Richard Jewell, RIP

There were scores of federal agents working at the 1996 Summer Olympics, but it was a private security guard named Richard Jewell who spotted the suspicious backpack loaded with explosives and sounded the alarm–sparing countless lives and injuries.  For his good deed, Jewell found himself in the crosshairs of a desperate FBI investigation.  Federal agents leaked his name to media outlets and Jewell was smeared as a killer who only wanted to pose as a hero.  The feds had to back up when the actual evidence pointed to someone else, but a lot of damage had already been done.  The life that Jewell had been hoping for was gone.  People treated him as if he had the plague.  Sadly, Jewell died yesterday.  He was only 44. 

The Jewell case serves as a reminder that the government has the power to inflict serious damage on the lives of people–even when there is no conviction in court, and even where there is no indictment.

Note that Cato will be hosting this forum about the Duke University students who got smeared in another investigation that went awry.

Note also the dismissal of charges against Frank Quattrone.  The indictment was a page one story, but the dismissal is found in section D, page 2.

Krugman on Education, Health Care

A few days ago, New York Times columnist Paul Krugman drew an equivalence between government provision of education and medical care for children:

We offer free education, and don’t worry about middle-class families getting benefits they don’t need, because that’s the only way to ensure that every child gets an education — and giving every child a fair chance is the American way. And we should guarantee health care to every child, for the same reason.

His argument would have more force if government actually ensured that every child gets an education. 

I once attended a dinner discussion with a bunch of health care big-wigs.  One highly educated woman – she is both an M.D. and a J.D. – began the dinner by declaring, “We need to make health care a right in this country, just as we make education a right.”

Later in the dinner, she complained that her organization’s materials must be written at an 8th-grade level to be understood by their target audience. 

I interrupted to ask how she reconciled those two statements: if we really have created a right to education, why the poor reading comprehension?  And if we create a parallel right to health care, how many people’s medical care will be stuck at an 8th-grade level?  Her answer was non-responsive.

It would be nice if Krugman and others would at least acknowledge that tradeoff.

No, a Disco Ball

In an interview in this morning’s USA Today, U.S. Secretary of Education Margaret Spellings is back to unbridled hyping of the No Child Left Behind Act (NCLB). As has been her custom, her answers are popping with utterly unsubstantiated rhetoric, perhaps the most outrageous of which is her insistence that NCLB has somehow brilliantly illuminated heretofore widespread but invisible failure in public schooling. She says, for instance, that before NCLB the nation took “the ostrich approach” to our schools, but with the law we’re at last “shining a bright spotlight on under-achievement.”

Oh, come on! Americans have known about their awful schools for decades. I mean, did everyone think everything was hunky-dory in Detroit, Newark, Washington, DC, New York, Los Angeles, Oakland, and on and on until, suddenly, NCLB came along and revealed that – gasp! – the schools in those and many other places were actually dangerous, dilapidated dungeons of ignorance? Of course not! And didn’t A Nation At Risk put Americans in a tizzy about their schools back in 1983? Oh, and wasn’t Rudolph Flesch’s Why Johnny Can’t Read a best-seller all the way back in the 1950s?

And what about that NCLB spotlight? At best, it’s a disco ball – it shines light, but light designed to dazzle much more than illuminate and confuse much more than clarify. So, while NCLB requires all states to bring kids to something called “proficiency” – enabling federal politicians to boast about their steely determination to educate all children – it leaves it to the state and local school officials who’s feet are supposedly being held to the fire to define proficiency and write the standards and tests. The result, as a recent study from Spellings’ own department has shown, has been that state officials and federal education fans have been able to point to rising state test scores to “prove” that NCLB is working, but the state test results themselves have essentially been lies, calling scores “proficient” that the feds themselves would call “basic” or “below basic.”

That sure is one wacky spotlight! What we need right now, especially with reauthorization of NCLB expected to begin when Congress returns from vacation next week, is not to shine a spotlight on our schools, but on both NCLB and all the damning evidence of Washington’s failures through decades of federal education policy. Then we’ll see that far from offering a solution to our education problems, Washington is a very big part of them. And don’t worry: All those troubles in the schools we’ve seemingly known about forever will almost certainly still be there when we move the spotlight off of Washington, and back onto them.

World Socialists Whine about Flat Tax Revolution

I almost feel sorry for hard-core leftists. First, they had to endure the agony of watching the Berlin Wall crumble and the Soviet Union break apart. As depressing as that must have been, they now must be horrified that former communist nations are leading the shift to pro-market flat tax systems. But their angst is my joy. I was greatly amused to read this account from the World Socialist Web Site:

The government of Albania has agreed on a standard tax rate (flat tax) of 10 percent aimed at outdoing its East European rivals and attracting international investors. The government in Tirana is determined to transform the impoverished Balkan state into a haven for multinational companies and western speculators. From the start of next year, corporate taxes will be reduced from 20 to just 10 percent. The basic rate of income tax, which amounted to 5 percent for average incomes and a maximum of 25 percent for top earners, had already been changed to a uniform rate of 10 percent for all incomes on August 1. … Measures aimed at massive tax relief for business and the rich are not specific to Albania. It is the result of a vicious competition between states in both the East and West of Europe aimed at creating the best possible conditions for foreign speculators and the wealthy. In the so-called “first round” in the 1990s, the Baltic states began to drastically lower company and income taxes, introducing tax rates of between 25 and 29 percent. These states—with the exception of some “Special Economic Zones”—suffered a loss of interest from foreign enterprises concerned that tax rates were still too high. The “second round” of cuts was initiated by Russia in 2001. Serbia followed in 2003 with the introduction of a flat tax of 14 percent. In 2005 Ukraine, Slovakia, Georgia, and Romania followed suit. The “new round” has now begun with tax reductions in the Czech Republic and Albania. Plans for further radical tax reductions are currently in discussion in Bulgaria, Croatia, and other states.

Time to Remember the Lessons of Katrina

The August 13 Time cover story on Katrina begins:

The most important thing to remember about the drowning of New Orleans is that it wasn’t a natural disaster. It was a man-made disaster, created by lousy engineering, misplaced priorities and pork-barrel politics.

The primary culprit was the Army Corps of Engineers, together with its congressional overlords. In the Time piece, reporter Michael Grunwald does an excellent job describing the misplaced priorities of the Corps, both pre-Katrina and post-Katrina.

As I’ve argued, the Corps ought to be privatized. Alas, the Bush administration bungled its Katrina response and has since missed a big opportunity to push for fundamental reforms of the Corps, FEMA, and other agencies.

Topics:

America’s “Public Squalor” Versus Europe’s “Social Justice”

A British member of the European Parliament urges approval of the new European Union constitution (now being called a reform treaty in an effort to preclude a referendum), arguing in the Guardian that it will promote European-style solidarity rather than the American-style squalor. Yet according to both the IMF and the World Bank, per capita GDP is $8,500 higher in the United States (nearly $13,000 higher according to the CIA and $9,800 higher according to the OECD) than it is in the United Kingdom. As for the less fortunate, a left-wing think tank published a report last year showing that poor people in America have more income than poor people in the U.K. (see Figure 8D). The international data suggests that the European social model does a good job preserving the self-interest of the political class and a crummy job helping people improve their lives:

The reform treaty will explicitly commit European governments to defend and strengthen the European social model. It will enshrine the values of social justice, full employment and solidarity in the EU’s “mission statement” and commit the EU to “a social market economy, aiming at full employment and social progress”. Similarly, the treaty emphasizes that the EU must work to “combat social exclusion and discrimination”, and will be legally required to promote social justice, gender equality and solidarity between generations. It is values such as these that clearly differentiate the EU from the American model of capitalism that allows private wealth and public squalor. …The overwhelming majority of our socialist colleagues across Europe support the reform treaty, despite some reservations, precisely because it will enshrine the European social model.

Hmm… You Should Have Someone Look at That

Americans usually criticize socialized health care systems for forcing patients to wait for care, so it’s a curious thing to find American patients waiting. It happens. I’ve weighed in on Americans waiting for care, as have Tyler Cowen, Matthew Yglesias, Ezra Klein, and others.

Today’s New York Times now informs us:

Patients seeking an appointment with a dermatologist to ask about a potentially cancerous mole have to wait substantially longer than those seeking Botox for wrinkles, says a study published online today by The Journal of the American Academy of Dermatology.

Researchers reported that dermatologists in 12 cities offered a typical wait of eight days for a cosmetic patient wanting Botox to smooth wrinkles, compared to a typical wait of 26 days for a patient requesting evaluation of a changing mole, a possible indicator of skin cancer.

The article also provides this interesting contrast:

Dr. Michael J. Franzblau, a dermatologist in San Francisco, said doctors typically charged $400 to $600 for a Botox antiwrinkle treatment, for which patients pay upfront because insurance does not cover it.

Meanwhile, doctors have to wait for health insurance to reimburse them for mole examinations, for which they receive an average of $50 to $75, Dr. Franzblau said.

This article reminds me of a 2005 study that called ambulatory clinics to see who is most likely to get an appointment for follow-up care after an ER visit. The study found, roughly:

  1. “Four hundred six (47.2%) of 860 total callers and 277 (64.4%) of 430 privately insured callers were offered appointments within a week.”
  2. People with private insurance and those who offer to pay cash up-front were more likely to get an appointment than Medicaid patients, who in turn were more likely to get an appointment than patients who offered to pay $20 up front and pay the balance later.
  3. Nevertheless, one-third of those with private insurance – and even those who offered to pay cash up-front – still couldn’t get an appointment.

When I discussed that study with my colleage Peter Van Doren, he described it (with precision) as “an out-of-equilibrium situation not resolved by the price mechanism.” With regard to Medicaid, it’s easy to see what’s interfering with the price mechanism: Medicaid prices are set by state governments, and so they don’t change to eliminate shortages (i.e., waits) the way market prices might. The same is largely true of private coverage: those prices are set by insurers, who mostly just track the prices that the federal government sets through the Medicare program [$].

But then why would there still be shortages for patients who come with cash in hand? The price mechanism seems to be working for cash-paying Botox patients, but not for cash-paying ambulatory clinic patients. One possibility is that there might be spillover effects that affect cash-payers in markets dominated by third-party payment and rigid prices. But then wouldn’t we see cash-only ambulatory clinics emerge to capture those customers? If not, that suggested supply constraints to Peter and me.