The Independent Institute


The Hot-Air Barrier: A Major Reason for the Infeasibility of Representative Government

Between the would-be, public office-holder on the one hand and the citizen in general and voter in particular on the other, lies a huge barrier that precludes the establishment of any rational connection. Think of genuine “representative government” on anything other than a very small scale as a practical impossibility. Many reasons explain the existence of this barrier, including the logical impossibility of an agent’s accurately representing each member of a group of principals who do not agree among themselves, but certainly one of the most fundamental factors is that the office seekers often lie to the public, or at least obfuscate and hedge about their statements in a way that makes them de facto lies.

Thus, Mr. Blowhard promises that if you elect him, he will do X. After he is elected, however, he does not do X, but offers an endless litany of excuses for his misfeasance or malfeasance in office. In any case, the essential reality is that no one can hold the successful office seeker to account for his infidelity in carrying out his promises. Everyone is stuck with him until the next election, in anticipation of which he will spew out another ridiculous series of lies and worthless promises.

The office-seekers’ lies cover pretty much the whole ground of their speech. Of course, they are not forthcoming about past defalcations, de jure and de facto bribe takings, and personal peccadilloes. They almost invariably misrepresent their true reasons for seeking office, putting the shiniest possible public-service gloss on their raw ambition and lust for power. And they rarely if ever reveal truthfully the actual coterie to which they will be ultimately beholden, normally the largest and most influential supporters in their electoral campaign. Instead, they ludicrously declare that they will invariably “serve all the people.”

Increasing Medicaid Dependency Does Not Reduce “Uncompensated” Care

12943214_MRobert Lazsewski is a leading health insurance expert whom I often cite (see, for example, here and here). Unfortunately, in a recent article praising Ohio governor John Kasich he has made a serious error. Gov. Kasich is one of only three Republican governors who took federal Obamacare money to expand Medicaid dependency. According to Mr. Laszewski:

On Medicaid, the Kasich administration helped 650,000 people whose uncovered health-care costs were being shifted onto and burdening employers and individuals struggling to pay their already-high health insurance costs. The administration enrolled them into a new Ohio Medicaid system that made 38 different reforms over five years. In 2015 alone, it saved Ohio taxpayers $1.9 billion compared with the original state-budget target. It held the program’s per capita cost growth below 3 percent while cutting the state’s uninsured rate in half.

The idea that people who cannot pay their hospitals bills are the major problem in driving American health costs is evidence-free. According to a September 2014 report promoting Obamacare’s benefits, the Affordable Care Act would reduce so-called “uncompensated care” by $5.7 billion in 2014. Health spending in 2014 was $3 trillion, so $5.7 billion is less than one-fifth of one percent of national health spending!

Obama’s Supreme Court Appointment

Supreme CourtRepublicans have already said they will try to block any attempt by President Obama to have his nominee replace Antonin Scalia on the Supreme Court. The president has less than a year left in office, so blocking his nominee may be easy. But the Republicans may be playing right into the president’s hands. Who would Obama most like to see take that Supreme Court seat? He’d like to occupy that seat himself.

He could pull it off, but it would be tricky. First, he has to get the timing right. He should wait long enough so there will not be enough time for a second nomination, but he should not wait until Fall, to prevent the Republicans from waiting until after the election for hearings. If the Republicans won the presidential election, there is no way they would confirm an Obama nominee. But if the Democrats won they might, which would prevent the next president from nominating Obama. And, he needs to nominate the right candidate, but that should be easy.

The president is already consulting with Republicans and Democrats in Congress to find out who might be acceptable. The easy part is nominating an unacceptable candidate. Of course, the Republican Senate will not approve the nominee, opening the door for the next president to nominate Obama.

Then, of course, Obama needs the Democrat to win the presidential election. Sanders would be more likely to nominate Obama, but Clinton might also come through for him if she is elected. If the Democrats have a big enough win that the Senate goes Democratic, the new president can nominate Obama to the Supreme Court, to be confirmed by the Democratic Congress.

Why should Obama try to fight it out with the Republicans to get a nominee with the clock ticking toward the end of his presidency, when an alternative strategy increases his chances that he will be appointed to be the next Supreme Court justice?

The “Bern” Unit

According to the American Burn Association, approximately 486,000 burn injuries are treated every year.

Chances are you’ve experienced a burn or two in your life. From touching a pan that was too hot, to forgetting to make sure the electricity was shut off before some DIY house work, to being particularly inept with a curling iron (voice of experience there), anyone who has ever had a burn can tell you they aren’t fun. First degree burns, the least severe type of burn, are incredibly painful and can take days to heal. Second degree burns cause blisters, take several weeks to heal, and may scar. Third degree burns destroy every layer of skin.

CBO’s Big Mistakes Highlight Need to Privatize Economic Data Series

33707664_MOn February 10, the Congressional Budget Office (CBO) admitted a mistake in its projections of the share of earnings replaced by Social Security for people approaching retirement.

Last fall, the CBO said the annual Social Security benefit for those born in the 1960s and retiring at age 65 would replace 60 percent of their earnings for middle-income retirees. CBO now says the actual replacement amount is 41 percent. For those in the bottom 20 percent of income, CBO had said Social Security would replace 95 percent of earnings. Now CBO says it’s 60 percent.

These weren’t little mistakes. These were doozies.

And this wasn’t the first time CBO made huge mistakes. The Center for Economic and Policy Research (CEPR) identified two other incidents of serious error happening in 2010.

All of these mistakes raise the question: Is everybody asleep at the switch at CBO? As CEPR noted:

Someone at CBO should have caught these numbers before they went out the door. They weren’t off by just a little bit, they were absurd. But somehow a number of economists and budget experts at CBO looked at these numbers and said they looked fine.

It’s debatable if anyone did actually look at the numbers, but these mistakes demonstrate a serious breakdown in internal control processes. If this is happening at CBO, it is surely happening at other government data-collection agencies and statistical departments.

In 1995, the U.S. Department of Commerce handed over its business indicator program to The Conference Board in New York City, a private organization. The Conference Board publishes leading, coincident, and trailing indexes for the U.S. economy each month. The Conference Board has done a fine job, and has since expanded the program to the United Kingdom, France, Germany, Spain, South Korea, Japan, China, Mexico, and the Euro Area. As entrepreneurs often do, they took a good product global. It’s time to privatize more government data collection and statistical analysis, which would ultimately lead to improvements in these products as well.

Whether it’s Congress, the Office of the President, or the Federal Reserve, economic data series are maintained and used by the federal government primarily to manipulate the economy, with tragic results.

It’s time for the private sector to decide which data is worth collecting and do it themselves. Any data series not claimed by the private sector should be ended.

Big Government Creates Political Polarization

capitol hillWe’ve heard it said that politics is more polarized today than in the past. If that’s true (and I’m not sure it is), big government is likely to blame. I recently noted that politics creates conflict. Bigger government creates more conflict.

Smaller government tends to focus on activities that meet with widespread agreement. Most people would agree that it is a good thing for government to protect the rights of its citizens. They want police to protect them from potential harm from others, they want a military to protect them from foreign threats, and they want courts to settle disputes peacefully. Politics is less polarized because most people agree government should do what it is doing.

When government expands its mission beyond generally agreed-upon activities, politics becomes more polarized. Should government be providing people with health care? If so, how? Should government be subsidizing business, or agriculture?

Even in the core functions of government, expanded missions lead to more polarization. When police expand their mission beyond protecting people’s rights to fighting a war on drugs–which is really a war on drug sellers and drug users–police shift from being the protector of citizens to their enemy. There was widespread agreement for the military buildup during the Cold War to counter the hostile Soviet Union, but less agreement on nation-building foreign affairs in countries that pose no threat to us. People like government infrastructure like water and sewer systems, but are not in as much agreement about government buying land for conservation or telling private property owners they cannot use their land because it might be home to some endangered species.

Big government creates political polarization because government expands beyond activities that meet with general agreement into activities that set the interests of some citizens against the interests of others.

The Benefits of Intellectual Property Protection

IPIf there is one thing about which libertarians are never likely to agree, it is whether intellectual property—patents, copyrights, trademarks, and trade secrets—should receive the same legal protection as physical property.

Without wading too deep into the philosophical debate, but showing my colors as an IP advocate, let me share some new research published by the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) on the benefits of legal protection of intellectual property.

Published on February 10, Infinite Possibilities ranks 38 countries by 30 indicators of strength of IP protection. The indicators measure both law and enforcement: Countries which do not enforce IP rights, despite the letter lf the law, are marked down. Most of the indicators are straight forward: Longer patent, copyright, or trademark terms are better; strong enforcement mechanisms are better; and treaty obligations protecting intellectual property invented in other countries are better.

Active Shooter Drills and Terrorizing Children

As a kid, I loved days when we had fire and tornado drills. It was something that broke up the monotony of day. There was nothing like scurrying down to the cafeteria and huddling by the floor with your best friends, “preparing” for a hypothetical tornado but really talking about what you had for lunch and what your were doing over the weekend. Oh yea, and if there was ever an actual tornado, stay away from the window and cover your neck. OK–got it.

Tornado and fire drills are probably a good idea. Though both are fairly rare occurrences, teaching children, and adults for that matter, to be prepared for tornadoes and fires should probably be considered a best practice.

But not all drills invoked such feelings during my school years. By the time I got to middle school, we hosted “active shooter drills.” These drills taught us the following. In the event someone comes into the school with a gun and the intent to kill everyone, turn off the lights and huddle in the corner of the room. Assuming the assailant has really poor vision and can’t see through the glass door, you’ll be safe. (The unspoken lesson went like this. If the shooter isn’t blind and can see through the door, pray that you’re in the middle of the huddle and not on the border.) As opposed to making me feel safe, these drills placed a kernel of worry in the back of my mind. Would today be the day that someone comes to the school with a gun?

I was in junior high when 9/11 changed the American psychological landscape. I remember going home and seeing the coverage on every news channel, including Cartoon Network and Nickelodeon. After that, we had to have drills every so often about what to do in the event of a terror attack. (I honestly cannot remember what the drills entailed.)

Politics Creates Conflict

36930686_MOne interesting thing to note about the political statements coming from candidates as the primaries approach is the adversarial nature of their rhetoric. They don’t hesitate to attack their primary opponents despite the fact that they broadly agree on most things. Yes, Republicans will take an occasional jab at Hillary, but mostly they are attacking each other, despite all they have in common. Meanwhile, Hillary and Bernie are debating who’s more progressive, and even what progressive means.

Candidates don’t talk about what they have in common. Politics brings out and amplifies any differences, regardless of how small they might be. Politics creates conflict, because if one person wins, others lose.

Compare that to market transactions, which are always cooperative because market exchange does not occur unless all parties to a transaction agree. Market transactions occur peacefully and leave everyone satisfied, even though the transacting parties might disagree about almost everything.

When you go to a store, do you check with the sales clerk to see if you share the same religious beliefs, agree on immigration policy or second amendment rights, or have the same views on abortion or same-sex marriage? No, it never comes up. In markets, people can disagree about almost everything and yet still cooperate. In politics, people can agree about almost everything, but politics makes adversaries of even those who hold similar views.

Politics creates conflict. Markets create cooperation.

Will Congress Fix Its Electronic Health Records Fiasco?

26925793_MThere is some hope that Congress will fix—at least partially—the largely bungled Electronic Health Records (EHRs) deployment on which it has spent $30 billion since 2009. Doctors are very frustrated by EHRs, which interfere with their practice of medicine. The current government program to have them installed nationwide should be abandoned.

Tomorrow, the Senate will mark up a number of bills to remove the regulatory burden in health care. One of them will address EHRs. Will it help? Maybe a little. First, it would force the federal government to reduce the administrative burdens associated with EHRs. Second, it would force the federal government to defer to the private sector on interoperability.

Interoperability refers to competing EHRs communicating with each other. The health IT landscape is overwhelmingly complex, and it is unsurprising that the federal government struggles to create and implement appropriate standards for interoperability. A recent Government Accountability Office report surveyed 18 nonfederal initiatives to improve health IT:

Conversely, representatives from two initiatives said that current federal work on standards duplicates existing private sector efforts, and representatives from a third initiative expressed concern that the government is not flexible enough to account for changing technologies and should therefore leave this issue to the private sector.

As for MU*: “Representatives from 10 of the initiatives noted that efforts to meet the programs’ requirements divert resources and attention from other efforts to enable interoperability.”

(*MU refers to Meaningful Use, the federal program which pays doctors and hospitals to install EHRs.)