevent what would’ve been a sharp (and probably unanimous) rebuke to the federal government regarding its use of “disparate impact” racial theories in housing policy, to the detriment of minorities and poor people everywhere;
  • Refusal to comply with subpoenas from the U.S. Commission on Civil Rights;
  • Dismissal of the Justice Department’s already-won prosecution of the Black Panthers for voter intimidation during the 2008 election;
  • Repeatedly stating and running a department dedicated to the proposition that voting rights and other civil rights law don’t protect white people;
  • Willfully misleading and lying to Congress under oath several times;
  • Racial abuse of the New York fire department, to the detriment of public safety and qualified minority applicants;
  • Hiring for “career” (non-political appointee) slots only attorneys who have demonstrable left-wing credentials—making Alberto Gonzales’s politicized-hiring foibles look like the model of civil service administration;
  • Trampling on religious liberties to the point that the Supreme Court unanimously rejected his arguments in Hosanna-Tabor v. EEOC regarding the “ministerial exception” to employment laws;
  • Conducting government business from a personal email account as much as 1,200 times (!) and now refusing to comply with congressional subpoenas to release those emails; and
  • Unrelated to him personally, being nominated to lead a cabinet department whose jurisdiction overlaps with an independent agency, the National Labor Relations Board, that was improperly constituted via illegal recess appointments and has continued to issue rulings even after the government lost its case unanimously at the D.C. Circuit.

About the only thing that The Talented Mr. Perez has going for him is that his performance at his confirmation hearing wasn’t the complete disaster that Defense Secretary Chuck Hagel’s was at his (a low bar). In short, if there is ever a reason not to simply defer to the president in his choice of cabinet members or to make political hay rather than simply have a quiet vote, this is it. 

Topics: 
Government and Politics, Law and Civil Liberties

Elite Panic

By
Jim Harper

Prior to the bombing and manhunt in Boston last week, Bruce Schneier pointed to an interesting interview with Rebecca Solnit, author of the book: A Paradise Built in Hell: The Extraordinary Communities That Arise in Disaster. She talks of a concept called elite panic.

The term “elite panic” was coined by Caron Chess and Lee Clarke of Rutgers. From the beginning of the field in the 1950s to the present, the major sociologists of disaster — Charles Fritz, Enrico Quarantelli, Kathleen Tierney, and Lee Clarke — proceeding in the most cautious, methodical, and clearly attempting-to-be-politically-neutral way of social scientists, arrived via their research at this enormous confidence in human nature and deep critique of institutional authority. It’s quite remarkable.

Summarizing her research, Soltis found a portrait elites paint of the public, to which they respond in times of crisis:

Part of the stereotypical image is that we’re either wolves or we’re sheep. We’re either devouring babies raw and tearing up grandmothers with our bare hands, or we’re helpless and we panic and mill around like idiots in need of Charlton Heston men in uniforms with badges to lead us. I think we’re neither, and the evidence bears that out.

There’s no denying the importance and value of investigating and capturing the perpetrators of the bombing, and I do not do so here, but elite panic seems to have been at play in Boston. The lockdown—technically voluntary, but tell that to the guy in the tank (HT: Bovard)—treated the public variously as suspects, sources of interference, or targets for display of governmental authority.

Who are the elites? How does their panic manifest itself? “Elite panic” is not a tight enough concept to declare affirmatively that Boston is its examplar, but the concept is worth having in mind. The resources and resourcefulness of civil society are great and entirely accessible in times of peril. They should not be pushed aside at these times—certainly not at the business end of a gun.

Topics: 
Foreign Policy and National Security, Government and Politics

Unexpected Praise for Australia’s Private Social Security System

By
Daniel J. Mitchell

As part of my “Question of the Week” series, I said that Australia probably would be the best option if the United States suffered some sort of Greek-style fiscal meltdown that led to a societal collapse.*

One reason I’m so bullish on Australia is that the nation has a privatized Social Security system called “Superannuation,” with workers setting aside 9 percent of their income in personal retirement accounts (rising to 12 percent by 2020).

Established almost 30 years ago, and made virtually universal about 20 years ago, this system is far superior to the actuarially bankrupt Social Security system in the United States.

Probably the most sobering comparison is to look at a chart of how much private wealth has been created in Superannuation accounts and then look at a chart of the debt that we face for Social Security.

To be blunt, the Aussies are kicking our butts. Their system gets stronger every day and our system generates more red ink every day.

And their system is earning praise from unexpected places. The Center for Retirement Research at Boston College, led by a former Clinton Administration official, is not a bastion of laissez-faire thinking. So it’s noteworthy when it publishes a study praising Superannuation.

Australia’s retirement income system is regarded by some as among the best in the world. It has achieved high individual saving rates and broad coverage at reasonably low cost to the government.

Since I wrote my dissertation on Australia’s system, I can say with confidence that the author is not exaggerating. It’s a very good role model, for reasons I’ve previously discussed.

Here’s more from the Boston College study.

The program requires employers to contribute 9 percent of earnings, rising to 12 percent by 2020, to a tax-advantaged retirement plan for each employee age 18 to 70 who earns more than a specified minimum amount. …Over 90 percent of employed Australians have savings in a Superannuation account, and the total assets in these accounts now exceed Australia’s Gross Domestic Product. …Australia has been extremely effective in achieving key goals of any retirement income system. …Its Superannuation Guarantee program has generated high and rising levels of saving by essentially the entire active workforce.

The study does include some criticisms, some of which are warranted. The system can be gamed by those who want to take advantage of the safety net retirement system maintained by the government.

Australia’s means-tested Age Pension creates incentives to reduce one’s “means” in order to collect a higher means-tested benefit. This can be done by spending down one’s savings and/or investing these savings in assets excluded from the Age Pension means test. What makes this situation especially problematic is that workers can currently access their Superannuation savings at age 55, ten years before becoming eligible for Age Pension benefits at 65. This ability creates an incentive to retire early, live on these savings until eligible for an Age Pension, and collect a higher benefit, sometimes referred to as “double dipping.”

Though I admit dealing with this issue may require a bit of paternalism. Should individuals be forced to turn their retirement accounts into an income stream (called annuitization) once they reach retirement age?

Read the rest of this post »

Topics: 
General, Government and Politics, International Economics and Development, Social Security, Tax and Budget Policy

Scapegoating ObamaCare

By
Michael F. Cannon

Here’s how Ezra Klein spins Sen. Max Baucus’ (D-MT) preditions of an ObamaCare “train wreck”:

The GOP can try and keep the implementation from being done effectively, in part by refusing to authorize the needed funds. Then they can capitalize on the problems they create to weaken the law, or at least weaken Democrats up for reelection in 2014.

In other words, step one: Create problems for Obamacare. Step two: Blame Obamacare for the problems. Step 3: Political profit!

It never ceases to amaze me how people who want government to plan our lives are horrified when government then interferes with their plans. Here’s one way to summarize Klein’s attempt to blame ObamaCare’s opponents for ObamaCare’s failures:

Step one: Pass a law the public opposes.

Step two: Act surprised when the public continues to oppose it.

Step three: Blame the public for the law’s failures. 

Or:

Step one: Enact an immense law requiring lots of implementation funding.

Step two: Don’t include any implementation funding.

Step three: Blame opponents for not funding the implementation. 

Ooh, this is fun:

Step one: Give government new powers.

Step two: Express frustration when those powers fall into the hands of your political opponents.

Step three: Put your political opponents in camps.

I wonder if Mike Pompeo will pen a letter to Klein, too.

Topics: 
General, Government and Politics, Health Care

Press Release from Union Seeking Repeal of ObamaCare

By
Michael F. Cannon

From the Wall Street Journal:

WASHINGTON, April 16, 2013 /PRNewswire-USNewswire/ – United Union of Roofers, Waterproofers and Allied Workers International President Kinsey M. Robinson issued the following statement today calling for a repeal or complete reform of President Obama’s Affordable Care Act (ACA):

“Our Union and its members have supported President Obama and his Administration for both of his terms in office.

But regrettably, our concerns over certain provisions in the ACA have not been addressed, or in some instances, totally ignored. In the rush to achieve its passage, many of the Act’s provisions were not fully conceived, resulting in unintended consequences that are inconsistent with the promise that those who were satisfied with their employer sponsored coverage could keep it.

These provisions jeopardize our multi-employer health plans, have the potential to cause a loss of work for our members, create an unfair bidding advantage for those contractors who do not provide health coverage to their workers, and in the worst case, may cause our members and their families to lose the benefits they currently enjoy as participants in multi-employer health plans.

For decades, our multi-employer health and welfare plans have provided the necessary medical coverage for our members and their families to protect them in times of illness and medical needs. This collaboration between labor and management has been a model of success that should be emulated rather than ignored. I refuse to remain silent, or idly watch as the ACA destroys those protections.

I am therefore calling for repeal or complete reform of the Affordable Care Act to protect our employers, our industry, and our most important asset: our members and their families.”

The United Union of Roofers, Waterproofers and Allied Workers, based in Washington, D.C., has 22,000 members participating in 9 regional district councils across the United States

www.unionroofers.com 

Topics: 
General, Government and Politics, Health Care

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