In addition to collecting information on your telephone and Internet activity, the federal government is collecting your raisins. Yes, you read that right.

Since 1937, the federal government has forced raisin growers to hand over without compensation a percentage of their annual crop to a government-sponsored raisin marketing board, keeping this portion from consumers in open domestic markets.

The goal is to reduce the supply of marketed raisins and artificially increase the price paid to farmers. The raisin board is one of several boards the federal government created more than 75 years ago under the Agricultural Marketing Agreement Act of 1937. Similar boards control other agricultural products, including milk, fruits, and vegetables.

A group of raisin farmers, led by Marvin and Laura Horne from Fresno, California, oppose the federal government taking their private property without just compensation.

“This is America, not a communist state,” they said when filing their lawsuit. In some years, growers were forced to turn over 30 percent and 47 percent of their crop to a “reserve pool” controlled by the raisin board. But the Fifth Amendment says “private property (shall not) be taken for public use, without just compensation.”

The seized portion may later be sold by the government overseas, or sold or given away in “noncompetitive” domestic markets such as school lunch programs.

The Hornes won a preliminary victory June 10th when the U.S. Supreme Court ruled 9-0 that their case be sent back to the 9th Circuit Court of Appeals in San Francisco to decide whether this forced taking of part of their raisin crop is unconstitutional.

The Hornes have grown raisins in the Central Valley since 1969. They have long opposed the raisin board and tried not to participate, saying: “We will not relinquish ownership of our crop.” But the USDA brought an enforcement action against them in 2004, hitting the Hornes with fines and assessments of nearly $600,000 for evading the raisin board. That’s when the Hornes sued.

Growers should be free to trade with whomever they choose at mutually agreeable prices. The notion that farmers will perish without price supports is ludicrous. Dramatic advances in technology, transportation, and forward and futures markets have occurred since 1937. As economist Robert Murphy notes: “[F]orward and futures contracts can act as a type of insurance policy, where traders can reduce their exposure to fluctuations in critical spot prices by buying or selling the appropriate instrument.” Farmers can reduce their exposure to temporary price fluctuations using forward and futures contracts.

New Deal-era agricultural price-support programs, which mainly benefit huge agribusinesses not mom-and-pop family farms, are no longer needed. The Senate version of the next farm bill, approved on June 10th, will cost a staggering $955 billion over the next 10 years.

If the Hornes prevail, it would put in doubt the constitutionality of all government agricultural price-support boards. We can only hope. Stay tuned.

In the immediate aftermath of 9/11, rather than hold accountable and roll the heads of the bunglers at the U.S. intelligence agencies who failed to follow up on multiple reports of possible terrorist activity, students learning to fly but not land, and possible hijacking plots, such as—

In a memo from the Phoenix FBI to headquarters, the agents recommended an urgent nationwide review of flight schools “for any information that supports Phoenix’s suspicions” of a terrorist connection. The memo reportedly cited Osama bin Laden by name.

Intelligence agencies were instead granted the expanded budgets and power that are always sought in the aftermath of a crisis. They were forced to abandon the nifty name and logo they had come up with (pictured at right, above) when its too-graphic, Big Brother-isc depiction elicited protest, but the spirit was fully retained, and a new era of unprecedented, total and widespread spying on innocent Americans began.

Unfortunately, the problem with a Total Information Awareness state is that it sweeps up prodigious amounts of data that is just so much noise that U.S. security agencies are demonstrated to be bad at filtering.

Wasting countless resources on false positives, violating the rights of innocent people, etc., the FBI bungled yet more direct information in failing to follow up on warnings concerning the Boston bombers.

As has been learned in every community in the U.S. as budget “crises” and the militarization of police forces result in less and less security for the common citizen, individuals sensitized and acting upon their powers of observation are far more effective at reducing crime than any number or force of police. Neighborhood Watch, for example, despite its sullied reputation in the Trayvon Martin case, is a proven-effective tool for empowering individuals to take charge of their security.

The only terrorists actually stopped since 9/11 have similarly resulted from sensitized individuals acting: the underwear bomber, the shoe bomber, the Times Square bomber, were all foiled by “common” people acting on their powers of observation.

Thus the irony that the trend of U.S. “intelligence” agencies away from good old fashioned detecting towards trampling the rights of individuals results not only in the loss of our liberties, but also in the loss of our security.

The second problem with the U.S. government collecting and indefinitely storing every email, phone call, text, website posting, etc., and the response to those innocents who bleat “But why should I mind? I have nothing to hide,” is something that Lavrenti Beria, Stalin’s notorious secret police chief, well knew:

Show me the man and I’ll find you the crime.

There is no individual whose private calls, emails, postings, bank and credit card transactions, online activities, and even private conversations in the “privacy” of your home, cannot be edited to paint the portrait of an enemy of the state.

And a police state makes for very many enemies indeed.

Something is wrong in the hospital marketplace. Government data released recently show that some hospitals in Dallas charge five times as much as other hospitals for the same procedures! This follows on the heels of a Time magazine/ CNN report, showing that hospitals routinely charge ridiculous prices for items and services: prices that bear no reasonable relationship to real costs.

But then we learn that no one is actually paying these prices, except some poor sap who happens to be uninsured and has to negotiate with the hospital on his own. Even so, there is no way you and I can know what we are going to pay in advance. We can’t get what we would get in every other market for repairs (a dented car, a damaged roof, etc.): an estimate. Even if we did have an estimate, we would have no way of knowing what competing hospitals charge.

There is just one problem with the flurry of news about hospitals. No one is pointing out that all these problems are the result of government intervention in the marketplace. They are not the result of a free market for medical care. In health care, we have so completely suppressed the market—for year after year, decade after decade – that few people ever see a real price for anything.

Employees never see a premium reflecting the real cost of their health insurance. Patients almost never see a real price for their medical care. Even at the family doctor’s office, it’s hard to discover what anything costs. This is detailed further in my book, Priceless: Curing the Healthcare Crisis.

Although many would like to think that our system is very different from the national health insurance schemes of other countries, the truth is that Americans mainly pay for care the same way people all over the developed world pay for care at the time they receive it—with time, not money.

On the average, every time we spend a dollar at a physician’s office, only 10 cents comes out of our own pockets. The rest is paid by third-party payers (insurance companies, employers, and government). As a result, for most people, the time price of care (waiting to get an appointment, getting to and from the doctor’s office, waiting in the reception area, waiting in the exam room, etc.) tends to be greater—and probably much greater—than the money price of care. When patients aren’t spending their own money, doctors will not compete for their patronage based on price. When doctors don’t compete on price, they won’t compete on quality either. The services they offer will be only those services the third parties pay for and only in settings and ways the third parties have blessed.

In a very real sense, there are no prices at a typical hospital, or even in a physician’s office. Medicare pays one rate, Medicaid another, BlueCross yet a third. In some cases the rates are negotiated. When the government is the payer, they are typically dictated.

The result is a hospital marketplace that has no resemblance at all to a free market.

In my next blog, I’ll illustrate markets in medical care that can work and work well—especially when third-party payers are not involved.

Robert Fogel died a few days ago. He was a prominent figure in the academic economic history profession for five decades, virtually from the time he burst onto the scene with the publication of a polished-up version of his Johns Hopkins Ph.D. dissertation, Railroads and American Economic Growth, in 1964. This book was the most impressive accomplishment to date of the type of research espoused by those who participated in a research program known as the new economic history, econometric history, or cliometrics, which had begun to take shape in the late 1950s. The hallmark of this program was the systematic application of neoclassical economic theory and the methods of statistical inference in the study of economic history.

In his book, Fogel undertook to determine how important the railroads had been as contributors to U.S. economic growth by calculating what he called their “social saving,” essentially the amount by which GDP would have been diminished if they had not existed and Americans had been compelled to use the next best means of transporting goods—by horse-drawn wagons on the land and by canal boats on a national system of canals. His conclusion that the social saving had been equal to less than 3 percent of the national product in 1890 cast great doubt on the beliefs historians had previously held about the railroad’s great importance. Although many objections were raised subsequently to Fogel’s approach, his specification of the no-railroads counterfactual, and his data, the book became an instant cliometric classic.

Having entered the economic history profession at the very top, Fogel then proceeded, along with his Johns Hopkins classmate Stanley Engerman, to tackle the subject of slavery in the United States. This time the target was the widely accepted idea that prior to the War Between the States slavery had been on its economic last legs, and therefore had the war not led to slavery’s destruction, this labor system would have died a natural death before long. In 1974, Fogel and Engerman brought their findings together in Time on the Cross: The Economics of American Negro Slavery, a book that probably made a bigger splash than any economic history book ever published in the United States. The main claims this time were that slavery had been economically thriving on the eve of the war, slave-plantation productivity had exceeded the productivity of comparable free-labor production, slaves had received much better treatment than generally believed, and the system had yielded handsome returns to the slave owners, in most cases at least as great as the returns that feasible alternative investments would have yielded them. The reaction to these findings bordered on academic violence as historians and fellow economists rushed to challenge Fogel and Engerman’s methods, data, and conclusions, and to indict them for omissions and errors of various sorts.

Fogel, who believed that any research project that required less than a decade was scarcely worth undertaking, then spent much of the next decade and a half in accumulating additional evidence and carrying out additional analyses, often in collaboration with colleagues or graduate students, to support the initial findings. The fruits of these follow-up efforts appeared in a two-volume work, Without Consent or Contract: The Rise and Fall of American Slavery, published in 1989.

From the 1980s onward, however, Fogel devoted the lion’s share of his research efforts to work that relates more closely to demographic changes in history than to economic history, although he always maintained that critical interrelations existed, for example, between improvements in nutrition and increases in labor productivity. I did not follow closely the mass of research that emerged from this project, much of it by other researchers in the United States, Europe, and elsewhere. I found that I could stand only a certain number of calculated height-by-age profiles and that I could not always accept the conclusions drawn on the basis of such data. In any event, many publications by Fogel and other economic historians grew out of this project.

Fogel taught mainly at the University of Chicago and, for a few years (1975-81) at Harvard. In 1993, he and Douglass C. North shared the Nobel prize in economics for their work as leaders of the new economic history. Fogel’s work was also recognized by his election to prestigious scientific bodies and by the award of honorary degrees by leading universities in the United States and abroad. Yet he never rested on his laurels and remained engaged in research and writing until the end.

I got to know Bob in the early 1970s. At that time I was carrying out research on what had happened to the U.S. freedmen and their descendants during the half-century after the War Between the States, and I imagined that my book on this subject might be seen as a sequel to Fogel and Engerman’s Time on the Cross. In 1977, Cambridge University Press published my book titled Competition and Coercion. Although it failed to receive anything like the gigantic recognition that Fogel and Engerman’s blockbuster had received, Bob was gracious in his own reception. He rarely wrote book reviews, but he did review my book in 1978 for the Business History Review and gave it high marks. Shortly afterward, he invited me to Harvard to make a presentation at the economic history workshop (where I first met Robert Margo, then a graduate student and later a friend and coauthor of mine), and he and his wife Enid entertained me at their home for dinner with some colleagues from the Harvard Department of Economics. In the late 1970s Bob used to encourage me when I complained that my book had been largely neglected, assuring me that in fifty years, it would still stand up.

Bob never showed any indication that he understood Austrian economics or cared to understand it. He was a Chicago School economist, and he enjoyed immense professional success as such. At Chicago and Harvard he oversaw the training of many excellent graduate students, who are now among the leading economic historians in the world. He had no incentive to cut loose from his Chicago-School moorings, which in his mind were those of science, however much some of his work might now seem to me to be more scientistic than scientific. At a symposium to honor my dear friend Max Hartwell, held at the University of Virginia in 1991, Bob became publicly angry with me for challenging, on Austrian grounds, his computation of “slave incomes.” I left academic employment in 1994 and never had any personal contact with him afterward. He must have got over his pique eventually, however, because in 2011, when I was honored with the Alexis de Tocqueville Award, he sent a very gracious video to be shown at the event in which he recalled my early days in the profession and praised my contributions to it.

It is difficult to imagine what academic economic history might have looked like during the past half-century without Bob Fogel. With the possible exception of only Doug North as a comparably influential figure, he did more than anyone to set the profession’s standards, determine its leading topics and methods of research, and train its most highly regarded practitioners. Especially considering that he had become a Communist during his undergraduate years at Cornell and had worked afterward as a Party organizer for eight years before abandoning communism as an unscientific doctrine, one must say that he had a truly amazing career.

California’s “tort wars” are heating up, and Dan Walters of the Sacramento Bee notes: “The big question is whether plaintiffs’ attorneys will try again to overturn the $250,000 cap on pain and suffering damages in medical malpractice cases that Gov. Jerry Brown signed in 1975.”

If increased by legislators—instead of by voters at the ballot box—a higher cap would have to be approved by Brown. The current cap limits jury awards to $250,000 for impossible-to-quantify pain and suffering damages in medical lawsuits. It does not limit compensation for lost wages, medical costs, childcare, home care, or any other out-of-pocket expense.

It would be a huge mistake for Brown to increase, index, or eliminate the limit because it has been a reasonable constraint on juror behavior that significantly improved health care in California. Jerry Brown just needs to listen to himself from 1993 as to why the bill worked:

At the time [1975], California’s medical community was in the midst of a crisis. The cost of medical malpractice insurance policies was skyrocketing. Many physicians were forced to “go bare,” because they could not afford to purchase insurance, some discontinued providing certain high-risk procedures, while others threatened to quit. Insurance companies claimed that the costs associated with malpractice insurance were rising at such a rate that their only option was to raise health care professionals’ liability premiums or to withdraw from the market altogether. In short, the stability of the health care system in California faced a grave threat.

The limit helped keep medical liability insurance premiums affordable and doctors in the state. It spared California all the turmoil of the 1990s and 2000s experienced by other states with no limits at the time such as Illinois, New Jersey, New York, Pennsylvania, and Texas. Patients in these states often had no access to care, especially in rural and low-income neighborhoods, due to doctor shortages. Patients often traveled long distances to find doctors, especially those who practiced high-risk specialties. Tragically, some patients didn’t make it in time and died. After Texas adopted reasonable limits on pain and suffering damage awards in 2003, medical liability insurance premiums fell and doctors flooded back into Texas.

As any doctor will tell you, “If it ain’t broken, don’t operate.” So Gov. Brown should not alter the limit he approved and that has worked well.

Meanwhile, Brown’s 1993 statement also discussed the problems he has with California’s medical liability law, MICRA. I will refute Brown’s objections in a future blog. Stay tuned.

One of the most important differences between my book, Priceless: Curing the Healthcare Crisis, and the conventional literature on health policy is my belief that patients should be encouraged to choose between healthcare and other uses of money. And that’s not just for small expenses. I think patients should be encouraged to make choices involving expensive procedures as well. If I’m right, doctors will have to take a new approach to medicine, and in taking this approach, they may have to rethink how they view medical ethics.

The latest edition of the American College of Physicians manual on ethics created quite a stir with the following passage:

Physicians have a responsibility to practice effective and efficient healthcare and to use healthcare resources responsibly. Parsimonious care that utilizes the most efficient means to effectively diagnose a condition and treat a patient respects the need to use resources wisely and to help ensure that resources are equitably available.[1]

On the right, American Enterprise Institute scholar Scott Gottlieb reacts by writing, “Parsimonious, to me, implies an element of stinginess, and stinginess implies an element of subterfuge.”[2] On the left, Aaron Carroll, a professor of pediatrics at Indiana School of Medicine, writes:

I would fight tooth and nail to get anything—and I mean anything—to save [my own child]. I’d do it even if it cost a fortune and might not work. That’s why I don’t think you should leave these kinds of decisions up to the individual. Every single person feels the way I do about every single person they love, and no one will ever be able to say no. That’s human.

Similarly, I don’t think that it’s necessarily fair to make it a physician’s responsibility. I also want my child’s doctor to fight tooth and nail to get anything that might save my child. Many times, physicians have long-standing relationships with patients. Asking them to divorce themselves from the very human feelings that compel them to do anything that might help their patients is not something that I think will necessarily improve the practice of medicine. They also should be human.

So whose job is it? Well, mine for instance. That’s what I do as a health services researcher. That’s what policy makers should also do....[3]

That’s a roundabout way of saying that only the government can ration care the right way.

My view: people in healthcare have become so completely immersed in the idea of third-party payment that they have completely lost sight of the whole idea of agency. Can you imagine a lawyer discussing the prospects of launching a lawsuit without bringing up the matter of cost? What about an architect submitting plans for a building but completely ignoring what it would cost to build it? Outside of medicine, can you imagine any professional anywhere discussing any project with a client and pretending that money doesn’t matter? Of course not.

Then what is so special about medicine? Answer: the field has been completely corrupted by the idea that (a) patients should never be in a position to choose between health benefits and monetary cost, (b) doctors shouldn’t have to think about such tradeoffs either, (c) to insulate the patient from having to choose between healthcare and other uses of money, third-party payers should pay all the medical bills, and (d) since no one else is going to think about what anything costs, the third-party payer is the only entity left to decide which services are worthwhile and which ones aren’t.

Notes:

1. Lois Snyder, editor, “American College of Physicians Ethics Manual, Sixth Edition,” Annals of Internal Medicine (2012): 73–104.

2. Rob Stein, “Physicians Group: Weigh Costs in Treating Patients,” National Public Radio, All Things Considered, January 2, 2012. http://www.npr.org/2012/01/02/144591018/physicians-group-weigh-costs-in-treating-patients.

3. Aaron Caroll, “Is it unethical for physicians not to consider costs?” The Incidental Economist (blog), January 4, 2012, http://theincidentaleconomist.com/wordpress/is-it-unethical-for-physicians-not-to-consider-costs/.

[Cross-posted at Psychology Today]

Here is a video of Representative Maxine Waters explaining that President Obama has put together a database that “...will have information about everything on every individual in ways that it’s never been done before.” Searching for the video, I only find it on “conservative” websites, the most “mainstream” of which is the Fox News site I’ve linked to here.

Representative Waters is referring to the president’s “Organizing for America,” set up as a 501(c)(4) tax-exempt organization for the benefit of Democratic political candidates, according to Representative Waters’ description.

As an organization that has “information about everything on every individual,” it sounds more invasive of people’s privacy than the NSA, as Representative Waters describes it. Also, she makes it sound like a political organization, which surely will raise the alarms at the IRS about its tax-exempt status. (This last sentence is meant as a joke, for those who can’t hear the tone of my voice through the internet.)

I tend to be skeptical of accusations like this, but this one is being made by one of President Obama’s big supporters. I assume President Obama will be able to explain this one to us, just as he has been explaining the information-gathering activities of the NSA.

In recent years, I have noticed that many—seemingly a great majority—of my libertarian friends express an optimistic outlook that sooner or later freedom will triumph against tyranny, even in the United States of America, because of technological developments, especially the development of the Internet and the World Wide Web, along with all the hardware and software that facilitate these means of communication and expand their reach. The idea seems to be, at bottom, that technology in general and these technologies in particular are intrinsically anti-state and pro-freedom. Some people regard them as decisive factors in the struggle for liberty. I have never been persuaded.

The Internet and the Web are obviously employed to some extent for anti-state and pro-freedom purposes. Probably their most important effect is to loosen the state’s hold on information about its leaders, their motives, and their actions, and thereby to speed the spread of truth to greater numbers of people who might otherwise have been taken in by the rulers’ habitual resort to distortions, evasions, cover-ups, and outright lies. Such fabrications have always proved most useful to the U.S. state in its foreign relations and imperial actions, where the matters at issue are out of sight of the great mass of Americans. Because the new technologies of communication are not only powerful—allowing the instant transmission of photos, audio recordings, and video recordings, as well as written texts—but also available worldwide, they have the power to prick the state’s balloons of misrepresentation about events abroad in short order.

Despite these anti-state effects, one must recognize that the state itself has hardly remained mired in ancient technologies while the public embraced the new ones. Drive from Dulles International Airport to Washington, D.C., and peer out at the huge office buildings inhabited in many cases by information technology companies that have put themselves—for a handsome reward, of course—at the disposal of the U.S. government. The rulers have in the past decade added to their longstanding military-industrial-congressional complex (MICC) a comparably vast security-industrial-congressional complex (SICC). Perhaps the individual and small-scale tech wizards working their magic in the non-state backwoods will always remain a step or two ahead of the CSCs, Microsofts, and Oracles; I don’t know enough about technology to speculate on this “IT arms race” in an informed way. I do know, however, that the state is not standing helplessly in place while the pro-freedom people innovate so as to render it toothless.

Much more important, however, is that whereas the new information technologies can spread information in the raw, as it were, they cannot so readily alter the mental filters—essentially the ideological screening and focusing—that the public uses to interpret and evaluate the information it receives. Consider, for example, the public’s reaction to the recent disclosures about the state’s all-encompassing spying on the American people’s electronic communications, whether by ordinary telephone calls, e-mails, or other means. At this point, the situation appears to be that the rulers have unashamedly excused their unconstitutional conduct and painted the bearer of the bad news, Edward Snowden, as a traitor for exposing their secret snooping on one and all without warrant or any plausible reason, aside from technological overkill in the alleged search for terrorists; and the public appears to be more approving than condemning. Revealing the state’s crimes serves no purpose in preserving or reestablishing liberty if the public receives such revelations with a yawn or, worse, with enthusiastic approval.

It is instructive to compare modern communications technologies and firearms as means of preserving liberty. The Founding Fathers expressed great faith in the power of an armed populace to resist tyrannical government. They went so far as to embed this conviction in the Bill of Rights. Yet, even though Americans have always been and remain today armed to the teeth, these guns have availed them nothing in the preservation of their liberties, which the state has steadily, and sometimes abruptly, stripped from them. Even if the armed populace had risen up, guns in hand, to resist these invasions of their rights, however, they would have been defeated by the state and its legions of more heavily armed police and troops. It is silly to suppose that today the people’s being armed provides any protection of their rights whatsoever against the state’s violations.

What decides the issue in the end is neither guns nor information technologies, but the people’s ideologies. These belief systems, however foggy and ill-formulated they are for most people, determine how people “see” the world, how they evaluate what they “see” as good, bad, or neutral, what political actions or programs they embrace in response to their understandings and evaluations and, finally, what personal identities they adopt as members of political or ideological communities of like-minded comrades. If people’s ideologies are friendly to a vast, invasive state, as they are to an overwhelming degree in today’s United States, flooding them with information will avail nothing in the struggle against an overweening state. They will either dismiss anti-state information as worthless to them—the product of cranks and crazies—or, worse, they will perceive those who spread such information as acting in opposition to what they believe to be proper, protective, and productive for the state to do. Indeed, they may look upon those who spread anti-state information as they now look upon Edward Snowden, as traitors.

Of course, the new communications technologies can deliver not simply raw information, but also ideological argumentation. In this way, many libertarians seem to believe, the public can be detached from their statism and brought over to pro-liberty views. In some cases such conversions may occur. On the whole, however, this view of how people adopt or give up an ideology is highly oversimplified. Only for a relatively small group of people—those unusually given to rational thought and self-education and unusually immune to social and cultural pressures—will such conversion by education be possible. In general, people’s ideologies reflect not only intellectual and informational factors, but also, and usually more significantly, the nature of their own experience. If, for example, their lives are going swimmingly, they have good jobs, and they are not being personally bothered by police or other state functionaries, they will be disinclined to raise serious questions about the state’s actions, however criminal those actions may seem to others. If life is good, electronic toys are abundant, and entertainment is nonstop, why should they concern themselves with the state’s mayhem in places beyond their immediate milieu?

Indeed, by providing unlimited means of diverting the public with funny videos, full-length movies, photos of cute cats or of rabbits nursing piglets, porn galore, and all the rest of the “information” transmitted in overwhelming volume by the Internet and the Web, people need never take any interest whatsoever in politics and the state’s shenanigans. What’s it to them? As the saying goes, If they’ve done nothing wrong, they have nothing to worry about. Thus, although the new technologies have the capacity to awaken people—to be more precise, certain sorts of people in certain sorts of circumstances—they also have the capacity to lull billions of people worldwide into a virtual coma of apathy in regard to the state. In the dystopia of Aldous Huxley’s Brave New World, people were lulled into contentment by popping a soma. Today’s amazing communications technologies, notwithstanding their potential power to aid resistance to the state, may have an even more powerful capacity to serve as the modern state’s soma.

Why does the U.S. government go to such extraordinary lengths to discredit, punish, and ruin persons such as Daniel Ellsberg, Bradley Manning, Julian Assange, and—next in line, no doubt—Edward Snowden? The government alleges that these persons give aid and comfort to the nation’s enemies and endanger national security. In reality, however, these persons’ only “crime” is to tell the truth to the public about what the U.S. government is doing. By telling the truth about especially important matters, they endanger only the state, by exposing its lies and its hidden crimes for the world to see.

The rulers can continue to plunder and bully the great mass of people only as long as the people believe the Biggest of All Big Lies, which is that the government seeks to be, and is, their essential protector and general benefactor. The Ellsbergs, Mannings, Assanges, and Snowdens, rare as they are, demonstrate that the government’s pose as protector and benefactor is nothing but a ruse to hide its essential nature and functioning. The only protection the rulers aim to provide us is the kind that a shepherd provides his sheep—protection from anything that interferes with his exclusive ability to determine how and when the sheep will be sheared and slaughtered.

The rulers would have us believe that our enemies are such shadowy characters as a Vietnamese peasant hugging an AK-47 in a jungle 8,000 miles away, an Iraqi scientist ginning up bottle-rocket WMDs in a hidden underground laboratory, and a starving Pashtun goat herder creeping about in Waziristan plotting to bomb you, your children, and your dogs and cats. These fantasies of danger to the American people are so far-fetched that one suspects anyone who takes them seriously of mental incapacity. Yet, it appears, a great many Americans are mentally impaired enough to be taken in by such officially promulgated poppycock.

Meanwhile, with people’s minds bewitched by the Tallest of Tall Tales, their real enemies go about their extortion, robbery, abuse, and contempt of intelligence in plain sight in every city, village, and borough in the land, and the masses take all these crimes to be nothing worth noting, but only “how it is.” Such a cosmic Stockholm syndrome more than boggles the mind. A gang of criminals has taken control of a protection racket so vast that it defies our comprehension, styling itself the legitimate government, and then has compounded its impudence by taking its strongest measures against those who—horror of horrors—do nothing more than reveal to the public what the gang is actually doing.

I have no idea what the gang is concocting as a means of destroying Edward Snowden, but I have no doubt whatsoever that the wheels of injustice are spinning furiously in Washington, D.C., and Langley, Virginia. If you are betting on this heroic young man’s living another five years, insist on heavy odds.

In my previous post I argued that low-income populations suffer disproportionately when lawmakers and bureaucrats fail to grasp that healthcare and other complex systems present special challenges. Now I would like to step back from particular examples and draw general lessons for policymakers trying to deal with complex systems. (I offer additional guidelines in my Independent Institute book, Priceless: Curing the Healthcare Crisis.)

When dealing with a complex system for which there is no reliable predictive model, the first lesson is to show humility. Restrictions on behavior limit people’s ability to meet their own needs and the needs of others. In the absence of better information, we should want people to freely exercise their intelligence, their creativity, and their entrepreneurial abilities to solve problems.

A second lesson is that we should eliminate restrictions on behavior unless there is overwhelming evidence that the limits do more good than harm. This means, for example, allowing low-income families on Medicaid greater access to services whose prices are determined in the marketplace.[1] Also, we should make it easier for nurses, physicians’ assistants, and other non-doctor providers to deliver care to low-income patients by relaxing occupational licensing restrictions.[2]

A third lesson is to avoid trying to administer and regulate the system from the top. If we are dealing with a complex system and we don’t have a reliable model to predict how it will respond to simple parameter changes, it is more important than ever to avoid trying to solve problems with top-down commands. Instead, we need to begin the process of liberation by working from the bottom up.

Consider a notorious violation of this principle. At one point, leaders in the Soviet Union thought they understood enough about their country’s entire economy to manage the whole thing from a central command post. Today, even the Russians admit they were wrong.

A fourth lesson is that complex systems can’t be copied. Suppose I said to you: “Let’s look around the world, find the economy that seems to work the best, and then replace our own system by copying the one we like better.” If you have any sense, you would respond by saying, “Goodman, that is a really dumb idea; don’t you know that complex systems by definition can’t be copied?”

You would be right. It is a dumb idea. But did you know that is exactly how President Obama talks about healthcare? Time and again he has said, “Let’s find out what works and then go do it.” This is an approach that is destined to fail before it even begins.

On the supply side, we have the islands of excellence (Mayo, Intermountain Healthcare, Cleveland Clinic, etc.). On the demand side, we have a whole slew of experiments with pay-for-performance and other pilot programs designed to see whether demand-side reforms can provoke supply-side behavioral improvements. And never the twain shall meet.

We cannot find a single institution providing high-quality, low-cost care that was created by any demand-side buyer of care. Not the Centers for Medicare and Medicaid Services (CMS), which runs Medicare and Medicaid. Not BlueCross. Not any employer. Not any payer, anytime, anywhere. As for the pilot programs, their performance has been lackluster and disappointing.[3]

What about other demand-side reforms: forcing/inducing/coaxing providers to adopt electronic medical records, to coordinate care, to integrate care, to manage care, to emphasize preventive care, to adopt evidence-based medicine, and so on? The Congressional Budget Office (CBO) has reviewed the evidence on all these reforms and concluded that the savings will be meager, if they materialize at all.[4]

Notes:

1. John C. Goodman, “Why the Poor Need the Marketplace,” John­ Goodman’s ­Health­ Policy ­Blog, August 24, 2011, http://healthblog.ncpa.org/poor-need-the-marketplace/.

2. Devon M. Herrick and Pamela Villarreal, “Healthcare for Hurricane Victims,” National Center for Policy Analysis, Brief Analysis No. 532, October 6, 2005.

3. Megan McArdle, “Why Pilot Projects Fail,” The Atlantic, December 21, 2011, http://www.theatlantic.com/business/archive/2011/12/why-pilot-projects-fail/250364/; and Megan McArdle, “The Value of Healthcare Experiments,” The Atlantic, December 24, 2011, http://www.theatlantic.com/business/archive/2011/01/the-value-of-health-care-experiments/70106/; and John C. Goodman, “Pilot Programs,” John ­Goodman’s­ Health­ Policy ­Blog, September 8, 2010, http://healthblog.ncpa.org/pilot-programs/.

4. Douglas W. Elmendorf, “Letter to the Honorable Nancy Pelosi,” Congressional Budget Office, March 18, 2010, Table 3, p. 4, http://www.cbo.gov/ftpdocs/113xx/doc11355/hr4872.pdf; and “Budget Options, Volume I: Healthcare,” Congressional Budget Office, December 2008, http://www.cbo.gov/ftpdocs/99xx/doc9925/12-18-HealthOptions.pdf.

[Cross-posted at Psychology Today]