Whitman on an Individual Health Insurance Mandate

Economist and blogger Glen Whitman has an excellent article in the latest Cato Policy Report on the latest fad in health policy: requiring people to purchase health insurance, a.k.a. an “individual mandate.” Hillary, Arnold, Mitt, John … the kids, they just love this individual mandate! If you read only one article on the topic, let this be it.

Whitman adds a post-script to that article in a recent post:

Something I don’t mention in the article is why some free-market types support the individual mandate. In short, I think the reason is that they have given too little attention to the political dynamics of such a mandate, instead naively assuming that the mandate could be crafted once-and-for-all in a wise and lobbying-resistant fashion.

More on Google/Doubleclick

Related to my last post, the New York Times’ technology blog has an excellent write-up about the case that illustrates just how arbitrary the standards in antitrust merger reviews can be:

Google’s $3.1 billion deal in April to buy DoubleClick set off a wave of advertising acquisitions by Microsoft, Yahoo, AOL and others. All of those deals have been completed, but Google is still waiting while regulators in Washington and Europe consider the antitrust and privacy implications of its proposed combination…

Several consumer groups are opposing the merger because they fear that Google and DoubleClick will have too much information about Internet users. Most observers suggest that although the commission regulates privacy, its opinion of the merger must reflect antitrust issues only. The groups opposing the deal have argued that there are in fact precedents for the commission to take privacy concerns into account. (The Electronic Privacy Information Center, which is against the merger, lists many documents supporting its view here. Google’s take is here.)

In the end, Mr. Lindsay writes that Google may well be forced to accept some limitations on its use of data about Internet users. It may be required in the United States to anonymize data about users after 18 months, something it already agreed to do with European regulators. And there may be some limits imposed on how data from DoubleClick’s ad serving system can be used by Google.

Now, as our own Jim Harper will be the first to tell you, there are reasons for consumers to be concerned about the data-retention policies of large Internet companies, Google included. But if new regulations about online privacy are needed, those regulations should be proposed and debated in Congress. It’s totally inappropriate for government regulators who are supposed to only be reviewing a merger on antitrust grounds to use the review as a pretext to single the company out for special, extra-legal privacy regulations. Whatever problems Google’s privacy policies might have, they’re certainly not attributable to monopoly power on Google’s part: even after the merger Google would have less than a third of the online advertising market.

Unfortunately, the lesson Google is likely to learn from this ordeal is the same one Microsoft learned a decade ago: you can never hire too many lobbyists. Regardless of what the law might say, Washington insiders will find ways to punish successful companies that don’t spend resources cultivating influence in Washington. Is it any wonder that Google has been pouring millions of dollars into a beefed-up Washington presence?

Dueling Antitrust Complaints

A decade ago, Cato scholars argued that the Justice Department’s antitrust case against Microsoft was a witch hunt instigated at the behest of Microsoft’s competitors. They also warned about the inevitably harmful consequences of the politicization of the technology industry. Once technology firms succeed in hobbling a competitor using antitrust law, other companies are likely to respond in kind, leading to a never-ending stream of antitrust litigation.

That prediction has been borne out in spades, as Microsoft, once a principled critic of antitrust law, has discovered the joys of using antitrust as a competitive weapon. This week we learn that Microsoft has enlisted the assistance of a public relations firm to build support for blocking Google’s acquisition of DoubleClick on antitrust grounds. Never mind that there are dozens of firms in the highly competitive online advertising industry, including aQuantive, a company Microsoft snapped up for $6 billion back in May.

Of course, Google’s hands aren’t clean either. In June, we learned that Google has asked the Justice Department to investigate Microsoft for “bundling” a search functionality with its operating system, despite the fact that desktop search has been a standard feature of operating systems for decades.

Unfortunately, we seem to have opened a Pandora’s Box that will be difficult to close. It’s a shame that Microsoft has backed down from its former, principled stance on antitrust, but it’s hardly surprising. Filing frivolous antitrust complaints is now just a part of doing business in the software industry. That’s great for antitrust lawyers, but it’s hard to see how anyone else benefits.

You Call That Rethinking?

In a maddening discussion with Robert Wright, AEI scholar David Frum promises a “rethinking” of his views on Iraq but, unsurprisingly, I suppose, provides no such thing. I’ll leave it to C@L readers to stomach as much of it as they can.

But at times like this, I am reminded of Anatol Lieven’s takedown of Eliot Cohen in The National Interest:

by contributing in this way to a hasty, poorly-planned military operation, it must be repeated that Dr. Cohen took on himself a measure of the moral, intellectual and political responsibility for precisely those U.S. administration mistakes in Iraq which he now denounces, and which have cost so many American lives. It is disappointing—though not surprising—that Dr. Cohen himself does not realize that this record demands from him, as an honorable man, a lengthy period of quiet, private reflection on his mistakes and the reasons for them.

Lieven is absolutely right, but if his advice were followed, housing prices in Northern Virginia could well plummet as the neocon commentariat flees for the hills to contemplate the err of their ways. We probably shouldn’t hold our breath.

Test Score Story the Media Will Miss

The latest 4th and 8th grade test scores for “The Nation’s Report Card,” or National Assessment of Educational Progress, were released this morning. They show improvement in reading and math, particularly at the 4th grade.

The story that the media will report will revolve around claims by No Child Left Behind advocates that their law is responsible for these improvements. In reality, NCLB almost certainly has little to do with these results, since they simply continue patterns that date back at least to 1990 – a dozen years before the law was passed.

But that’s not the real story. The real story is that none of these improvements have been persisting through to the end of high school. What families and business leaders care about is how well students are prepared for life and work at the end of high school. As the NAEP Long Term Trend results show, the mathematics achievement of 17-year-olds has been flat since 1990, and their reading achievement has actually declined. In fact, achievement among 17-year-olds is flat or declining in math, reading, and science since the first NAEP tests were administered in the late 60s and early 70s – despite the fact that real spending has doubled to more than $11,000 per pupil over that period.

What that means is that the improvements in the earliest grades simply represent a shifting of when learning is happening, not an increase in what students ultimately learn. We are, in the hackneyed phrase, merely rearranging the deck chairs on the Titanic as it continues to slip beneath the waves.

That’s the sad but true story that the American people need to be told.

Cato Offers Home Study Course

The Cato Institute is now pleased to offer the Cato University Home Study Course, a self-paced, home study program, enabling you to spend time with brilliant minds in your home, office, or car; during a workout; while on vacation; or wherever and whenever you have an opportunity to listen and think. Immersing you in the thoughts and views of John Locke, Thomas Jefferson, Thomas Paine, James Madison, Adam Smith, Voltaire, John Stuart Mill, Henry David Thoreau, Ayn Rand, F.A. Hayek, Milton Friedman, and others, the Cato University Home Study Course offers you the opportunity to deepen your perspectives, knowledge, and insight on the growth of human freedom – and with it science, culture, and capitalist prosperity.

SCHIP’s Perverse Incentives

Picking the worst government program would be a huge challenge, but picking the worst funding system is much easier. Programs involving joint federal-state funding contain built-in incentives to expand the size of government because politicians at either level can buy more votes by expanding the program, knowing that they only have to pay (depending on the formula) a share of the cost. In other words, lawmakers can promise $1 worth of goodies for, say, 50 cents. This is one of the reasons why Medicaid is a fiscal disaster. It’s also why welfare reform was a step in the right direction (the old system funneled more money to states when they added more people on the dole, creating a terrible incentive system). Unfortunately, politicians generally make things worse rather than better, and a Wall Street Journal editorial (sub only) shows how the SCHIP program is encouraging more government:

Schip was created in 1997 to help insure children from low-income families, but it has since become a stealth vehicle to expand government control of health care. Schip expires next week, and House and Senate negotiators are hashing out a “compromise” that would expand the program by about $35 billion over the next five years (plus a budget gimmick concealing at least $30 billion). … Many states like New Jersey have been taking advantage of Schip’s “flexibility” and covering more affluent children, their parents, and even childless adults. In a tardy response to this trend, the federal Department of Health and Human Services announced in August that before states could further expand their Schip programs beyond 250% of poverty, they would have to enroll 95% of children below 200% of poverty. …For several years the number of uninsured New Jersey children under 200% has held steady, while New Jersey’s Schip rolls have grown by about 10% a year. One major reason is that the state continues to enroll families with incomes up to $72,275. … Governor Corzine could always tax his own residents to pay for this largesse. Then again, New Jersey already has one of the worst tax burdens in the country, and Trenton has raised taxes five times in the last six years. For the Governor, the political beauty of Schip is that it allows New Jersey to finance its spendthrift ways on the backs of more responsible states.