By Robert Higgs • Thursday February 23, 2017 10:35 AM PST •
Turmoil and conflict
Politics nourishes them
Nature of the beast
Free markets and firm contracts
Human rights basic
State thrives on war and plunder
Freedom works better
By John R. Graham • Thursday February 23, 2017 9:36 AM PST •
Before the Affordable Care Act passed in March 2010, President Obama repeatedly promised that the typical family’s health premiums would go down by $2,500 after implementing the expansion of health insurance we label Obamacare.
Nothing of the sort has happened, of course. For the past few years, prices and spending have appeared moderate by historical standards. However, that is largely because they are reported in nominal terms, not real (inflation-adjusted) terms. From the Great Recession until very recently, general measures of inflation were about zero. An increase of premiums of eight percent when general measures of inflation are about zero is a lot more than an increase of eight percent when general measures of inflation are about three percent.
Actuaries at the Centers for Medicare & Medicaid Services, a government agency, have just updated their estimate of future health spending:
For 2018 and beyond, both Medicare and Medicaid expenditures are projected to grow faster than in the 2016–17 period, and more rapidly than private health insurance spending, for several reasons. First, growth in the use of Medicare services is expected to increase from its recent historical lows (though still remain below longer-term averages). Second, the Medicaid population mix is projected to trend more toward somewhat older, sicker, and therefore costlier beneficiaries. Third, baby boomers will continue to age into Medicare, with some of them dropping private health insurance as a result. And finally, growth in the demand for health care for those with private coverage is projected to slow as the relative price of health care—the difference between medical prices and economywide prices—is expected to begin gradually increasing in 2018 and as income growth slows in the later years of the projection period.
The vanity of Obamacare was that more central planning would reduce wasteful use of resources through “value-based” and “accountable” care. In fact, demand for health services by the privately insured will shrink only because prices outpace our ability to pay for them as government weighs down our prosperity.
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For the pivotal alternative to Obamacare, see Priceless: Curing the Healthcare Crisis and A Better Choice: Healthcare Solutions for America, by John C. Goodman, published by Independent Institute.
By John R. Graham • Tuesday February 21, 2017 1:45 PM PST •
The Government Accountability Office (GAO) has published its biennial update of federal programs “that it identifies as high risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement...”
Healthcare programs feature high on the list. Medicare, the entitlement program for seniors, and Medicaid, the joint state-federal welfare program for low-income households, are longstanding members of the list; and the GAO notes that legislation will be required to fix them:
We designated Medicare as a high-risk program in 1990 due to its size, complexity, and susceptibility to mismanagement and improper payments.
We designated Medicaid as a high-risk program in 2003 due to its size, growth, diversity of programs, and concerns about the adequacy of fiscal oversight.
By David J. Theroux • Saturday February 18, 2017 1:23 PM PST •
Our very dear friend and Founding Member of the Board of Advisors of the Independent Institute, Michael Novak, passed away at the age of 83, on February 17th. A man of immense generosity, integrity, joyfulness, and good will, Michael was one of the most important scholars, theologians, prolific authors, and public intellectuals of the post-World War II period. As a brilliant Catholic writer with a far-reaching, ecumenical influence across both religious and secular worlds, he championed the ideas and institutions of individual liberty, personal responsibility, free markets, civic virtue, religious freedom, private charity, entrepreneurship, family and community, and the rule of law, showing their roots in Judeo-Christian teachings. In the process, he thoroughly critiqued the tyranny and horrors of communism and fascism and the disasters of socialism/statism in creating massive poverty, environmental ruin, human depravity, and spiritual hopelessness.
The author of more than 50 books, including his pioneering volume, The Spirit of Democratic Capitalism (1982), he was the 1994 Templeton Prize Laureate for Progress in Religion. His books have been translated into most all major Western languages, plus Chinese, Korean, Japanese, and Bengali.
By Sam Staley • Saturday February 18, 2017 12:19 PM PST •
Hundreds of thousands of people protested Donald Trump’s presidential election win, many believing he “stole” the presidency because Clinton “won” the popular vote. Digging below the surface of the November 2016 election results, however, suggests that Clinton’s presidential bid was doomed from the beginning. Moreover, the popular vote “win” may actually have been a result of conservatives in the “never Trump” camp crossing party lines, raising intriguing questions about whether she could have even governed successfully if she had won.
Most Americans, including those at the top levels of the Trump campaign, were shocked as Hillary Clinton’s presidential bid crumbled at the polls. She ended up with a popular win of 3 million votes, but this still represented a minority, just 48 percent, of the voting public. Most national polls failed to predict the outcome, prompting industry experts to do some serious soul searching. Their problem, however, may have been less methodological (e.g., sampling bias, survey design, or other technical issues) and more a failure to pay attention to fundamentals.
By Sam Staley • Thursday February 16, 2017 3:31 PM PST •
On the surface, Moonlight is a heart-wrenching film about a young African-American boy coming to terms with his sexuality while growing up in the impoverished public housing projects of Miami. But the Golden Globe winner (Best Motion Picture—Drama) is much more than a compelling, poignant, and uncompromisingly relevant movie; it’s a provocative portrayal of the complex underbelly of American cities.
In artistic terms, the film is outstanding, earning its eight Academy Award nominations, including Best Director, Best Picture, and Best Adapted Screenplay, even if its pacing seems a bit too deliberate at times. Filmed on-site in Miami over 25 days, many scenes were shot in Liberty City housing projects where director/screenwriter (and Florida State University film school graduate) Barry Jenkins grew up. The film is tight, brooding, engrossing, and focused.
Adapted from the semi-autobiographical book In Moonlight Black Boys Looks Blue by Tarell Alvin McCraney, the film doesn’t shy away from the complexities of the real-world dystopia that traps denizens of urban neighborhoods in big cities across the nation. For this reason the film speaks to a more universal condition and social problem.
By Alvaro Vargas Llosa • Tuesday February 14, 2017 10:59 AM PST •
It is a pity that Ecuador’s presidential election, which will be held this coming Sunday, is not attracting more international attention. It should, now that the world is witnessing the rise of populist nationalism.
For the past decade Ecuador has been governed by Rafael Correa. Like other Latin American populists, he won free elections but changed the constitutional rules so he could remain in power indefinitely through a combination of authoritarianism, fiscal profligacy, and demagoguery. However, the backlash against populism in the region and his increasing unpopularity at home forced Correa to give up his plans to run for yet another term this year. Which is why this election marks the beginning of the end of his rule.
Surveys say that 70 percent of the country calls for major changes. Although the government’s candidate, Lenin Moreno, is in the lead, he has only one-third of the vote at most, and his running mate is under serious accusations of corruption. Both Guillermo Lasso, a successful entrepreneur and banker who is in second place, and Cynthia Viteri, the Social-Christian candidate who is in third place, have a good chance of beating Moreno in the second round if Correa doesn’t rig the outcome.
Correa won the oil lottery when he came to power. As shown in an article by Gabriela Calderón that uses data put together by Pablo Arosemena and Pablo Lucio Paredes, Correa’s government has received half of all the oil revenues obtained by Ecuador since 1972, when the country began to export crude in large volumes. Despite the oil bonanza, between 2007 and 2014 the country’s rate of economic growth, about 4 percent, was very similar to that of the previous six years, when oil revenues were much more modest.
By John R. Graham • Monday February 13, 2017 12:46 PM PST •
New research by scholars at the University of Pittsburgh shows that American patients have significantly better access to new cancer medicines than their peers in other developed countries:
Of 45 anticancer drug indications approved in the United States between January 1, 2009, and December 31, 2013, 64% (29) were approved by the European Medicines Agency; 76% (34) were approved in Canada; and 71% (32) were approved in Australia between January 1, 2009, and June 30, 2014. The U.S. Medicare program covered all 45 drug indications; the United Kingdom covered 72% (21) of those approved in Europe— only 47% (21) of the drug indications covered by Medicare. Canada and France covered 33% (15) and 42% (19) of the drug indications covered by Medicare, respectively, and Australia was the most restrictive country, covering only 31% (14).
(Y. Zhang, et al., “Comparing the Approval and Coverage Decisions of New Oncology Drugs in the United States and Other Selected Countries,” Journal of Managed Care and Specialty Pharmacy, 2017 Feb;23(2):247-254.
I am no fan of the U.S. Food and Drug Administration, but it is a less-restrictive bureaucracy than its counterparts in other developed countries. Allowing patients to use new medicines without the interference of a government bureaucracy should be pretty straightforward, as long as they are aware of the risks.
Coverage, on the other hand, is more ambiguous. Both Medicare and other countries’ single-payers systems are socialized. So, we should not always jump to the conclusion that every approved drug should be covered 100 percent. As long as patients are free to pay out-of-pocket, we might not want taxpayers to pay the entire cost of each drug. However, cancer is the textbook diagnosis of a catastrophically expensive diagnosis, when we expect insurance to kick in. If insurance does not cover a wide portfolio of therapeutic options, it is not good coverage.
When we look at approval and coverage combined, the results are appalling. Of 45 drugs covered by Medicare, the British National Health System was the best of the other countries measured, and it covered only 21—less than half. We are not talking about North Korea, here. Nevertheless, it is shocking how much citizens of otherwise free countries give up when they allow their governments to control their access to health care.
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For a critical look at the U.S. Food and Drug Administration, see FDAReview.org.
By Randall Holcombe • Monday February 13, 2017 9:35 AM PST •
My book, Advanced Introduction to the Austrian School of Economics, is being translated into Korean, and the translator asked me to provide a short preface for the Korean edition. I’m reproducing it below, partly just to give my book a bit more publicity (it’s affordably priced, if you go with the paperback), partly to indicate how I see how the ideas of the Austrian school are relevant to Korea, and partly because the introduction will be translated before it is published, so the only people who will be able to read it are those who read Korean. Here’s what I had to say:
Preface for Korean Readers
Mainstream economic theory at the beginning of the twenty-first century rests on a neoclassical foundation of equilibrium models. The concept of equilibrium in economics, as in the sciences more generally, is that when something occurs to disturb that equilibrium, there are forces at work to pull the economy back to equilibrium. Equilibrium models provide a great deal of insight into the way markets coordinate the desires of suppliers and demanders in all markets so that the quantity supplied equals the quantity demanded. This is one of the great achievements of economic science, and the equilibrium approach to analyzing economic phenomena has developed and matured over the twentieth century and into the twenty-first.
By Robert Higgs • Monday February 13, 2017 9:20 AM PST •
Like nearly all economists, I am inclined to explain to people who favor tariffs that such taxes entail inefficiencies. They make the consummations of otherwise desirable trades more costly and hence discourage people’s actions that, absent the tariffs, would result in the creation of new wealth. After all, people who voluntarily purchase goods and services from sellers who reside outside the national borders expect to gain by making those purchases (and, of course, the sellers also expect to gain from the sale), and a gain from trade is the principal form of wealth creation in the world today. It is child’s play for an economist to explain the theory of comparative advantage, however inclined most lay people are to reject the argument despite its iron-clad logic.
Protectionism, as it is misleadingly known, has always been an insider’s game, a political gambit aimed at enriching those to whom the government is especially beholden or seeks to seduce at the expense of other people. Incumbent producers who produce products on which tariffs are imposed succeed in repelling competition by force of the government’s customs officers, which is to say that they succeed in increasing their profits by force, not by offering consumers a better deal.