Posts tagged with: Bad Economics

Blog author: mvandermaas
posted by on Friday, February 13, 2009

Washington is all atwitter about the “Stimulus,” which is currently being pushed through Congress (without being read by most members). Acton’s own Michelle Muccio has come up with a plan of her own, and did a bit of independent research to see if her proposal would find any support:

Mark Tooley calls out “emerging church maestro” Brian Mclaren in a piece today in The American Spectator titled “A Real ‘Economic’ Recovery.” I was introduced to Brian McLaren in seminary when new students were required to read his books in introductory classes. Unfortunately, I was one of only a handful not impressed. He also lectured in person to a class I took, but honestly I don’t remember much about the lecture, except conservatives were generally denounced and “big oil” was of course bad.

I can also relate to the beginning of Tooley’s piece where he highlights some of the stereotypes heaped upon religious conservatives. A few years ago, I attended a religious left conference as a reporter for Tooley’s Institute on Religion and Democracy in Cambridge, Mass. At the conference, one of the participants accused the Bush administration and a collection of evangelicals at the Pentagon of using the book of Revelation as a blueprint for implementing official U.S. foreign policy. It was bizarre to say the least, and the lady making this accusation was actually mildly rebuked by a somewhat more rational professor from Harvard’s John F. Kennedy School of Government.

Back to McLaren. Tooley responds to McLaren’s idea of an economic recovery with wit and humor, all along making serious points. Tooley concludes the piece by noting:

McLaren is hoping to “sabotage” these addictions to “stuff” by redefining “recovery” to mean waking up from a drug-induced “comfortable, dreamy, half-awareness” into a new world of solar panels and Fair Trade coffee. But this post-industrial fantasy is itself hallucinatory, portraying the Religious Left as even loopier and more archaic than the worst stereotypes about the Religious Right.

Don Surber thinks so, and it’s hard to argue his point when you see stories like this:

Sorry about the wait for that angioplasty...

Sorry about the wait for that angioplasty...


More than 400 Canadians in the full throes of a heart attack or other cardiac emergency have been sent to the United States because no hospital can provide the lifesaving care they require here.

Most of the heart patients who have been sent south since 2003 typically show up in Ontario hospitals, where they are given clot-busting drugs. If those drugs fail to open their clogged arteries, the scramble to locate angioplasty in the United States begins…

…While other provinces have sent patients out of country – British Columbia has sent 75 pregnant women or their babies to Washington State since February, 2007 – nowhere is the problem as acute as in Ontario.

At least 188 neurosurgery patients and 421 emergency cardiac patients have been sent to the United States from Ontario since the 2003-2004 fiscal year to Feb. 21 this year. Add to that 25 women with high-risk pregnancies sent south of the border in 2007.

Although Queen’s Park says it is ensuring patients receive emergency care when they need it, Progressive Conservative health critic Elizabeth Witmer says it reflects poor planning.

That is particularly the case with neurosurgery, she said, noting that four reports since 2003 have predicted a looming shortage.

“This province and the number of people going outside for care – it’s increasing in every area,” Ms. Witmer said.

“I definitely believe that it is very bad planning. …We’re simply unable to meet the demand, but we don’t even know what the demand is.”

Read that last line again: “We’re simply unable to meet the demand, but we don’t even know what the demand is.”

Well, that’s a confidence builder.

The Canadian system is supposedly one of the main models upon which the coming American health care revolution will be based. And yet this wondrous Canadian system seems to be more and more incapable of providing relatively common medical procedures to Canadian citizens, even in Canada’s most populous province. Because the system is controlled by a bureaucracy, it doesn’t respond to market pressures (goodness knows that most of the time, bureaucracies barely respond to political pressure) and in fact can’t even figure out what the market is demanding. All of this results in the Canadian government relying on the supposedly inferior US system to provide lifesaving care in many instances. No wonder 3 out of 4 Canadians live within easy driving distance of the US border.

So what happens if we decide to go down the path toward single-payer health care in the US? You’d have to be a fool to think that we could try the same thing that the Europeans and Canadians have done and get different results. No, in the long run, we’ll experience the same sorts of inefficiencies, quality and supply problems that plague the government systems, and yes, more Canadians will die, because the safety net that currently exists for the Canadian system here in the United States will be gone.

More: Check out the video after the jump… (more…)

As a person with a strong family history of cancer, this story warmed my heart. Oh wait, did I say “warmed my heart”? What I meant to say was “chilled me to the bone“:

Created 60 years ago as a cornerstone of the British welfare state, the National Health Service is devoted to the principle of free medical care for everyone. But recently it has been wrestling with a problem its founders never anticipated: how to handle patients with complex illnesses who want to pay for parts of their treatment while receiving the rest free from the health service…

…One such case was Debbie Hirst’s. Her breast cancer had metastasized, and the health service would not provide her with Avastin, a drug that is widely used in the United States and Europe to keep such cancers at bay. So, with her oncologist’s support, she decided last year to try to pay the $120,000 cost herself, while continuing with the rest of her publicly financed treatment.

By December, she had raised $20,000 and was preparing to sell her house to raise more. But then the government, which had tacitly allowed such arrangements before, put its foot down. Mrs. Hirst heard the news from her doctor.

“He looked at me and said: ‘I’m so sorry, Debbie. I’ve had my wrists slapped from the people upstairs, and I can no longer offer you that service,’ ” Mrs. Hirst said in an interview.

“I said, ‘Where does that leave me?’ He said, ‘If you pay for Avastin, you’ll have to pay for everything’ ” — in other words, for all her cancer treatment, far more than she could afford.

Officials said that allowing Mrs. Hirst and others like her to pay for extra drugs to supplement government care would violate the philosophy of the health service by giving richer patients an unfair advantage over poorer ones…

…in a final irony, Mrs. Hirst was told early this month that her cancer had spread and that her condition had deteriorated so much that she could have the Avastin after all — paid for by the health service. In other words, a system that forbade her to buy the medicine earlier was now saying that she was so sick she could have it at public expense.

Mrs. Hirst is pleased, but up to a point. Avastin is not a cure, but a way to extend her life, perhaps only by several months, and she has missed valuable time. “It may be too bloody late,” she said.

I’m simply thrilled that so many people are so keen on introducing this system to the United States.

The Wall Street Journal jumps on my bandwagon:

We’re all for putting more money in the hands of the poor and moderate earners, especially via stronger economic growth that will give them better paying jobs. But the $250 or $500 one-time rebate check they may now receive has to come from somewhere. The feds will pay for it either by taxing or borrowing from someone else, and those people will have that much less to spend or invest themselves. We are thus supposed to believe it is “stimulating” to take money from one pocket and hand it to another.

To put it another way, when the government calculates gross domestic product, it expressly omits transfer payments. It does so because GDP is the total of goods and services produced in the economy, and transfer payments produce no goods and services. The poor will spend those payments on something, but the amount they thus “inject” into the economy will be offset by whatever the government has to tax or borrow to fund the transfers. No wonder stocks sold off yesterday after Mr. Bernanke endorsed this 1970s’ economic show.

A fiscal stimulus that really stimulates would change incentives, and do so permanently so workers and investors can know what to expect and take risks accordingly.

Blog author: mvandermaas
posted by on Thursday, January 17, 2008
Think, Congress! THINK!

Congressional logic:

As the increasingly troubled economy emerges as the trump issue of the 2008 political season, senior congressional Republicans said Wednesday they would put aside demands to make President Bush’s tax cuts permanent if that was what it took to get quick action on a stimulus package…

…The White House has not addressed the issue in detail, but Bush, who has been traveling in the Middle East, is scheduled to hold a conference call today with congressional leaders. To avoid a veto, they hope to get his nod in advance on the outlines of a plan that would probably include a $500 rebate check for taxpayers, extended unemployment benefits for the jobless, and incentives for businesses to expand and create jobs.

Let’s think about this for a second:

  • There’s at least a tacit acknowledgment here that it’s better for the nation for this money to be in the hands of consumers instead of the government, because they’ll go out and spend it in order to “stimulate” the somewhat sluggish economy.
  • In order to get more money into the hands of consumers in the short term, Congress is probably going to allow tax rates to rise pretty significantly over the longer term, thus removing (presumably) a lot more money from the economy than the $150 billion that this neat little package is estimated to cost.

I know it’s difficult for Congress to think outside of the box, but let’s try for just a minute: What if… instead of handing out a $500 bribe to the voters, you actually made the US a more attractive place to do business? Perhaps by actually reducing the size, scope and cost of government, thereby leaving more of that cash in the private sector where it belongs – where wealth is created instead of just siphoned off of productive people? Heck, you might even obviate the need for those extended unemployment benefits and business incentives, because the drag on the economy from the cost of government would be significantly smaller…

But it is an election year you know. So what are you going to do with your $500?

Via The New Editor, a restatement of a basic economic rule that we all need to remember as government in America swings back to the left. Clive Crook, in the course of reviewing Robin Williams’ Man of the Year, notes the potential unintended consequences if an anti-business mood overtakes our representatives:

Case by case, the merit in these proposals varies from substantial (executive pay) to less than none (taxing profits), but put the merits of the individual policies aside. What they have in common is a fallacious premise — namely, that the cost of a new fiscal or regulatory burden stays where you first put it, with the companies concerned. The idea is very appealing: If businesses are told to give their workers more-generous benefits, or to pay higher taxes, or to use alternative fuels that reduce their greenhouse-gas emissions, or whatever it might be, the rest of us — workers and consumers — get that benefit at no cost.

But that is rarely, if ever, true. In the end, the costs of those policies, as well as the benefits, mostly find their way back to voters at large as higher prices or lower wages (and this is to say nothing of the dynamic effects on incentives to grow and innovate). In short, business is not a separate segment of society that can be squeezed to advance the interests of the other segments. Economies are not built that way.

A very basic idea, to be sure, but one far too easily overlooked by populists who promote governmental intervention and regulation on behalf of “the poor” or “consumers” or whatever other group happens to wander into their line of sight. And having worked in political offices in the past, I know all too well the pressures that politicians face to “do something” when economic problems begin to mount. But we all need to step back and remind ourselves that in many (probably most) cases, governmental action to correct perceived economic injustices ends up penalizing not only the intended target of the action, but also the intended beneficiary.