Volume 17, Issue 5: February 3, 2015
- Healthcare Reform Should Target Bad Incentives
- Americans Ignore Real Threats at Their Peril
- Why the Pope Needs Public Choice
- The New Greek Tragedy
- New Blog Posts
- Selected News Alerts
1) Healthcare Reform Should Target Bad Incentives
Almost all Republicans in Congress say they want to repeal and replace Obamacare, but few agree on what to replace it with. Why? According to Independent Institute Senior Fellow John C. Goodman, its because they think about health reform in the wrong way. In a recent piece for Forbes, Goodman explains the right way.
Many politiciansDemocrats and Republicans alikethink the most serious problems in American healthcare originate in the private sector. In contrast, Goodman believes most problems originate in the public sectorespecially in the bad incentives created by misguided government policies. These bad incentives encourage people to drop private coverage when the government expands the public safety net and relegate people into non-portable coverage that ends when they switch jobs.
When people act on these perverse incentives, they shift costs to others in the form of higher taxes, higher premiums, higher medical bills, lower wages, etc., Goodman writes. How can we correct all of that? By taking a do-no-harm approachmaking sure that government is not causing the very problems we want to solve.... A do-no-harm approach creates a level playing fieldfree of government distortionsupon which the private sector is free to make choices and solve problems. Goodmans op-ed elaborates on this approach. Highly recommended.
Why Dont Republicans Have an Alternative to Obamacare?, by John C. Goodman (Forbes, 1/19/15)
Priceless: Curing the Healthcare Crisis, by John C. Goodman
Healthcare Solutions for Post-Obamacare America, by John C. Goodman
2) Americans Ignore Real Threats at Their Peril
Americans worry too much about low-probability risks to their security and well-being, and dont worry enough about government encroachments that pose a real threat. Case in point: While we were focusing on the brutal terrorist killings that struck Paris last month, the vast majority of us missed a news story revealing the U.S. governments unlawful collection of Americans phone recordsin bulk and without probable cause of criminal wrongdoingfor purposes other than national security. The culprit? The U.S. Drug Enforcement Administration.
Although Americans should be outraged when politicians and bureaucrats violate the Constitution for the sake of national security, one can make a reasonable case that violations for the sake of domestic policy are often worse. In the current example, the Drug Enforcement Administration allowed its agents to access bulk phone records if they had reasonable actionable suspicionnot probable causethat a phone number was related to an active federal criminal investigation. Such a program, as Independent Institute Senior Fellow Ivan Eland explains in his column for the Huffington Post, is illegal because the U.S. Constitution doesnt authorize general warrants, only specific warrants that identify a particular suspect and crime. Thats because the Founders believed that British authorities prior to the American Revolution had abused their authority by using general warrants to go on fishing expeditions that harassed innocent colonists.
Hopefully, the Drug Enforcement Administrations unconstitutional program has been discontinued. A spokesman for the Justice Department claimed that the DEAs data collection program was suspended in September 2013, has been terminated, and the data deleted, Eland writes. If true, that is rare good news in the field of civil liberties preservation; however, citizens should still be alert for other unconstitutional or illegal government behavior originating from bureaucratic incentives to exploit peoples excessive fear of being killed by the rare terrorist attack.
A Second, Even More Unjustifiable Episode of Government Collection of Phone Records, by Ivan Eland (The Huffington Post, 1/19/15)
Audio: Ivan Eland on the DEAs New Database (Doug Stephans Good Day, 1/21/15)
3) Why the Pope Needs Public Choice
Last December, Pope Francis gave his diagnosis of the ills that plague the upper echelons of the Roman Catholic Church. If he wishes to making last reforms, His Holiness would do well to study a discipline that specializes in the pathologies of non-market organizations: public choice. Such study would help him to better understand the incentives and constraints of the church hierarchyan essential first step if he is to make lasting improvements, according to Independent Institute Research Fellow William F. Shughart II and Utah State University Visiting Assistant Professor of Economics and Finance Jayme Lemke.
Heres an excerpt from Lemke and Shugharts analysis in National Review: Pope Francis is the product of a South American political climate affected by liberation theology. He is happy to put authority in bureaucratic hands to further political causes, including efforts against climate change and income inequality, that are dear to the Left. If he is serious about curial reform, however, as he gives every indication of being, he might want to peruse more of the public-choice literature on bureaucracy and on the political process generally.
Familiarity with public-choice theory would allow Pope Francis to recast his diagnoses in ways more amenable to treatment. For example, in his December 22 notice to the Roman curia (the Catholic Churchs governing body), he failed to identify the role that institutional self-interest plays in shaping the behavior he wishes to change. He also failed to recognize that what he calls spiritual Alzheimers diseaseforgetting the Churchs core tasksstems from mission creep, what Lemke and Shughart call a predictable side effect of the survival instinct. Seen in this light, the pontiffs message, they write, is less an indictment of the curia than a lesson in the dangers and limitations of bureaucratic organization.
The Pope Should Read Public-Choice Theory, by Jayme Lemke and William F. Shughart II (National Review, 1/24/15)
Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William F. Shughart II
4) The New Greek Tragedy
Greece just elected a left-wing prime ministerAlex Tsipraswho is threatening to pull his country out of the euro unless the European Union and International Monetary Fund drop demands that he carry out draconian austerity measures. Tsipras wants lower interest rates on Greek debt and a longer repayment schedule. The greatest tragedy in all of this, according to Independent Institute Senior Fellow Alvaro Vargas Llosa, is that Greek voters now equate austerity with free-market capitalism and dont appreciate that their leadersand ultimately their dysfunctional political culturebear the brunt of the blame.
The troubles between Greece and the European Union are deeply rooted in Greeces failure to reform its welfare statea failure that helped drive down GDP by 25 percent in five years and push up unemployment to 25 percent. The standoff could have far-reaching consequences, Vargas Llosa explains in Investors Business Daily. If Greece decides to go along with its creditors by increasing taxes and repaying 7 billion euros in debt it is supposed to pay off this summer, this would further strain the Greek economy and help prevent it from recovering anytime soon. But if the European Union caves in to Tsiprass demands, this could encourage the voters of Portugal and Ireland to follow Greeces lead and stage revolts themselves.
Writes Vargas Llosa: No one in the EU bureaucracy foresaw this dilemma when they came up with these rescue packages, which may have bought some time but havent solved the problem that Europes economies face: the need to reform the welfare state radically and liberate European producers and consumers from high taxes, anti-competitive regulations and other destructive practices.
Lack of Reform, Not Austerity, Doomed Greek Economy, by Alvaro Vargas Llosa (Investors Business Daily, 1/30/2015)
Global Crossings: Immigration, Civilization, and America, by Alvaro Vargas Llosa
5) New Blog Posts
From The Beacon:
Breaking News: The FDA Will Not Regulate Your Kids Skateboard
John R. Graham (2/2/15)
The Fall of Liberty and Human Dignity in American Sniper
Sam Staley (1/31/15)
Controlling the Regulatory State
Randall Holcombe (1/30/15)
How Much Longer Can the U.S. Economy Bear the Burdens?
Robert Higgs (1/30/15)
Death Valley? Peter Thiel and Steve Jobs on What Could Kill Silicon Valley
Lawrence J. McQuillan (1/29/15)
Milton Friedman on Free College
Vicki Alger (1/29/15)
About That CBO Report Claiming Obamacares Costs Are Down 20 Percent...
John R. Graham (1/28/15)
From MyGovCost News & Blog:
What President Obamas Budget Proposal Means to the Typical American Household
Craig Eyermann (2/2/15)
California Is Increasist in Cost of Government
K. Lloyd Billingsley (2/2/15)
Why Is the Debt Rising Faster Than the Deficit?
Craig Eyermann (1/30/15)
Federal Operation Choke Point Abuses Americans
K. Lloyd Billingsley (1/28/15)
The Next 10 Years and Beyond
Craig Eyermann (1/27/15)
6) Selected News Alerts