Archive for October, 2011

In Real Life They Never Call it the Dark Side

October 24, 2011 5 comments

I remember a time when I was young that some churchgoers were concerned that we (the children) were becoming corrupted by Star Wars because we were actually worshiping the force.  I thought this was a pretty strange thing to worry about at the time but oddly enough the older I get the more I feel like everything you need to know about power and good and evil you can learn from those movies (don’t ask me what happened to George Lucas, I don’t get it either…).  And don’t worry you don’t even need to sit through the newer ones.  You pretty much just need to watch every scene with Yoda, when he was still just a well-made puppet.  So when I see things like this I can’t help but think of this.

“…beware of the dark side.  Anger, fear, aggression, the dark side of the force are they.  Easily they flow, quick to join you in a fight but once you start down the dark path, forever will it dominate your destiny.  Consume you it will…..”

“Is the dark side stronger?”

“No, quicker, easier, more seductive.”

“But, how am I to know the good side from the bad?”

“You will know, when you are calm, at peace, passive.  A Jedi uses the force fo knowledge and defense, never attack.”

Why am I talking about Star Wars?  Because the existing political paradigm is being upset.  This is good because it is an illusion which distracts us from the important conflict, that between individualism and collectivism.  But it is very dangerous because the dark side’s allure is that it is quicker, easier, more seductive.  The dark side preys on the uninformed, the unthoughtful and the desperate.  It appears at your time of need and offers a solution.  It offers you the thing you want most.  When your house is being foreclosed it offers to satisfy your lust for possessions and your anger at the banks.

More importantly, this is why a jedi must be thoroughly trained prior to this moment, when his mind is clearLiterally this instant, as I was writing that, I heard an OWS guy on TV say “all I want is 50,000/year.”  All I want is freedom.   I want money too but I know that individual liberty and responsibility and the rule of law is the only way to be secure economically.  He doesn’t know that because he hasn’t thought it through, and he is unemployed, and he just wants $50,000.  It is too late for him to study economics, political science and moral philosophy.  He just wants $50,000.  And what’s worse he went on to say he is praying that the union lets him in (he is a welder).  And he complained that there was a bridge or something nearby that he could have been working on and asked “why aren’t we working on that?”  He doesn’t understand that all these problems are the result of collectivism.   The reason he can’t get work is that the union has special power to prevent him from working unless he begs them for permission.  But taking away this power from the union is not such an obvious way for him to get $50,000.  It’s not quick enough, easy enough, seductive enough.  A much simpler solution would be to get the government to take it from someone else and give it to him.  After all, he deserves it more than those greedy rich guys on Wall Street.

Libertarians want to end the Fed.  So do OWS folks.  Libertarians think the government is screwing us over.  So do the OWS folks.  Libertarians want radical change.  So do OWS folks.  These movements are not the same.  One is characterized by a desire to be free and have a government that will leave them alone except for the enforcement of property rights.  One is characterized by a hatred of the rich and Republicans, and Fox News etc. and a desire to use the power of government to suppress those voices and behaviors with which they don’t agree and take the property of those whom they hate for their own benefit.  One is focussed on knowledge and defense, one is focussed on attack.  Have you ever seen a tea party person call anyone greedy?  There is a reason why the other side has to do this, they have to make you hate them to give you moral authority to attack them.  We all must figure out which is which and who’s side we are on now while we are (relatively) calm and at peace.  That is the time to consider which is more important liberty or $50,000.  Because when the time comes to choose, the decision will not be presented to you in those terms.  And when they tell you “you can’t imagine the power,” they certainly won’t call it the dark side.

A Real CLASS Act

October 17, 2011 2 comments

The administration declared a piece of the healthcare bill “unworkable”  on friday, ending the Community Living Assistance Services (CLASS) Act.  Long-time readers of this blog will not be surprised by this as it is a clear result of the adverse selection inherent in these markets.  As administration officials put it:

If they designed a benefits package generous enough to meet the law’s requirements, they would have had to set premiums so high that few healthy people would enroll. And without a large share of healthy people in the pool, the CLASS plan would have become even more expensive, forcing the government to raise premiums even higher to the point of the program’s collapse.

Sound familiar?  So the Obama administration finally figured out what I was explaining a year and a half ago.  If only they had read my blog….. Of course, it’s not as though the people who designed this stuff had never heard of adverse selection, this was in there because in theory it reduced the deficit by $86 billion.  This accounted for over 40% of the imagined savings in the bill.  So this is playing out exactly as I and many others predicted.  The promised savings are not materializing for reasons which were entirely predictable (notice the quote at the end of this post).  Of course at the time everything was far too complicated for most people to understand so it just came down to our word against theirs and you took the side of whichever party you were predisposed to agree with.  But I digress.

The important thing here is that this presents the perfect opportunity to notice how government robs us of our liberty by promising the impossible.  They told us that they were going to have a voluntary insurance program that would generate $86* billion in profits.  It should be obvious from the start that this is a complete lie.  If it were possible to offer a voluntary insurance program that paid for itself (and actually generated a profit) someone would be doing it already.  And of course they are doing it, there are all kinds of long-term care insurance products available in the market.  We don’t need government to have insurance, we just need to pay for it.

The government doesn’t have special powers to eliminate asymmetric information.  They don’t have special powers to produce goods cheaper than the private sector.  There is only one special power the government has which the private sector doesn’t have: the power to force you to do things.  The failure of this plan is the result of three particular causes:

1.  Information is asymmetric and this causes adverse selection

2.  The plan is required to be self-sufficient

3.  The plan is voluntary

The first one is a law of nature.  Notice, the first step in the theft of your liberty is always a claim that the government can overcome some natural yet inconvenient consequence of individual liberty.  But the way they overcome it is never by somehow changing the laws of nature, it is always by taking away some element of individual liberty.  This, after all, is the only power government has.  The reason they failed to eliminate the effects of adverse selection in this case is that they prevented themselves from using this power from the outset by including numbers 2 and 3 in the bill.  Notice that if the plan didn’t have to be self sufficient, they could just keep it going by subsidizing it with money they took involuntarily from someone else.  If the program didn’t have to be voluntary they could force people to be in it and, again, keep it going with money they took involuntarily from someone else.

But have no fear, the rest of the healthcare law won’t have this problem….

Sherry Glied, assistant secretary for planning and evaluation at HHS, countered that the CLASS program was an isolated case whose practicality was questionable from the beginning.

“There is a very clear difference between that kind of uncertainty and the rest of the law,” she said.


*I’ve been hearing 79 billion lately  so the exact number seems a little uncertain but the principle is the same

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Managing monetary policy ain’t like dusting crops, boy. Without precise calculations, we’d fly right through a star, or bounce to close to a supernova, and that would end your trip real quick, wouldn’t it.

October 5, 2011 4 comments
Categories: Uncategorized