The Independent Institute


Obamacare’s Perverse Job-Creation Program

22854301 - portrait of medical center team, doctors, nurses.The latest jobs report gave the stock market a boost and injected some optimism into public sentiment about our economic prospects. Unfortunately, there’s a problem with the current employment situation that few understand: Obamacare has likely led to too many jobs in health care, drawing labor from more productive functions.

Dan Diamond of Politico reports jobs in health care have grown 23 percent since 2005, while jobs overall have grown only 6 percent. Much of this growth was driven by the collapse of non-health jobs in 2008-2010, while health jobs remained undisturbed. As the economy recovered, Obamacare kept layering jobs onto health care that did not actually improve health care:

Adversarial Justice and Police Misconduct

16995420_MLWe all know from the TV series Law and Order that, “In the criminal justice system, the people are represented by two separate, yet equally important, groups: the police, who investigate crime; and the district attorneys, who prosecute the offenders.” Day in and day out, these two groups work shoulder-to-shoulder for a common cause.

But what happens when members of the police themselves are the alleged offenders? Two recent cases involve the notorious deaths of Michael Brown in Ferguson, Mo., and Eric Garner in Staten Island. Both cases involved the arrest of an unarmed man for a relatively minor offense—Brown was suspected of having shoplifted some cigarillos, and Garner was accused of selling loose cigarettes, perhaps in evasion of the 29 cent per cigarette New York State and City cigarette tax. Neither crime posed a dire threat to public safety or warranted the use of lethal police force.

In the Michael Brown case, we know from the unusual public release of the grand jury proceedings that the county prosecutors vigorously defended the police defendant before the grand jury, which therefore only naturally declined to indict on charges of murder or even manslaughter. The Eric Garner grand jury proceedings were secret, but again the county prosecutors failed to obtain any indictment, even though there would appear to have been ample “probable cause” that excessive and unauthorized force was used in both cases.

I am no attorney, but I would suggest that our adversarial justice system is more likely to function properly in cases involving apparent police misconduct, if the county prosecutors who work hand-in-hand with the local police on a daily basis were not also responsible for prosecuting them when things go wrong. Instead, all cases against local police should be prosecuted by a special division of the state Attorney General’s office, or at least by Special Prosecutors appointed by the state’s Attorney General, perhaps drawn from other, non-contiguous counties in the state.

Grateful Remembrances of My Government High Schooling

39785550 - illustration of bright empty classroom with desks and chairsI do not speak Spanish fluently. Indeed, I am often at a loss for the right words, not to mention a proper conjugation of the verbs, and I frequently fail to understand what people say to me. Yet all in all, I am astonished that, living in a part of Mexico where few people speak English, I get by as well as I do. And whenever I spend a day in Chetumal, as I did yesterday, dealing successfully with one sort of business or another, I never fail to remember with gratitude my high-school Spanish teacher, Mrs. Tocher, who taught me at least 90 percent of the Spanish I know today. She will always hold a cherished place in my affections.

Nor is she the only one of my high school teachers I revere. Above all, I am indebted to Mrs. Raven, my 9th grade English teacher, whose instruction in English grammar has carried me through a fair degree of success as a writer and editor over a span of fifty-five years or so. She and my other English teachers introduced me to some of the timeless works of English literature, especially several of Shakespeare’s greatest plays, along with books such as Dickens’s Tale of Two Cities and Great Expectations, among others. Mrs. Malm, my 12th grade English teacher, began to hone my skills as an essayist. Several math teachers did a creditable job of teaching me algebra, geometry, trigonometry, and elementary calculus, and “Prof.” Silver, an elderly science teacher, gave me a decent grounding in chemistry and physics. Mrs. Hume, in a semester of the 9th grade, taught me how to type and write proper business letters, skills that I have been putting to good use for nearly sixty years. To all of these dedicated and competent teachers I remain deeply indebted.

Does Pell Propel College Graduates?

35986125 - student portrait in front of dormitory at collegeEarlier this year, the Congressional Budget Office projected a $7.8 billion temporary surplus for the federal Pell Grant program next year—and some members of Congress can’t wait to spend it on year-round disbursements, which were eliminated in 2011 but recently revived in the Senate. (See here and here also).

The concept has enjoyed bi-partisan support since 2005, when President Bush proposed the idea (p.9). But will restoring these pay-outs really help undergraduates complete their degrees sooner? Not likely.

The Pell Grant program was originally called the Basic Educational Opportunity Grant Program, authorized as part of the Higher Education Amendments of 1972. In 1980 the program was renamed in honor of Senator Claiborne Pell of Rhode Island. Today, it is the largest federal grant program, averaging $30 billion annually (See Table 1).

The program is intended to provide need-based aid to low-income undergraduate students who may use their grants at any one of approximately 5,400 participating postsecondary institutions. The maximum Pell grant through June 30, 2016, is $5,775. Maximum awards will increase to $5,815 next year, although one recent proposal would raise them to $5,935.

Government Price Controls and Drug Addiction

7320054_MLIn the print edition of the latest issue of National Review, staff writer David French has a sobering article describing how the Veterans Health Administration is overdosing veterans on prescription drugs. A veteran himself, French has plenty of anecdotes about his buddies:

They couldn’t sleep, so they had to take Ambien. They were depressed, so they were taking Lexapro. They had chronic neck and back pain after hanging 90 pounds of gear on their frame day after day, month after month, so they took Lortab. They were anxious, so they took Xanax.

It was as if a VA doctor had simply listened to a list of symptoms, located a pill to address each complaint, loaded up the patient with prescriptions, and called it “treating” a soldier with PTSD.

In 2014, an inspector-general report found that the VA was systematically over-medicating its patients – even to the point of death.

Wisconsin’s Senate race is being roiled by a report on the VA facility at Tomah, a place so notorious for freely writing narcotics prescriptions that it gained the nickname “Candyland.”

(David French, “Casualties of the VA,” National Review, Vol. LXVIII, No. 12, July 11, 2016, pp. 20-21.)

I am sure the usual bad government incentives are at work here. I’d also like to point out that the VA gets the lowest prices in the country for prescription drugs. However, of the top 200 drugs prescribed in the United States, only 59 are on the VA’s formulary (list of drugs covered).

Despite low prices and lack of access to most commonly prescribed drugs, the VA manages to get veterans hooked on narcotics. Why would we expect the federal government to do a better job if it dictated prices and controlled access to medicines for other Americans?

Even When School Choice Works, Critics Call It a Failure

43346097_ML (1)Thomas Paine recommended vouchers to help parents afford private schools for their children more than 200 years ago. While most college students today use vouchers to attend public or private colleges and universities, the concept remains needlessly controversial when it comes to parents using them for their school-age children.

For example, in a recent Washington Post article Emma Brown recently claimed school choice hasn’t worked based on evidence from New York City, where students are no longer assigned to public high schools based on their zip codes.

For starters, the Big Apple is hardly, as Brown calls it, “a real-life laboratory for questions of school choice” just because in 2004 the city deigned to allow parents of eighth-graders to choose up to 12 public high schools to attend out of a possible 400.

Currently, more than half of all states have parental choice programs that include private schools – not just public schools. New York isn’t one of them.

A Glimpse into the College Entitlement Mentality

31206844_MLShould a college education be a handout or something earned?

A recent feature in The New Yorker Magazine provides a sobering glimpse of things to come if advocates of “free college” get their way.

In his feature article “The Big Uneasy,” author Nathan Heller interviewed several Oberlin College students who demanded, among other things, the suspension of any grades below C so they could devote more time to on-campus activism (driving some 40 minutes to protest in Cleveland proved too burdensome).

About 85 percent of Oberlin students receive financial aid from federal, state, and local sources to attend this progressive liberal arts college, amounting to nearly $24,000 per student. About half of those funds come from the federal government.

Nationwide, just 33 percent of Americans have four-year college degrees. The vast majority of adults are slogging away at their jobs day-in and day-out to pay the taxes that subsidize college students, who are effectively absent from the economy for four to six years (more if they pursue graduate studies).

What Iran Can Teach Us about Selling Kidneys

23743546_ML (1)A few weeks ago, I had the opportunity to participate in a debate on the PBS program, Point Taken with Carlos Watson. The program brings together four experts in different fields to debate relevant and controversial topics. The goal of the show is to inform, to present viewers and the live audience with different perspectives. I can honestly say it was a great experience, one I hope to be able to do again.

We were discussing the sale of human organs, particularly kidneys.

I (probably not a shock to readers of this blog) am a strong proponent of legalizing organ sales. I’ve written on this topic, and it’s one I cover with my principles students when discussing the economics of price controls.

During the show, both my opponents and I used one particular example to make our points about how well a market for kidneys might work.

Have a Student Loan Question? Take a Number and Wait in Line

13044485 - mini graduation cap on money“[E]rrors and poor customer service.” That’s how the federal government watchdog, the Government Accountability Office, summed up the US Department of Education’s handling of $96 billion in federal higher education loans affecting more than 9 million student borrowers.

So much for the improved service and efficiency we were promised more than 30 years ago when the US Department of Education (ED) was created, not to mention just a few years back when the department took over student lending.

Back in 2010 the Student Aid and Fiscal Responsibility Act (SAFRA) ended the former practice of subsidizing loans made by banks, which was a bad policy to begin with, and shifted to an even worse one: direct lending by ED.

Former ED Secretary Arne Duncan insisted things would be much better if the department took over the student loan biz so government could “invest” in students directly without any meddlesome middleman. He also  blasted private banks for making a profit off student loans.

The USA’s Trifurcated Legal System

43221213_MLThe FBI’s recommendation against the prosecution of Hillary Clinton for her wanton, illegal mishandling of classified information in her emails puts on display once again the reality of the so-called rule of law in the USA. This reality is, above all, that the system is trifurcated: there is effectively one set of rules for the great mass of white, middle-class citizens; another set for blacks, Mexicans, and poor whites; and, most notably, another set for the powerful and connected members of the ruling elite.

For the first group, which for the most part tries to be “law-abiding” and supportive of “law enforcement,” the laws, regulations, and cops are obnoxious at times, but not for most people intolerable. People get used to being told what they must do and refrain from doing. They may grouse about certain laws, but they remain loyal to the political and governmental system that puts those laws in place and oversees their enforcement. These people are inclined to view instances of police abuse as the misfeasance of “a few bad apples.”

The second group has a clearer view of reality. They understand for the most part that the laws and the cops are not there for their protection, and indeed are part of an overall arrangement that looks all too much as if it were deliberately designed to humiliate, oppress, and persecute them, often in the guise of enforcing drug laws or petty commercial regulations that act as barriers to their self-employment or operation of small businesses. To members of this group, the cops are an army of occupation, and the disproportionate number of blacks and Mexicans in jails and prisons as well as the various state and local convict-labor arrangements testify fairly clearly to the correctness of their perception.