The Rabid Independent, Nonpartisan solutions, independent policy ideas

Trying to understand the revocation of Obamacare

I’m going to make a solid effort here to understand the reasoning behind the repeal of Obamacare. I’ll try my best to withhold my shock and depression over this issue, at least for a few minutes. Let’s make a list of all the reasons why repeal makes sense to those voters who will continue to support their congressmen (or senator) after he votes for the AHCA:

  1. It was President Obama’s signature piece of legislation and Obama is the devil. He is a black, Muslim, Kenyan, socialist who nearly destroyed the country. We must destroy his legacy. By definition, if he was in favor of such a program, it must have been profoundly damaging to the American economy.
  1. As a libertarian, I detest any Government interference in the economy. I believe in free markets and the ability of price to effectively allocate resources. Everything will be better if the government gets out of the way. I’d be in favor of getting rid of Social Security and Medicare as well.
  1. The obesity epidemic in this country has shown us that people must be responsible for their own health. If they are sick then it’s their fault. Why should I have to pay any taxes towards their healthcare? Why should my premiums be higher to average out an insurance pool. I have no pre-existing conditions.
  1. I am fabulously rich and perfectly able to buy as much health coverage as I want. If you have failed to make a lot of money like me then you must accept the consequences.
  1. I am on Medicare or have fabulous coverage through my employer so this is not really important to me. If people die from this repeal then that’s not my problem. I’d just like to see my taxes go down, and Roe vs Wade revoked.
  1. How did the government raise taxes on capital gains or force me to buy healthcare insurance when I don’t want to. That’s an infringement on my liberty!

Obamacare is just made up of two things: a restriction on charging people more for their pre-existing conditions, and a series of subsidies for poor people [Medicaid, high risk, and older people). That’s it. So if you hate it you have only a few things to get angry about. You must hate sick people, poor people or you must make a ton of money from capital gains. You must not know anybody who is between the ages of 50 and 65 who have been sick or might get sick. (Is that possible?)

The other option, of course, is that you think that Obamacare is a much more intrusive system which tells doctors how to do their jobs. It doesn’t. Ask the AMA what they think. Maybe you believe that subsidies are the same as socialism. If everyone gets healthcare they’ll become lazy economic leeches.

In this debate, there is sort of a sweet spot – around the age of 45. When you’re that age your parents are old enough for Medicare so they are not affected by any of this. You’ve been healthy all your life and your insurance rates before Obamacare were reasonable, or you got your insurance through your employer. You’re too old to have more children so prenatal care or child delivery coverage is irrelevant. Such a person may not realize that cancer can hit somebody younger than 65. They are on the edge of a cliff, premium wise. Simply being 55 is a preexisting condition in and of itself. Ageism makes it very hard to get a new corporate job if you get laid off. These “nearly old” are unemployable and uninsurable. 45 year-olds don’t realize how close they are.

In the end, it comes down to compassion versus a tax cut. It’s a matter of recognizing that the state has a logical role when it comes to establishing insurance pools. Every actuary and every other country in the world understand this. As with climate change we are unique in that we have a significant (vocal) minority who prefer not to have a plan when it comes to long-term complicated issues. They simply hope that supply and demand will take care of things since they (and their donors) can’t or won’t. Consequently, CO2 emissions are not taxed to pay for negative externalities [secondary spinoff effects]. Similarly, prices do not allocate healthcare resources effectively. There there is no “elasticity”. Simply put, demand does not decline if price rises. That’s why the United States free market version of healthcare is so spectacularly less efficient than every other socialized system in the world. We pay more but receive the same services as any Dutchman or German. There is no state monopsony.

It’s hard to admit when free markets, don’t work. When you read Ayn Rand at the age of 16 you completely bought into her depiction of government as evil. How can you recant or explain to other true believers that there seem to be a few holes in the storyline? Will someone call Milton Friedman? You decide it’s better to ignore these glaring exceptions so you can reduce regulation and government corruption. Voters don’t want to hear about complexity anyway. So in the name of your God – Free Markets you declare:

If 24 million uninsured people must die in the gutter or go bankrupt to pay for hospital care then – so be it!

 

 

What will drive the Trump agenda?

I think we are actually progressing faster than we ever have to the universal conclusion that a (this) president is a profoundly stupid man. I almost never hear anyone defending his acumen or foresight. No one defends his “policies” because he clearly has none. Every campaign promise has been broken and his opinion on any subject is driven by the last conversation he had or what he saw on Fox News. Republicans of various stripes – libertarians, Christian fundamentalists, big defense interventionists, and fanatical tax cutters are all hoping the Trump wheel stops spinning at their number. None of them can (honestly) say he shares their ideology – they all know he has no ideology other than self-enrichment.
The last place the wheel stopped was on government contract bidding. He proclaimed that contracts should only go to American companies. What could make better sense? I argued that the Obama Stimulus plan of ’09 should have a buy-America requirement built in. Isn’t at least part of the point of government spending to stimulate the US economy.  Trump seems to get this “buy America” thing but when it angers certain interest groups like Ryan’s Border Tax would, then he runs away – just like a man devoid of ideology would do. He wants to do some of those things he promised but only if certain people don’t get mad. Why? He was supposed to be the rich guy who could ignore special interests.

The only logical reason is that it’s bad for business – the Trump Hotel business.

Forcing China or Japan to relent from their mercantalist policies would hurt his chances to open new hotels there. Raising taxes on retailers who source their goods overseas would aggravate many rich hotel patrons and investors. Conversely, policies that only benefit the working poor do the company no good. In fact, association with racist yahoos may hurt the brand.  Such people don’t buy $10mm condo’s in New York. They don’t have low handicaps. If there is no impact on Trump Hotels then his opinion gets blown around by the wind. Let’s filter policies for whether they are OK for his business:

  1. A border wall – poor illegal immigrants don’t stay at the Trump International Hotel. He has no properties in Mexico (he did have a failed one in Baja) or for that matter any part of Central America.
  2. Cancel all health care for the middle class and the very sick. Health care insurance company executives may join Maralago.
  3. Bomb only places where there are no Trump hotels. That takes North Korea off the list since Kim Jong Un would destroy Seoul and Trump has real estate there. Iran is OK.
  4. Tax cuts must only be for the rich – prospective hotel patrons.

In the end the very thing – money, that was supposed to make him able to drain the swamp actually makes him aligned with all the same wealthy vested interests that already control Washington. All of this would have been prevented if he had chosen to completely liquidate his assets before being sworn in. As it is we have just stepped closer to a classic third world construct.

Trump voters have been left hoping that his proven stupidity will shake things up for the better. As long as they are on the side of Trump hotels they won’t be disappointed.

The Populist Scam

We have had populists rise to the top of the American political system in the past. In each case, we saw a relationship between the man and the message. Take a look at the style and wealth of Eugene Debs, William Jennings Bryan, Henry Wallace, and Bernie Sanders. Their message was clear and no one doubted their sincerity.

It became hard to understand the commitment of a real estate millionaire to populist policies such as trade tariffs, more healthcare for the lower and middle classes, lower levels of immigration and less international engagement. Trump’s believers bought into the inconsistency because the man seemed so different from the standard polished lawyers who competed against him. They couldn’t be trusted/believed. Trump spoke his mind and had no history of flip-flopping on policy because he had never been a policy maker.  The fact that his promises were altered to suit his audience never shook their faith.

Trump has abandoned all his populist positions in record time:

  • Repeal and replace became – dump coverage for all those middle-class voters.
  • China (and India and Mexico) were not declared to be currency manipulators as promised, and his talks with the leaders of Japan and China seem to be warm and fuzzy. Wasn’t China our economic archenemy?
  • The tax bill that was to include a Border Tax Adjustment seems to be dying as the retail industry gets its way.
  • No NATO countries are being asked to contribute more or raise their level of defense spending.
  • NAFTA cancellation has become NAFTA renegotiation – light.
  • Where’s the wall?

He seems to need love from whoever is in the room more than the satisfaction of actually doing anything he promised. There are always far more people in the room who favor corporate interests over those of the people. That was supposed to be the problem he was going to change. As we watch the demise of Steve Bannon and the rise of Xi Jinping and Jared Kushner we are watching the logical failure of a millionaire who never believed in the cause.

You can tell by how Bernie Sanders combs his hair, that he is a true believer. No one can doubt that when confronted by Wall Street lobbyists he would be deaf to their remonstrations. Trump says he wants to make deals. Did it occur to anyone that blowing up a trading relationship is the opposite of a deal? China will always offer us a “good” deal. After all, they just want to sell us cheap stuff. It will be far easier for Trump to take the easy path.

Inertia is powerful.

The question then becomes – when do his supporters realize they have been had? Do they maintain hope because of his unconventional (moronic) approach/appearance? How will he defend his failure to deliver on anything other than a bombing raid in Syria which is exactly the sort of thing his voters really don’t care about?

The conventional forces of the Washington political quagmire are taking hold – they have sucked this neophyte into their black hole of dysfunction and failure.

What is the constituency of an interloper?

Donald Trump entered the political realm as a self-proclaimed pragmatist with no perverted loyalties, free from the corruption of Washington. He sold us on the idea that as a businessman he would get things done. He then chose various issues somewhat at random based on (presumably) populist outcry – the chanting of crowds. There were so many contradictions and absurdities that we could never trust his sincerity or commitment to any of his promises.

Now that he is in office we find that many of his ideas – a Mexican wall, punishing trade cheaters like China, and healthcare for all (but not Obamacare) are falling by the wayside. Since Trump is not a politician and not (really) a committed party member he can take or leave various policies as it suits him but that causes a natural problem. Who are his true-blue followers that will stick with him through thick and thin?  His voters were with him for what he was handing out. Some media members may stay loyal (Sean Hannity) because he’s good for ratings but everyone else is now figuring out that he will betray you – eventually. The wall will never happen and your healthcare may be taken away – still OK? How about a budget with no improvement in the deficit and a giant increase in the defense department budget? Did you really expect to see new trade deals and manufacturing jobs?

After Trump abandons all of these promises and gets buried in Twitter scandals, his voters will melt away like an iceberg in Jamaica. Populists will have to go back to Bernie and Repubs will fall back on Paul Ryan or maybe Mike Pence. Trump will find himself naked and afraid – friendless and mocked.  Steve Bannon may cling to power for as long as he can but a better test will be what all the (cabinet) oligarchs and generals will do when they see that their reputations are getting destroyed. So far Trump seems to think that following the extreme right wing of the Republican Party and abandoning his populist crowds will be safer. It won’t be.

Donald Trump is a political interloper who succeeded by promising everything and lying when asked to reconcile those promises. He doesn’t have the backing of a green party, the socialists, or the libertarians. He is an atheist fighting for the religious right on abortion and LGBT issues. He seems to like single payer healthcare but is (sort of) supporting Paul Ryan’s plan to take away coverage for 24 mm people. His only hope to succeed is to stick to his brand of populism. That means more, not less healthcare. It means new trade deals and new high-paying manufacturing jobs. It means big cutbacks in immigration. If he gets none of this done and only delivers  Ryan-style tax cuts for the highest earners or Pence-style destruction of Planned Parenthood then 2018 could be a mess for the Repubs, to say nothing of 2020.

There is one way I get this all wrong: We find out that the Republican party is a rotting corpse full of racists and moronic Ayn Rand followers. They have no coherent vision of the country or of social and economic policy. Since they have no plan they’ll stick with Mr. Crazy in the White House because that’s all they’ve got. By their tortured standards, he is the most electable in their party so they use him to pass whatever laws they can think of for two years – until the voters come back with a new verdict.

Does immigration produce economic prosperity?

There seems to be a popular narrative that says that immigration acts as a sort of economic engine. People arrive, many without skills, and get trained. They work their way up feverishly. They use their new money to educate their children. The next generation is entirely American. They know little of their parents’ homeland and have no desire to move there. They see that they would have never have been so well off if their parents had not emigrated.

The twentieth century provides a sort of glorious history with regard to labor empowerment and enrichment as long as you can live it in fast forward by reading a textbook and avoid one critical fact.

Hordes of people arrive in the 19th century and live horrible lives in poverty and misery while robber barons become rich on the back of labor’s woes. By 1910 everyone understands that the labor glut is killing any chances for labor advancement. Teddy sets up an arbitrator to rule on the coal strike of 1910. The union/labor movement is born. 

Before we continue, allow me to inject an irritating fact:

immigration

As you can see the percent of foreign born people peaked in 1910 – at the exact same time as the labor movement was born. What allowed it to succeed was the steady decline in new cheap foreign labor – until 1970. I’d like to continue my history of economic success and upward mobility by virtue of innovation, foreign wars, government stimulus and the accumulation of skills and education by the great American workforce but, unfortunately, this chart has ruined the narrative.

All those factors put the wind at the backs of labor. When we virtually stopped immigration we saw wages grow with GDP and productivity. An economist must make a hard argument to claim that everything will be fine this time just like it eventually was for our great grandparents in 1910. They have to argue for foreign wars that kill lots of people in countries we trade with and we need a sort of reverse industrialization where labor is needed to boost production rather than machines. If you can’t see either of those two things happening then there is only one way labor recovers from the hole it’s in – we must stop immigration or at least slow it to a trickle. (Need I point out that median wages peaked in 1974?)

Immigration by Another Name

But what about all those poor desperate people who just want a shot at the American dream? (You cry.) I see examples of them every night on the news. Well, there is another answer. Foreign immigrants come into the country in another way: They trade their way in. If we have no tariffs with China then we essentially allow every Chinese peasant to work here. There are hundreds of millions of them. If you want to help a poor Guatemalan immigrant you have to stop buying goods made by that Chinese peasant. Think what the chart would look like if I added in all those Chinese peasants.

This is, of course, nothing more than an argument based on supply and demand. If you expect to have a system that will benefit US labor then you have to have less labor. If you are an open border person (such as Mayor de Blasio) then you have to live with this:

Corporate-Profit-Margins

Once again, I must point out that labor’s share peaked in the 1970’s. Maybe it was too high? It couldn’t last and it wasn’t fair that an hourly worker at Ford without any education at all could make more than a college professor. True. Foreign competition and corporate outrage broke up union power but did we want it all to be completely destroyed so we could go back to the gilded age?

When I hear Silicon Valley whining about immigration bans I have no sympathy. Let the price rise and a labor shortage ensue. Let them train people and push them up the system. Sorry Mr. Zuckerberg, your costs may rise a little and your next useless feature may get delayed. Is there a foreign competitor you are worried about? I don’t hear China whining about not being able to hire Indian programmers. They buried and replaced Google and their economic growth seems to be unaffected. The arguments that begin by decrying our prospective loss of competitiveness are absurd and self- serving. If you repeat them then you have become a dupe for CEO’s desperate to pad their own pockets.

Alas, Trump the idiot has stumbled upon the correct policy of America First = less immigration and a tax system that favors “insourcing”. Beware of malevolent morons executing good policies. The policy may end up being desecrated.

A Reply to the Madison Initiative

Last week I went to a talk by Larry Kramer, a lawyer at the Madison Initiative – a subsidiary of sorts of the Hewlett Foundation. I struggled with his balanced assessment of blame regarding the dysfunction of Congress so I wrote him this letter as a retort:

The Problem: Congressional Dysfunction

The Madison Initiative: The objective is to find solutions to congressional dysfunction so that government works as it should for the benefit the country as a whole. You argue that unwillingness to compromise has spread evenly throughout both parties and therefore we cannot blame either party for this dysfunction.

This is a false assumption/belief.

If we can show that one party has moved significantly away from its traditional position in the political spectrum, then it naturally follows that both parties will become unwilling to compromise. For example, if the Democratic Party becomes a Marxist party, it will dig in and only accept legislation that promotes or advances its new radical ideology. Similarly, the Republican Party will find this new agenda to be completely unacceptable, so it too will try to veto every Democratic initiative. The fact that both have become intransigent is not a sign that both are equally to blame. One has completely stepped away from representing the American people and so it is solely to blame.

The Republican Party over the last 30 years has become dominated by media ideologues. The Democratic Party has no equivalent set of influencers. There is no one on the left as extreme as Michael Savage or Rush Limbaugh on the right. It is an easy task to show that the Republicans have moved to the right in lockstep with the demands of their entertainers (http://wapo.st/2kUj5mK). The Democrats have responded appropriately with intransigence.

This means we have a new task. If we are to improve functionality, then we must make sure that congressional representatives are voted in that represent the views of the population [more or less). The problem with a radical party is that it may pass laws that are completely out of sync with the beliefs of the country (See NSDAP in Germany) even, or especially when, they are elected in disproportionately large numbers.

Solutions:

  1. The Democratic Party could finance a more extreme left wing [radio or Internet] media program to energize its own base. This may help offset the influence of “hate” radio.
  2. A legal battle must be made to eliminate Gerrymandering at all levels of government. Proportionality is critical to any democracy. (I shall dodge Hamilton’s apprehension about mob power.)
  3. Term limits must be enacted. This will prevent old and famous politicians from gathering too much power.

Final Thoughts

The intransigence of Democrats during the Bush II years was an appropriate response to a government that was engaged in radical policies. One would expect and demand such inflexibility from the opposition. It does not prove that Democrats are equally responsible for dysfunction unless you can show that Bush’s wars, support for torture and warrantless wiretapping (to name 3 easy cases) were well reasoned and consistent with American values.

Greater proportional representation may not prevent stalemates. These will still occur when no significant polarization exists on a specific issue in the voting population. The goal must be to prevent majority power accruing to a radicalized few – that is far worse than dysfunction.

History is replete with examples.

Choose Your Battles Wisely

The Democrats are getting a lot of content to work with. Unsurprisingly Trump is lying and setting policy recklessly with no proper thought. His minions are lying to show their loyalty (welcome to 1930’s Russia). Some policies will be dangerous or absurd and others are populist in nature and should be endorsed or at least left alone.

Issue #1 The Mexican Wall

Enforcing the US southern border is logical and appropriate. To argue that it shouldn’t be protected is to be in favor of open borders. That puts you in a tiny minority, completely out of the mainstream. You will win no votes by arguing to let everyone in, in a sort of immigration free-for-all. You can say you object to the price but now you are changing the conversation to one about fiscal responsibility. Almost no one seems to care about that especially Dems as they allowed a $600bn deficit to go on and on and on under Obama.

Issue #2 Immigration Restrictions and Reductions

We have a global labor glut and wages have stagnated for 30 years. How are you going to solve that problem by allowing everyone in or raising the number of entrants every year? Humanitarian examples are easy to find but they make for bad policy. Why are there so few parallel anecdotes about suffering US workers? Underpaid or unemployed American workers will not vote to save every poor family in Somalia. If you want to win, Mr. Democrat, you need to start promoting policy that helps Americans, not Iraqi’s.

Issue #3 Save Muslims from discrimination

Everyone hates discrimination but no one relates to Islam. We associate it with Jihad and Sharia law. It doesn’t support the separation of church and state, or the rights of women, apostates, atheists and homosexuals. I stand with mistreated people from Afghanistan but I sure don’t stand with their religion. Democrats who want to wear hats in favor of Islamic solidarity will not win any converts. Repubs who favor Christian over Muslim immigrants may.

Go After These Issues

There are some big fat juicy policies that will grow the Democratic party base – the repeal of Obamacare, the cozying up to Russia, crazy tax policy that may blow up the budget and benefit only the super-rich. Dems will be given many gifts. They need to choose the right battles that make sense and win them more votes. They must avoid the failed obsessions of the past.

If Trump wants to promote a populist item like Made in America then Dems must get on the right side – even if it makes them sick.

Propaganda that binds us together.

At school we all learned about the military leadership of Washington, the morality of Lincoln and the resilience of FDR. Every Presidents’ Day we can see clips of Kennedy’s and Reagan’s speech in Berlin. As time passes it’s easier to mythologize our old leaders. Jefferson becomes a genius. Teddy is rambunctious and indefatigable. Old film presents every president as well intentioned and sternly committed to leading the world, not just the United States. We are told how we ended the WWI quagmire. We saved England and France from Hitler. Our economic might destroyed the Soviet Union in the cold war.

All Americans are joined together by this history and by the mythology. Every country has a version of it. French men grow weak as they recall the glorious victories of Napoleon. England revels in stories of its benign empire. Italy lays claim to ancient Rome and Russia swoons over Peter The Great. Socialists, communists, and fascists are all united by these stories. A limousine liberal in Manhattan has the same ingrained images as the family in Duck Dynasty.

We can discuss how twisted the truth is from the history in our heads but the video snippets linger. It’s as though the nobility of FDR proves that we have a superior system with exceptional people so we too can be exceptional. All of this history provides us with a sort of How to Behave if You’re President guidebook. We have so many examples to work with that we can’t help but construct a model President with regard to demeanor, maturity, and placability. These are the men who kept it together while the world or the country struggled.

Half the country has now selected a President who plainly chooses to not behave presidentially. He tweets his petty grievances every day. He brags and insults. He calls Democratic senators “clowns” and concerns himself with the ratings of his TV show replacement.   What I am confounded by is how his voters reconcile this behavior with past presidential behavior they have ingrained in their memories. If they accept him as a good change then they must reject the nature of all his predecessors. Can people suddenly look at the Ich bin ein Berliner speech as embarrassing, – delivered by a philandering liberal who should have been home, cutting taxes?

This is akin to suddenly rejecting your birth religion because someone you liked called Jesus, Mohammed or Moses an idiot. You have to abandon everything you were taught in bible school in one fell swoop. I think it’s more likely that Trump voters believe his behavior is temporary and once he is in office he will conform to historical norms.

If he doesn’t then either:

  • their (our) memories of his predecessors will destroy his popularity or
  • cognitive dissonance will kill their love and belief in our old Presidents and the office itself.

Can you please stop saying this?

Sometimes if you repeat something enough, everyone accepts it as the truth. “Obamacare is a disaster” for example. Really? How does insuring 30 million new people represent failure? If rates have gone up elsewhere because Congress failed to fund the program then that’s not the fault of the program. Here are a few more of my favorites:

Illegal Immigration is no longer an issue – after all, border crossings from Mexico have dropped to zero.

Yes, border crossing are down but does that mean that illegal immigration has declined? What if people are simply flying in as tourists and never leaving? Here’s some data from the Migration Policy Institute:

immigrants-to-us

The sum of all F1, H1B, and E8 visas granted has grown from 250,000 to 700,000 since 1992. The average is about 400,000 compared to total immigration of approximately 1 million/year. The popular revolt against massive immigration is not based on mythology. The data supports the populist argument that at the low end of the pay scale job competition is growing enormously by virtue of illegal immigration. Building a wall will not fix the problem.

Manufacturing plants will never be built in, or return to, the United States.

The New York Times did an excellent feature on the huge list of subsidies China offers to Foxconn so it can make and export iPhones. Is it unreasonable to believe that we can compete on an even playing field? US workers rank third in global productivity behind Luxembourg and Norway which are not exactly normal cases. We are three times more productive that Mexican workers for example. Comparisons to Chinese workers is hard because the data includes parts that are outsourced and local subsidies such as the ones mentioned by the NY Times. The reality is that manufacturing plants are being opened (and closed) all the time in the United States. I don’t expect a new iPhone plant in the US to look anything like its Chinese counterpart. Automation would be a much bigger component but higher wage jobs would be created as would jobs for security guards, sanitation workers, and hair cutters. Did I mention that R&D follows plant location?

The question we must ask is what would an iPhone cost without all those subsidies? We must have an industrial strategy to beat those foreign mercantilists who are already doing everything they can to destroy our industrial base. Then we can compare costs.

Israel is one of our closest allies.

What does it mean to be a close ally exactly? Israel advocated for our invasion of Iran. It chose to talk to the political opposition rather than President Obama. Does it support our diplomatic efforts in the Middle East?  Israel says that simply being a democracy is enough to earn love and everlasting aid. Is it? Being a close ally means doing something for us that does not help them or may be contrary to their interests. I seem to have missed those actions. Maybe they just have a terrible (American)  public relations department. Maybe there’s no such thing as close allies in such a Realpolitik world.

Germany needs Muslim immigrants since they have no population growth.

This is repeated right after it is mentioned that allowing in oceans of people from Syria and Eritrea was an act of mercy. Yes Germany has a very old population but are there no unemployed people in the Balkans or Spain? Wouldn’t it be easier to provide German lessons to Italians than to illiterate Syrians? What would it cost Germany to go on a worker hunt among the PIIGS where they offered transportation, subsidized housing, worker training and language courses? I’m sure it would be less than what they will pay to inhale a vast collection of Eritreans and Afghani’s. Did I mention that the unemployment rate in the PIIGS for 20-30 year-olds is above 25%? Bringing in culturally insoluble people to lower your average age is a multi-generational error.

 

 

 

Fair and Unbalanced

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