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The Lighthouse


The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 19, Issue 26: June 27, 2017

  1. Medicare and the Myth of Single-Payer Efficiency
  2. Construction Restrictions Cost Lives
  3. What the World Needs Now: Flower Power?
  4. In Search of Monetary Integrity
  5. Independent Updates


1) Medicare and the Myth of Single-Payer Efficiency

Single-payer—i.e., taxpayer-funded—health reform may have died at the national level when Bernie Sanders lost the Democratic Party’s presidential nomination to Hillary Clinton. But it continued in California, where lawmakers introduced SB 562, the Golden State’s single-payer healthcare proposal. Its prospects look dead at the time of this writing, but whether or not it will remain so next year is another matter. This is one reason why it’s still important to address recurring claims about the supposed efficiency advantages of single-payer health reform.

Support for single-payer rests in part on the belief that its administrative costs are significantly lower than private insurance. However, as Independent Institute Research Fellow Gary M. Galles notes in an op-ed for The Hill, a leading piece of evidence for this claim—the alleged administrative-cost advantages of Medicare, a single-payer system—is not really evidence at all. Single-payer advocates frequently assert, for example, that Medicare’s administrative costs are only 3 percent of the program’s total costs, whereas the administrative costs of private insurance are 11 to 14 percent of premiums. Such a claim, however, is like comparing oranges and apples. One reason involves the fact that, as Galles puts it, “nonmedical administrative costs largely depend on the number of persons insured, not on medical expenditures.” In addition, Medicare’s administrative costs are spread across multiple agencies—including the IRS, Social Security, and Health and Human Services—and those components are typically ignored in standard calculations of administrative costs.

There are other factors that also make Medicare look more efficient than private coverage. In many states, health insurance companies must pay a tax on premiums collected—a cost that’s often ignored in calculations of private insurance administrative costs. For these and other reasons, “What everyone ‘knows’ about the lower administrative costs of single-payer systems is false,” Galles concludes.

Single-Payer Healthcare Is Far More Expensive than Advocates Claim, by Gary Galles (The Hill, 6/15/17)

A Better Choice: Healthcare Solutions for America, by John C. Goodman

Priceless: Curing the Healthcare Crisis, by John C. Goodman

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2) Construction Restrictions Cost Lives

Homeless people are far more likely to die prematurely, but Oakland’s deadly Ghost Ship warehouse fire last December and London’s catastrophic Grenfell inferno less than a fortnight ago are two horrific reminders that having a roof over one’s head is not the same as having a safe place to live. In different ways, each disaster is a failure of government policy. The root problem, as Independent Institute Senior Vice President Mary L. G. Theroux suggests in an op-ed for the Huffington Post, is government suppression of private housing construction.

“Governments depriving those they rule from access to low-cost housing is neither new nor confined to ‘developed’ nations,” Theroux explains, recounting how in the 1960s governments from Peru to India prevented her father from building affordable housing for would-be first-timer homeowners.

Theroux continues: “It’s time for those victimized by these policies to stop being duped and rise up: You’re not being kept down because ‘the rich are getting richer.’ You’re being killed and dispossessed by your rulers ‘protecting’ you from housing you can afford and the opportunity to make a better life for yourself and your families.”

Death by Government Housing (Policy), by Mary L. G. Theroux (Huffington Post, 6/19/17)

Housing America: Building Out of a Crisis, edited by Randall G. Holcombe and Benjamin Powell

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3) What the World Needs Now: Flower Power?

It’s been 50 years since the flower children of the 1960s flocked to the streets of San Francisco’s Haight-Ashbury neighborhood and kicked off the Summer of Love, but many of their concerns are in one form or another still with us. Indeed, “the hippies’ defiance of government holds lessons for us today,” writes Independent Institute Senior Fellow Lawrence J. McQuillan in an op-ed for the San Francisco Chronicle.

The war in Southeast Asia is long over, but subsequent U.S. military interventions have destabilized much of the Middle East. Despite liberalization at the state level, marijuana is still classified at the federal level as a Schedule 1 drug. The hippies protested the soul-crushing tendencies of centralized power, but the feds now have more power than ever. Although many excesses of police-state intelligence gathering were tamed in the aftermath of Watergate, Big Brother has far more sophisticated surveillance tools at its disposal than it ever had when federal COINTEL operatives infiltrated antiwar groups in the late 1960s.

“Half a century after the Summer of Love, resistance to government orthodoxy and the quest for personal freedom remain noble pursuits,” McQuillan writes. “In 2017 and beyond, America would benefit from less politics and more reliance on individuals solving problems in their own communities.”

Summer of Love’s Hippies Had It Right about Big Government, by Lawrence J. McQuillan (San Francisco Chronicle, 6/24/17)

Do You Remember the Sixties?, by Robert Higgs (The Beacon, 5/3/14)

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4) In Search of Monetary Integrity

President Richard Nixon owed his 1972 electoral victory in no small measure to Federal Reserve chairman Arthur Burns, who helped goose the money supply to ensure the economy would be humming when voters entered the ballot box. Economists and historians have called out the Fed for its politically motivated monetary mischief, but the threat has never gone away. The appointment of the next members of the Federal Reserve Board policymaking committee will be a test of political integrity as well as a test of the safety and soundness of the world financial system, which largely relies on the U.S. dollar, as Independent Institute Research Fellow David Beckworth explains for a piece in National Review.

“Ultimately, then, President Trump needs to appoint individuals to the Federal Reserve who take the global importance of the Federal Reserve seriously,” Beckworth writes. “The stability of the world economy depends on it.”

Trump has reportedly selected two new Fed Board members, with more remaining. Monetary economist J. Huston McCulloch has offered insightful commentary about various potential Fed appointees in The Beacon. As to the fate of Fed Chair Janet Yellen, a newspaper article reported that the president had told Yellen that “he considered her, like himself a ‘low-interest-rate’ person.” This is not good news for those who believe that her policies, like those of her predecessor Ben Bernanke, are creating an unsustainable financial bubble.

Trump’s Appointments to the Fed Could Affect the Global Economy, by David Beckworth (National Review, 5/18/17)

Filling the Federal Reserve Board Vacancies?, by J. Huston McCulloch (The Beacon, 2/11/17)

Boom and Bust Banking: The Causes and Cures of the Great Recession, edited by David Beckworth (Editor)

Another Financial Bubble Ahead? Statistics Suggest It Could Happen, by Alvaro Vargas Llosa (Las Vegas Sun, 6/17/17)

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5) Independent Updates

The Beacon: New Blog Posts

MyGovCost: New Blog Posts Featured Video
News Alert

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  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org