The End of History

I just finished reading The End of History and the Last Man, by Francis Fukuyama. I was pleasantly surprised by the philosophical content of the book, although I do have a few complaints. First, let me give a quick recap of the thesis for those who haven't read it.

Fukuyama argues that capitalism and liberal democracy comprise the final state of society and that all nations will eventually adopt them. His basic argument for the spread of capitalism is simply that it is a more efficient way of organizing an economy, which eventually gives capitalist countries an economic and technological edge over mercantilist or command economies. But capitalism does not always imply liberal democracy, and in some cases authoritarian governments (e.g., Singapore, and perhaps China) are better able to manage capitalist expansion.

Therefore, the argument for liberal democracy rests on the theory that men do not simply strive for satisfaction of physical desires. They also strive for "recognition," in the form individual dignity or dominance over other men. He divides this spirited thriving into two categories, which he has named isothymia (from the Greek iso - equal, and thymos - spirit), the desire for equality and megalothymia (megalo - great), the desire for dominance.

Following Hegel, he describes early societies as consisting of an aristocracy who dominate based on their willingness to risk their lives to achieve fame and defend honor, and slaves who are unwilling to risk their lives. There is tension in this arrangement, however, because the fact that slaves are treated as less than human makes dominance over them unfulfilling. Only in a democracy can all people achieve the dignity having their humanity recognized by a society of other human beings.

Of course, there is also tension in a liberal democracy because people are unable to fully exercise their tendency toward megalothymia. The insistence that each person is equal under the law, and the spread of tolerance and moral relativism make it difficult for citizens of a democracy to dominate and impose our set of values on each other. Nietzsche lamented this result when he described the satisfied man of bourgeois society as weak and subhuman.

The discussion of a desire for recognition has made me think deeply about my own motives, and about how to connect with other people. On a personal level, although I consider myself a very rational person I believe that many of my decisions are driven more by the need to promote the principles that underly my view of the world than by a desire for satisfaction of physical desires. Yet when I discuss political issues I often have the tendency to assume that people ought to be satisfied with policies that achieve a maximization of self interest rather than reflect their own view of how the world should be organized. In reality, people often vote based on moral beliefs rather than on personal interest.

For example, people oppose abortion not because it hurts them personally but because they see it as evil. The desire that many people have to strictly enforce immigration laws is often based more on the principles of sovereignty and rule of law than it is on a calculation of self interest. Last night I spoke to a resident of the district who pointed out that the debate about gay marriage was mostly about two sides that wanted to force each other to adopt their personal "religion," or moral code. The word marriage has long been associated with religious beliefs and authority. Some want more than anything for society to recognize the legitimacy of homosexuality by sanctioning gay marriage; they see this social recognition as an important part of their personal dignity. Others believe that homosexuality is evil, and that government recognition would undermine the moral structure of society.

I agree with Fukuyama that although these tensions are inevitable in a democratic society, the contradictions are less fundamental than they would be in an authoritarian society. In a democracy it is possible to accept that people disagree and allow them to attempt to convert each other in the private sphere without allowing either side to enlist the power of government, and the monopoly on force that it represents, to ensure that society recognizes their views. This is one reason that I believe in the principle of limited government. Although part of me would like to enforce my understanding of morality on the whole of society, I believe that doing so would undermine the ability of people with differing views to live together peaceably. I believe that it is possible to recognize the right of others to live by a different moral code, and to design government policies with the goal of maintaining neutrality with respect to our differences.

The Hidden Cartel

Over the weekend I discovered something that explains a lot about the state of our health care system: relative value units. This is the system that Medicare and many private insurance companies use to determine how much to reimburse doctors. Guess what? It's not based on free market principles of supply and demand. It's not even based on a government determination of which types of care are most valuable. Incredibly, our whole system of medical payment is based on the recommendations of a secretive panel of mostly specialist doctors inside the AMA who make their decisions based on which procedures require the most mental effort and talent! I recommend that you all read this article from Slate magazine describing the situation.

To those of you who aren't familiar with the AMA, it is a group of physicians (20% of doctors are members according to Wikipedia) that publishes a medical journal, lobbies government in support of the interests of doctors, and attempts to regulate the practice of medicine. One of my favorite economists, Milton Friedman, despised the AMA because of their attempts to reduce the number of doctors below the level that would be determined by an equilibrium of supply and demand. Many of their activities, such as trying to sue osteopaths and chiropractors for the unlicensed practice of medicine, are reminiscent of Medieval guilds who tried to dominate industries on behalf of a limited number of existing members.

I must point out that there is a government agency that decides whether to accept or reject the recommendations of the AMA. However, according to the Annals of Internal Medicine, this underfunded agency accepts the proposals of the AMA committee 95% of the time. The result? At the recommendation of a few specialist doctors we have rearranged our whole system to prefer expensive procedures over basic care provided by generalist doctors (or anyone else who threatens to undermine the power of radiologists, oncologists, etc.)

One of the main reasons that I oppose government interference in the economy is that i simply don't think that bureaucrats are capable of effectively setting prices for a whole industry that will be conducive to providing cost effective goods and services. But perhaps the one thing worse than allowing government to set prices is to give that power to an industry cartel. Industry associations like the AMA do not represent the interests of consumers and they avoid free competition like the plague. Although I am sure that the members of the AMA committee that determines the relative value scale has admirable intentions, the ultimate effect of their policies is to line the pockets of medical specialists at the expense of generalists, consumers, and "unlicensed" practitioners.

Morality and Government

Just as I believe that not everything that is good should be provided by government, I also hold that not everything that is evil should be prohibited by government. One reason for this is that each person is entitled to his own beliefs about what is good and what is evil. If the government attempted to enforce morality, it would have to choose one version of morality to sanction. What would be the basis for this choice? One could argue that we should simply enact laws that reflect what the majority of the public holds as moral. Should we so easily trample the rights of the minority for no other reason than that the majority thinks they are wrong? Yet it is obvious that some evil things should be illegal, so where do we draw the line?

One way of resolving the issue is to allow people freedom to act up to the point that their actions harm other people. But this doesn't always resolve every issue. Consider the example of a public beach. Suppose Nude wants to enjoy the beach without any clothes and Prude wants to bring his children to the beach without exposing them to nudity. Nude does not feel that nudity on the beach is an issue of morality but Prude thinks that it is. Nude thinks that requiring a swimsuit would be an infringement of her rights and Prude thinks that exposing his children to nudity would cause them harm. The trouble is that it would be difficult to answer the question of whether Prude (or his children) are suffering harm without some reference to one moral position or the other.

The economist Ronald Coase once argued that aside from transaction costs it doesn't really matter where you draw the line as long as the line is clear and transactions are allowed. If you give Nude the right to walk the beach naked, Prude could always purchase that right and by contract obtain the right to visit the beach without exposing her children to such things. Similarly, if you give Prude the right to visit the beach free from exposure to nudity, Nude could purchase the right to walk naked if it meant a lot to her.

Unfortunately, for this and many issues of public morality transaction costs are very high. That is, if you give everyone the right to visit the beach sans nudity, those who value being naked would have a hard time purchasing that right from everyone involved. It would take so much time to track everyone down and come to terms that doing so would be unrealistic even if Nude enjoys walking naked much more than Prude and her sympathizers value protection from exposure. Coase's answer in such situations is to make the initial grant of right to the party who values it most. That is, you try to guess who would come away with the right if contracting were a simple process. So is this what we should do to resolve moral issues such as whether gays can marry, women can have an abortion, and gamblers can bet on a sports event? If you think abortion is evil, how much would you pay to prevent an abortion from happening?

I don't think many people would be satisfied by this method. It doesn't seem possible to put a price on moral convictions or personal freedom. And the trouble is that my moral convictions often extend to your behavior. So "private" actions can cause negative externalities in the form of moral outrage (or divine displeasure).

My preferred resolution to this dilemma is that one person's freedom should take precedence over another's moral conviction about how people ought to behave. If I am morally offended by the actions of another, I should be free to debate, preach, and offer incentives in order to encourage them to change their behavior. But I should not be able to enlist the power of government to enforce my will on them. This belief is not really based on any economic calculation. Ironically, it is based to a large extent on a moral conviction I have that people ought to be free to choose between good and evil.

Unfortunately, this conviction does not fully answer some of the more complex moral debates. For example, many people who oppose abortion would argue that they do not oppose it simply based on their own personal convictions. But that is a discussion for another day. For now I would simply like to hear whether the rest of you think there are cases where it is right for government to legislate based on morality.

Why Charity Doesn't Work

A few weeks ago I wrote about a health care forum in which the President of the Sutherland Institute advocated solving the problem of the uninsured by developing a system he called "Authentic Charity Care". Basically, people would volunteer time and money to run charity clinics that provide care for those that can't afford it.

Charity clinics offer a number of advantages over government run health programs. First, I believe that charitable programs contribute to a sense of community. Those who contribute to local charities can see the effects of their generosity, and those who receive help are more likely to feel a sense of responsibility to give back to the community. Charity is also less likely to interfere with the free market, and it doesn't infringe on the right of each person to decide what to do with the fruits of his labor.

So why would I say that charity doesn't work? Because charity does not provide a sufficient mechanism to ensure that the supply of care is related to the demand for care. In a free market, when demand goes up it raises prices and signals to producers that they need to produce more. Even a government run system can determine how many people need to be served and then spend enough money to satisfy their needs. With charity, there is no reason to believe that individual generosity will be adequate to supply those who need help with the care they need. It might. In fact, it might be the case that people are so generous that charity clinics would have far more resources than they need. But the point is that the link between what people need and how generous people are is pretty weak. It may be possible to inform the public about how much is needed, and this might lead them to modify their contributions but there is no guarantee.

This does not mean that charity care should not be a part of the solution. I think it should be. But I don't think charity can ever really be counted upon to be an adequate solution to any systemic problem without a stronger mechanism for linking supply and demand.

The Lives of Others

The other night, Mercedes and I watched a film about life in what used to be East Germany called The Lives of Others. It is one of the best movies I have seen in a the past several years. The plot follows a member of the East German Secret Police (Stasi) as he spies on an author suspected of sympathizing with the West. Although there are several fascinating questions that are raised in the movie I would like to focus on just one: can people really change? The two main characters in the movie undergo significant transformations. The author is transformed from a man dependent on the system into one capable of fighting against it. The Stasi spy begins as an idealist who is willing to do anything to his fellow man in support of his ideology, but learns to follow his own sense of what is right and wrong.

Some critics have suggested that the magnitude of these changes is unrealistic either from a psychological perspective or in that a member of the Stasi would have been under constant surveillance himself, which would have made even the slightest act of rebellion impossible. I am not that concerned with whether the movie was a realistic portrayal of the way the East German police maintained discipline within their own ranks. But I do believe that psychologically it is possible for people to undergo the type of changes depicted in the movie.

One of the fascinating aspects of human nature is that most of our behavior is part of a vast web of interactions that are tied together by a unifying world view. Since this world view is a mental construct that is subject to change, it is possible for people's behavior to undergo incredible transformations. Both of the main characters in this movie experienced something that made them question the whole network of justifications that motivated their behavior. I have experienced things in my own life that opened my eyes and made me question my understanding of the world, so I know this is possible.

When I was young I was afraid of the possibility that people can change. Whenever I looked over a cliff or a bridge I imagined how easy it would be to throw myself off into the depths. I had no desire to do it then, but I was afraid that if it were possible for me to undergo a significant change in perspective there was little to keep me from jumping in the future. Jumping off a cliff was a symbol of every decision that I feared. Of course I didn't have to make any decision that I didn't want to, but I had no way of ensuring that my future self would see things the same way.

In the end I decided that such fears were unfounded. Even if significant aspects of my world view are undermined and I am forced to rethink my perspective on the world there is some core part of me that survives. Plus, some of the "cliffs" that I feared to approach turned out not to be as fatal as I imagined. My fears were based on the assumption that my young self had a better concept of what I ought to be afraid of than my more experienced self. Occasionally this might be true, but I don't think it is often the case.

I believe that people can change because there are often cracks and contradictions in the way we understand our relation to the world. Drastic changes may not be common, but they happen and we need not fear them.

SLCO GOP on Reforming Social Security

The Salt Lake County Republican Party is holding its central committee meeting tonight, and one of the things on the agenda is a resolution calling for the reformation of social security. The resolution points out that social security costs are a big part of of nations budget problem and that costs are going to start growing much faster than payments into the system. To solve this problem, the resolution offers two measures of reform:

1) Index the growth in benefits to the consumer price index rather than wages.

2) Invest more funds with a higher rate of return so that the system eventually won't have to rely on social security payments.

I think the first measure is reasonable. Social security should ensure that retired people can afford to pay for their basic necessities, but it should not try to replace individual savings if people want to maintain the same standard of living once they retire.

The second proposal is a terrible one. Think about it. If the government decides to invest trillions of dollars in order to pay for social security without relying on individual payments, where are they going to invest the money? They will have to buy stakes in private business. If the government buys up shares (or bonds) in private companies they will have a stake in how those companies are run. So this proposal would result in a massive increase in government interference in the private economy. But that isn't all. What happens if we hit a recession and the government needs to sell some of its shares to make its social security payments? It will have to engage in a massive sell off of its assets, which will make it nearly impossible for businesses to obtain any financing, which is one of the main things that exacerbates any recession.

We should eliminate the myth (and expectation) that social security funds are separate and sacred. Pay for it with general revenue just like everything else. Of course we need reign in costs in order to balance the budget, but we shouldn't do it by encouraging greater government control of the economy.

Is Obama a Socialist?

A number of commentators have accused Obama of being a socialist. There actually is a socialist party in the US, and Obama is not a member so in that sense he is not a socialist. But that isn't the end of the discussion. Socialism is an ideology which holds that means of production ought to be owned or controlled by society rather than by individuals. Since there are a lot of different kinds of "means of production", and there is a broad spectrum of possibilities between social control and unlimited individual property rights I think most people probably fit somewhere in between full communism and unbridled capitalism. So the question is not whether Obama is a socialist, but where he would draw the line between social control and private property.

A number of Obama's policies have (or will, if acted upon) push the nation toward the socialist end of the spectrum. His response to the current financial crisis and recession has included the government assuming huge financial stakes in a number of the countries most important banking and automotive companies. His administration has used this leverage to interfere significantly in the operations of what used to be private companies. For example, there is a government "czar" in charge of determining how much banks can pay their executives. They also forced the CEO of GM to resign, and have sold off parts of GM and Chrysler to foreign automakers.

Like it or not, it is clear that Obama's health care plan would also result in a more socialist system. Even if there is no public option, government will place pretty severe restrictions on individuals and insurance companies that will stifle any free market competition in the health care industry. The Obama administration has also made it harder for individuals and private companies to lease public land in order to develop natural resources. Land is the most basic form of capital, and reducing private control of natural resources is a socialist policy.

The thing about these changes is that a lot of Americans support them. Many people agree that there should be a limit on executive pay, or that it was necessary to buy up banks and car manufacturers to save jobs or prevent a collapse. A great number of people think government should manage the health care industry, and not a few think we shouldn't make it so easy for private companies to exploit the resources on public land.

A lot of Americans think that the United States ought to become more socialist (or at least that a shift toward socialism has been necessary to avert a deeper recession). But the fact that a shift toward socialism is popular with many people does not mean that the problems with socialist policies have gone away. And although Obama claims to have great reverence for the free market he sometimes seems to forget the disadvantages of some of the policies he has chosen. So let us remind ourselves of some of the problems that can be caused by socialist policies.

1) If the government controls industry they make decisions based on political expediency rather than economic efficiency (e.g., giving unions a better deal than bondholders in the automotive bankruptcies, refusing to cut inefficient health benefits for seniors, limiting executive pay of banks)

2) Government controlled industries that make bad investments are not allowed to fail, so a lot of capital is wasted propping up inefficient and unresponsive businesses.

3) Taxes, subsidies, and government restrictions on property (such as rent control) result in deadweight loss. That is, some people who could benefit from working or consuming don't do so because of government interference and they are worse off for it. High taxes and welfare make workers less inclined to work, and investors less inclined to invest.

4) Social control of resources can result in the tragedy of the commons. For example, if we make a commitment to give everyone as much health care as they want on the government's bill, there will be little incentive for individuals or doctors to choose cost effective treatment measures.

Well, there are a few of the problems with socialism and it should be clear that Obama's policies are not immune. While he may not be at the far end of the socialist spectrum, Obama's presidency will result in a nation that is more socialist than it was when he got there and even his supporters should accept that this shift will come at a high cost.

Nucular!

Everybody check out our new YouTube video!

If you like it, forward the link (http://www.youtube.com/watch?v=Aqn31tnAgAM) to your friends.

Sandy's Municipal Elections

Although I am just beginning my campaign for the state legislature, a number of municipal elections across the state are coming up on the final stretch. Sandy City will have elections for Mayor and City Council seats 1, 3, and an at-large seat.

The candidates for Mayor are Tom Dolan and Dave Perry. Tom Dolan has been the incumbent mayor since 1994 and is the only person to serve two consecutive terms in that position for as long as anyone can remember. He is known for his vast connections to other politicians, businessmen, and lobbyists throughout the state and has accomplished several important development achievements for the city such as getting a stadium for the MLS team Real Salt Lake. Here is a link to an interview with Tom saying why he would like to be elected for another term.

Dave Perry is challenging the incumbent. Here is his website. He is a local businessman that has been involved in everything from running a service station to teaching computer drafting and selling real estate. From his website it appears as if his platform centers on God, Family, and Community. He argues that the recession is going to get worse and we can't rely on federal stimulus dollars. He thinks that strong families are a bulwark against such "isms" such as humanism, fascism, communism, and globalism.

My vote in this race goes to Tom Dolan. I am not always a big fan of having 20 year incumbents, but Dave Perry seems a bit naive to me. I don't know if the mayor can really do much about fascism, but I am impressed with the current Mayors efforts to make Sandy a "first rate suburb".

According to Sandy City's website, there is only one candidate running for the council seat from both district 1 and 3. There are two people running for the At-Large seat, however. The incumbent is Stephen P. Smith. The challenger is David Kingsbury. Neither of them has much of a presence on the web. I am not sure I can recommend a candidate who does not have any online presence. If a candidate runs for office, and they aren't online do they make a sound?

As an interesting side note, Mercedes and I met another At-Large Sandy City Councilwoman, Linda Martinez Saville, while searching for a refrigerator on ksl.com. Her husband was home when we went to see it but he wanted $375 for an almost new unit, and I offered $275. After talking to his wife, they offered $300 and I accepted. When we went back to get it, we met Linda and she told us that she had run against Trisha Beck once. She confirmed what we had heard elsewhere that Trisha is an especially, shall I say, vigorous campaigner. It's a small world.

My Reaction to Obama's Health Care Speech

I listened to Obama's health care speech this morning on YouTube. He is an impressive orator, and his performance was enough to get many people who are sitting on the fence to support his plan. But I still have several important misgivings with health care reform as he has proposed it.

First, I remain unconvinced that his plan will have any significant impact on rising health care costs. People who purchase private insurance will be even further removed from the economic costs of the treatment they choose, and it is entirely unclear how he proposes to cut Medicare costs. I agree that we need to cut waste. I agree that a lot of health care doesn't do much to improve health. But Medicare recipients consider this waste as part of their benefits so you can't root out the waste in any significant way without cutting benefits. Support Obama if you will, but if his health care reform passes I suggest you keep a close eye on whether Medicare costs are reduced before the next round of reform.

Second, I think his plan will put the final nail in the free market's coffin. Why? It will make high deductible health care plans illegal. Paying for health care in cash will be like sending your kids to private school. You can do it if you have loads of money lying around, but since you already have to pay for the public option there is a very strong incentive not to.

Obama claimed in his speech that the reason for requiring everyone to get health care insurance and banning high deductible plans is to prevent healthy people from gaming the system. He made it sound as if the reason our health care system is so expensive is that we are all paying for the care of those who have high deductibles. Wrong. He isn't trying to rope these people in because they are the problem. He wants to include them so that they will subsidize people with pre-existing conditions.

Let me make this very clear. I think the poor should have subsidized health care. But young and healthy people should not be subsidizing care for old (or any other kind of) rich people. If there is one person reading this who can give me a good reason why a hard working middle class family should subsidize the health care of a billionaire with diabetes, please let me know. If not, then you should be skeptical of any regulation that forces people into a low deductible plan.

My Latest Health care Proposal

Having outlined the objectives I think health care reform should address, I will now describe a plan that I think will best achieve them.

First, ensure that those who can't afford their own care get basic coverage by creating a health exchange where insurance companies can list various plans with different kinds of coverage, and providing a subsidy that can be used to purchase a listed plan. The subsidy will be based on two things: income and the cost of a low deductible plan that covers only those treatments that have been proven cost-effective. A schedule of cost-effective treatments will be created by a government agency that measures the cost per quality adjusted year of lived saved by the procedure, but the actual plans will be developed by private companies. Those below the poverty line will get a subsidy sufficient to cover the whole cost of a basic plan, with those above the line getting progressively smaller subsidies.

Make affordable health insurance available to those with pre-existing conditions by prohibiting insurance companies from considering pre-existing conditions when determining premiums. This will make it possible for you to get an accurate quote online through the exchange by simply putting in your zip code and what kind of coverage you want.

Reduce the cost of health care by

• limiting the subsidy for poor people to an amount sufficient for a plan that only covers treatments that have been proven cost effective. Thus, if an MRI is not a cost effective way to locate kidney stones, the subsisdy will not be sufficient to cover a plan that covers it (unless someone decides to sacrifice coverage of some cost-effective treatments or go with a higher deductible).
• allowing insurance companies to list high deductible plans, and allowing individuals to deduct medical costs paid in cash from their taxes. This will create an incentive for many healthy individuals to pay cash for a large portion of their medical care. If enough people pay cash, an efficient and competitive market will emerge where wasteful care is eliminated simply because cash paying customers will not pay for it.
• removing the employers from the health care equation so that individuals are not anesthetized from the financial consequences of their health care decisions. If employers want to subsidize the health care of their employees they can, but there will be no requirement to do so, nor will there be a tax incentive that is not available to individuals.
• create a system whereby medical debts are deductible from your paycheck automatically like income taxes, and not dischargeable through bankruptcy. This will ensure that medical costs will not be passed on through the system to other customers.
• relax the rules that require doctors to perform procedures that can be done by nurses and technicians. Also, break the grip that professional groups have on the supply of doctors by creating a system of certification that allows as many people as want to become doctors. The law of supply and demand will determine the number of people who go into each specialty rather than the availability of residency programs.

Promote cost-effective innovation in medical care by opening up the market through the increased use of high deductible plans, and by limiting government subsidies to an amount sufficient to cover proven cost-effective treatments. If a drug company develops a drug that is not on the schedule of approved treatments but people still want it, they can purchase it with cash at a price determined by the market or choose an insurance plan that will cover it.

Reinforce the power of individuals to make their own health care decisions by providing cost efficiency information on various treatments, allowing people to make their own decisions about what kind of health insurance coverage they get rather than being limited by employers, promoting the development of a cash basis health care market for as many treatments as possible that will cater to the demands of consumers rather than government or insurance companies.

That's it. That's my plan. People (with the possible exception of temporary workers) will not be required to buy insurance, but the exchange will make it a simple and informative process for those who do and subsidies will be provided for those who couldn't afford it otherwise. If someone does not buy insurance their debts will still be collectible from their paycheck so that doctors will not be hesitant to provide care for the uninsured. Please comment.

Health Care Reform: Back to Basics

Despite how obvious many of the points I have made about health care seem to me, I realize that many people are still not convinced by my argument that we need to expand the role of the free market. So I want to get back to basics with the hope of making my position more clear and identifying the root causes of the disagreement. I begin by pointing out five important objectives that any reform package ought to consider.

1. Provide at least basic care for those that can't afford it. I agree that we are in a position as a society to provide everyone some minimum level of care just for being a member of our community. I absolutely do not agree that everyone is entitled to the highest level care regardless of how much they are willing to pay. Health care is a scarce resource and we simply can't provide everything for everyone.
2. Make health insurance affordable for those with pre-existing conditions. Those with pre-existing conditions that are poor should be covered by a plan that effectively addresses concern #1, but there are also middle and upper class people who would like to buy health insurance and are discouraged by the cost. Some middle class families would be dragged into poverty if they paid the premiums that insurance companies demand, and these families (or individuals) need some relief. But many community rating proposals (those that prohibit premium discrimination based on pre-existing conditions) would result in middle class people subsidizing the care of the rich and other unintended consequences. This subject needs further discussion.
3. Reduce the cost of health care for the average American. Health care costs are rising quickly, and reform that doesn't address this problem is severely lacking. Part of the problem is that drugs, devices, and procedures are costly. Part of the problem may be that specialists cost more than they are worth. Another aspect may be inefficient administration. And last but not least, a large portion of health care is simply wasteful and ineffective. Truly effective reform should address all of these problems.
4. Do not undermine incentives to develop new health care products and methods. Most innovative health care companies invest in research and development with the understanding that they can recoup their investment and make a profit in the US. Any proposal that results in significant interference with these incentives will greatly reduce the rate of innovation. This point is rather clear to me, but some people may not be convinced yet. If not, let me know and I can be more clear about why I maintain this position.
5. Reinforce the power of individuals to make informed decisions about their own care. I have been pretty adamant we should not be over paternalistic with regards to decisions that people make regarding their health. A few of you (e.g., Mercedes) seem reluctant to grant that this is an important consideration. If this is because in your heart of hearts you truly believe that government can always make decisions that are somehow better than those made by even the most informed individuals then I am not sure we can find much common ground. That is a pretty fundamental philosophic disagreement. However, if you simply think that granting individuals control over their health care destiny will compromise some other important value, I would ask that you please let me know what it is that you are afraid of.

So those are my five objectives. If anyone has another value that I didn't mention and deserves to be listed with these five let me know. Next time I will describe how I think we ought to balance these objectives with a single reform package.

Taking Geoengineering Seriously

It seems that not everyone in Utah is convinced about the virtues of cap-and-trade, the proposed carbon emissions reduction program. According to the Deseret News, Sen. Hatch and Gov. Herbert are trying to draw attention to the program's cost to the state. Also, an opinion piece in the Salt Lake Tribune claims that global warming isn't really our fault. After all, there are a number of other factors that have a bigger impact on climate than carbon emissions.

But does it really matter whose fault it is? As far as I am concerned there are two important questions that we should be focusing on. First, assuming that we take no drastic steps to change it, how should we expect the climate to change over the course of the next 100 years or so. I don't really care who or what is at fault so much as I care about what sort of challenges we are facing. Of course, knowing the causes of climate change is important if we want to predict the future. But even if global climate change is driven by sea monkeys in the South Pacific, it will still affect us. My second question is whether we can take any cost effective steps to mitigate the effects of climate change. This includes stabilizing temperatures, building higher levies, developing better storm prediction systems, etc.

Limiting carbon emissions should be seen as one way of mitigating the impact of climate change. It is not the only way, nor is it likely to be the most cost effective way. But it should be subject to a cost benefit analysis just like any other method. I am a bit skeptical of the approach of Hatch and Herbert because they fail to compare their costs to the cost of any other alternatives, much less to the cost to the economy of doing nothing. But a recent report by the Royal Society takes on the immense task of comparing the pros and cons of just about every viable method of bringing climate change under control, a process they call geoengineering.

I discussed one of the methods under consideration in a previous post; namely, the option of sending a fleet of ships out into the ocean to seed clouds which will then reflect more sunlight back into space. But the report considers a wide variety of methods which can be categorized under two primary headings: Carbon Dioxide Removal and Solar Radiation Management. The first category includes a number of alternative ways to reduce the amount of carbon dioxide in the atmosphere. They include such methods as planting more forests, growing algae in the ocean, and capturing atmospheric carbon using chemicals. Solar Radiation Management means doing things to reflect more sunlight. In addition to cloud ships, options include painting rooftops (or some have suggested whole deserts) white, planting crops that reflect more in a certain part of the spectrum, and releasing reflective particles into the air (or into orbit).

Although the recommendation of the article is that none of these methods should replace emissions reductions, if you take a look at the numbers you might wonder why. Reducing carbon emissions will cost the global economy about $1 trillion dollars each year. That will amount to about $2,500 for each household in the US. Some of the solar radiation management techniques can stabilize the climate at an estimated cost of between $5 billion and $20 billion. That would amount to between $12 and $50 per American household per year.

The difference is pretty stark. Should we be worried about climate change? Yes. But it seems like many environmentalists aren't just worried about the human impact of climate change. Many people simply want to reduce human impact on the environment regardless of whether the changes promote social interests. I suggest that we take back the debate from those that want to challenge the right of humans to inhabit the earth. Let's think about our options and choose those that make the most sense for us (and our children) economically.

Immigration: Principle and Process

Yesterday before the Town Hall Forum got underway I was conversing with another person in attendance. He was an upper middle aged man and appeared to be on the conservative side. One of the topics we discussed was immigration. When he asked me about my views on the matter I said that we need to grant more permits for workers to enter the country legally. When asked about his views he replied that the US needs to enforce its borders in order to protect our sovereignty. He said he doesn't really care whether there are a lot of immigrants or a few. He just wants them to be legal.

The man's comments made me realize how important it is that we distinguish between principles and processes. The man I was talking to was driven by a very strong sense of principle. The essence of his opinion was respect for the rule of law, something that is important to me as well. Yet my answer didn't really communicate that fact. I described a process, when he was interested in learning whether we shared the same principles.

So what is the principle behind my proposal? I believe that government should facilitate economic transactions rather than try to control them. It seems that there are quite a few employers who want to hire immigrant laborers (presumably because they will work for lower wages), and there are quite a few laborers who want to find employment in the US. Rather than trying to come up with a formula for determining the proper level of immigration, I think the government should let employers decide whether they need additional workers and laborers decide whether they want to work for those wages. I also believe that immigrants who come here to work should not automatically be entitled to the economic safety net that is available for citizens. Just as I don't think it is the role of government to limit the number of laborers who are allowed to work in the country, I don't think it should be the role of government to create additional incentives that attract even more migrant workers.

So how is my principle related to his principle? I believe that government attempts to control the market will almost always have the unintended consequence of making it more difficult to enforce the rule of law. The lack of an effective market leads to a black market. When the government oversteps its bounds, people will try even harder to sidestep government.

Some philosophers (such as Thomas Hobbes) have argued that maintaining the rule of law is more fundamentally important than preserving individual freedom. After all, without a strong central authority to protect us our lives would be nasty, brutish, and short. But I think that in a liberal democracy the principles of maintaining the rule of law and limiting the role of government must go hand in hand. So perhaps it would be better for me to begin any discussion of immigration by affirming my belief in these two basic principles, and then outline my preferred methods for achieving them.

Town Hall with Jason Chaffetz

Tonight Mercedes and I went to a town hall forum featuring Rep. Jason Chaffetz. Prior to seeing him in person, neither of us had a very positive impression of the freshman congressman. I thought his constant focus on earmarks is out of proportion to the importance of the issue, and Mercedes is unimpressed with some rash remarks he has made about illegal immigrants. But both of us came away more favorably inclined than before.

Chaffetz is very amiable in person, and he spent a good deal of time telling motivating stories about some of the great people he has met in his first term on Capitol Hill. He also shared a theory that people vote based on who they know, who they like, and who they agree with. Well, he has gotten a lot of attention, and he is likable enough, but the question remains whether I agree with him. So when the time came for him to field a few questions I raised my hand and asked whether we need to ration care to reign in the cost of Medicare and other government funded programs. His response didn't directly address the issue, but he avoided my question in an artful way. Basically, his response was that the power and responsibility for these health care programs should be with the states, and each state should be able to deal with the problem in their own way. He also stated that if there were an easy answer to the question people would have implemented it a long time ago.

I whole-heartedly agree that the best way to resolve the problems in health care is to let each state experiment with alternative reforms and see which things work the best. Health care reform is very complicated, and different solutions may work better in different circumstances. If we expect congress to design a single plan to resolve the whole mess then we will be greatly disappointed. But if 50 states try 50 different methods, someone will eventually stumble upon a successful recipe.

But I am not sure that the Medicare situation is too complicated to even attempt an answer. Basically, there are two ways to deal with the untold billions of unfunded commitments. Either we provide less care, or we raise taxes. It is only complicated because any attempt to ration care or reduce the number of people on Medicare will meet with incredible opposition from the elderly. Any attempt to raise taxes will infuriate just about everyone else. So its not that there is no easy answer, it is just that anyone who states the obvious and lays out a position will have a hard time getting elected.

Well, let me throw caution to the wind and state my position: if people receive government funded care, that care must be rationed. If we remove the incentive that market participants have to choose only cost effective transactions, we need to replace that market mechanism with another method of controlling output. Of course, the best case scenario would be to let individuals themselves decide whether a procedure is worth the cost. That is why it is critical for us to open up as much of the health care market as possible to free competition. But for that portion of society that simply can't pay, we need to ration care.

In the end, I was moderately impressed with Chaffetz's performance. He connected with the crowd and made a number of points that I agree with. Perhaps it is too much to ask of a politician to take a stand on an issue that is sure to offend half of the crowd no matter what position he takes.