New Cato Study: How Markets Can Provide Health Security

None of us has health insurance, really.

If you develop a long-term condition such as heart disease or cancer, and if you then lose your job or are divorced, you can lose your health insurance.

You now have a preexisting condition, and insurance will be enormously expensive – if it’s available at all. In a new study, “Health-Status Insurance: How Markets Can Provide Health Security,” author John H. Cochrane argues that free markets can solve this problem, and provide life-long, portable health security, while enhancing consumer choice and competition.

The TSA Strip-Search Machines

USA Today reports that the Transportation Security Agency is replacing metal detectors in some airports with body scanners (sometimes known as “strip-search machines”).

This doesn’t sit right with many people.

The TSA has done a questionable job so far of informing the public about what the machines do and - most importantly - of the fact that they’re optional.

Back in October, St. Petersburg Times columnist Robyn Blumner wrote about her experience.

As I stepped out of the virtual strip-search machine I immediately felt a shock wave of humiliation and intrusion, particularly as I looked around the security area and realized I was the only female traveler around and the only person “randomly” selected. The TSA agent hadn’t bothered to explain that I had the right to decline and submit to a pat-down by a female agent instead — a choice I would have taken.

A friend wrote me the other day to tell of her recent experience:

For the past year I’ve been reading stories about new machines being tested by TSA at airports which x-ray or wave scan passengers in order to detect explosives or other items hidden under one’s clothing. I’ve been horrified by these stories and the accompanying sample pictures which show a pretty detailed picture of the person’s body parts. I think the use of this technology is a gross violation of the right to privacy, particularly when used randomly on passengers for no probable cause or even reasonable suspicion of any wrong doing.
… .

This past Sunday in Miami, … after going through the normal metal detector, a TSA agent had me enter a machine which looked similar to the puffer machines (explosive trace portals) from the outside. He told me to put my feet on two premarked spots. The door closed, and an internal panel of the machine rotated part of the way around my body. Then the machine opened, and he had me turn, put my feet on different preprinted places, the door then shut, and the panel rotated around my body again. All the while I had to keep my arms raised.

My hunch and a subsequent internet search confirmed that TSA is using millimeter wave body-imaging technology at the Miami International Airport. I saw a picture of the machine I was lead through. However I also read on the TSA website that use of this technology is supposed to be VOLUNTARY. Several places on the TSA website describe it as an alternative OPTION available for passengers.

… .

At no point did the TSA agent tell me what the machine was doing. I was not told of any other options available to me such as a pat down or wand. There were no signs informing passengers that they were being x-rayed/wave scanned for viewing of them naked at a remote location.

I never would have willingly entered that machine had I known in advance what it was. In my opinion, this technology should not be used at all, but if it is, TSA needs to do a better job on site of disclosing its actions and the capabilities of its equipment. TSA also should make advising passengers of their rights a high priority.

I’ve corresponded with Peter Pietra, the TSA’s Privacy Officer, and he disputes the absence of signs at the Miami airport. I think he’s done a creditable job of trying to build privacy protections into this system. You can find information on the millimeter wave strip-search technology here and here.

But maybe it’s not enough. We’re talking about trying to maintain privacy with a technology that’s fundamentally intrusive.

Back to Robyn Blumner:

Here is the inevitable: You give people with routine jobs the ability to rummage around in other people’s intimate lives — innocent people who are not suspected of anything — and bad stuff happens. Privacy goes out the window, boys will be boys, the rules, law and even the Constitution don’t stand a chance. Titillation trumps training, at least for some.

Why must we fight about this? Because we transferred so much more responsibility for airline security to the government in a knee-jerk reaction to the 9/11 attacks. This was a bad idea, for reasons I discussed at length in a March 2005 debate about airline security with Reason’s Bob Poole.

Instead of this lumpy, government-provided airline security, I said, “Airlines should be given clear responsibility for their own security and clear liability should they fail. Under these conditions, airlines would provide security, along with the best mix of privacy, savings, and convenience, in the best possible way.”

TSA is not balancing all these interests well. Government agencies are terrible at responding to consumers compared to businesses, whose bottom lines rely on it. As I said in the Reason piece, the fix to this problem is to rethink aviation security from the ground up. The TSA should be eliminated.

Update—2012 GOP Contenders and the Stimulus

Louisiana Governor Bobby Jindal has indicated that he may refuse $4 billion in federal funds that his state is scheduled to receive under the stimulus bill that President Obama signed this week.

Earlier South Carolina governor Mark Sanford said he would turn down the money. Alaska governor Sarah Palin has also suggested she may say no to stimulus funds.

On the other side, of course, Florida governor Charlie Crist was perhaps the most ardent Republican proponent of the stimulus bill. (Mitt Romney opposed the stimulus, but since he is no longer a governor he doesn’t face the difficult decision of whether to put principle above “free” federal money).

Who knows, Republicans in 2012 might actually have candidates who are (or at least want to be) fiscal conservatives.

The Obama Recovery Plan: Carter Redux?

The big-spending massive pork barrel bill known as the stimulus package has been signed into law.  Richard Rahn reflects back on the economic crisis three decades ago and finds that the Obama plan looks a lot more like the Carter than the Reagan plans.  And we know which one of those worked best.

Writes Rahn:

President Jimmy Carter inherited a growing economy but one with relatively high inflation and high unemployment. He left office with the economy in a recession, high unemployment, and a record high inflation and interest rates (the prime rate at one point had reached 21 percent). Mr. Carter’s policies were to maintain the very high marginal income tax rates in effect at that time, coupled with a small expansion in the relative size of government.

Mr. Carter had appointed G. William Miller as Federal Reserve chairman, who proceeded to engage in a very rapid monetary expansion. The inflation disaster caused by the excessive monetary expansion caused Mr. Carter to replace Mr. Miller with Paul Volcker at the very end of his administration.

President Reagan inherited an economic situation even worse than the one President Obama has. When Reagan took office, the economy had been in recession for about a year, the unemployment rate was almost identical to today’s, but the labor force participation rate was smaller, and inflation was out of control. At the time, the newspapers were filled with stories about the “worst economy since the Great Depression” - which, unlike today, was true, and the economic establishment seemed to be bereft of ideas of what to do.

Credit markets were in a mess, and both businesses and consumers were not borrowing because they could not afford the interest rates. President Reagan, unlike his critics, had a clear plan to revive the economy, which included: monetary restraint to stop inflation; large reductions in marginal tax rates to renew the incentives to work, save and invest; and a reduction in nondefense spending as a percentage of gross domestic product (GDP).

Unlike other recent presidents, Reagan actually kept and delivered on his promises, which resulted in high growth (7.2 percent in 1984 alone) and large reductions in the unemployment rate - particularly, inflation. He stuck with Mr. Volcker and his monetary restraint because he understood inflation had to be brought under control, even though he also knew it would necessarily prolong the recession. How many of today’s politicians would be willing to take the heat for the long run good?

It is hard not to ask:  do the supporters of the “stimulus” bill really think it will work?  Or did they decide long ago that policy effectiveness was irrelevant to their political success?

Deeper into Afghanistan

President Obama yesterday announced his decision to send 17,000 extra troops (two brigades and support troops) to Afghanistan in the coming months, bringing the total American troop presence there to over 50,000. This has been in the works for some time. It comes as the administration conducts several reviews on Afghan policy.

You might say we are putting the cart before the horse, sending troops at a problem just as we reconsider our strategy for confronting it. On the other hand, our existing strategy, which is to prop up the Afghan state with US firepower, seems unlikely to change under Obama. Despite recent sensible comments about the limits of what we can accomplish in Afghanistan, Obama’s team likely remains committed to state-building there. Given that goal, it is hard to see why we should stop at two brigades. We could send five and still have a low force-to-population ratio, judging by historical ratios for counter-insurgency campaigns.

A stable Afghanistan is neither necessary to US security nor obviously possible at reasonable cost, as I have periodically written. It is not evident that Al Qaeda types would again find haven in Afghanistan should we go. But assuming that they would, there remains an alternative to trying to overcome Afghanistan’s anarchic history. We could attack only the remaining jihadists, their allies, and insurgents who will not settle for local power. That would require only a small U.S. ground presence, airstrikes and local allies.

Pundits tend to assume that counterinsurgency and state-building are identical — foreigners enforce the state’s claim to a monopoly on violence to gain it support and crowd out alternative authority structures. But there is another counterinsurgency strategy out there, which is to allow the insurgency local power, to appease it as part of a bargain. The key tactic that brought lowered violence in the Sunni part of Iraq – bribing insurgent militia leaders to cooperate with us — undermines the Iraqi state, sacrificing our stated goal for a simpler one.

While we’re on the subject, I see Matt Yglesias supports the troop increase because it will lessen the need for airstrikes, which too often kill civilians. That seems backwards. Even with 12,000 new combat troops, our forces will remain a relatively small force in a large mountainous region. That means operating in dispersed contingents with limited firepower and therefore depending on air support in firefights. The new troops will likely provoke more combat and more supporting airstrikes, at least in the short term.

New Podcast: Obama’s Shock Doctrine

Naomi Klein, author of The Shock Doctrine: The Rise of Disaster Capitalism, says free-market advocates spend their careers stockpiling free-market ideas waiting for a crisis that could be used as a springboard for implementing those ideas. But, as David Boaz asks, what about Obama’s policy proposals amid recession and financial crisis?

In today’s Cato Daily Podcast, Boaz exposes Obama’s Shock Doctrine:

We know from history that, while there are a few examples of free-market or somehow right-wing programs coming about after a crisis, usually what happens in a crisis is government seizes more money and power. And you can see that in the New Deal; the Great Depression led to the New Deal. You can see it after Kennedy’s assassination led to Lyndon Johnson and his 100 days of legislation. You can see it in practically every communist government that ever came to power, was in the devastation of war….

We had a financial crisis and what happened? Did the incumbent Republican administration say, now’s our chance to implement Milton Friedman’s program and privatize and deregulate? No, they did what governments always do: they expanded their own powers at the expense of civil society, and so in that sense, Obama’s just doing the same thing that Bush did. We could call this the Bush-Obama era.

It was, after all, Rahm Emmanuel who said, “You never want a serious crisis to go to waste. This crisis provides the opportunity for us to do things that you could not do before.”