Sometimes, the Strawman Blogger wonders: Why think at all when others can do it for you?
For a much more detailed and intellectual take on the mess in Europe, read Krugman. It's clear, informative, and adds quite a lot to our previous protestations that little Europe is thoroughly screwed.
An additional note: Krugman points out the impossibility of deconstructing the Eurozone. But given the fractured political nature of Europe, I don't see how any meaningful integration can be achieved at all.
Tricky.
Wednesday, February 10, 2010
Tuesday, February 9, 2010
In Which We Wonder Why Corporations Are So Levereged
And outsource the task to Felix Salom here.
Click the link - it's instructive. Corporations that finance operations through debt pay a negative six percent tax rate. They simply raise enough debts that they pay more in interest than they earn in income. The tax deductibility of interest payments takes care of the rest.
In a world where everyone would like to return to some semblance of thrift, subsidizing companies to take on debt and taxing equity at rates in excess of thirty percent, can politely be called "a large misalignment of priorities."
Click the link - it's instructive. Corporations that finance operations through debt pay a negative six percent tax rate. They simply raise enough debts that they pay more in interest than they earn in income. The tax deductibility of interest payments takes care of the rest.
In a world where everyone would like to return to some semblance of thrift, subsidizing companies to take on debt and taxing equity at rates in excess of thirty percent, can politely be called "a large misalignment of priorities."
Healthcare Redux: In Which We Declare Victory In The Blogosphere
A mere four days after we pointed out the conservative ideas already included in the healthcare bill, venerable blogger Ezra Klein points out the conservative ideas already included in the health care bill.
Of course, this would all hang together better if we hadn't gotten the idea from him in the first place. But we feel that this could be considered points on the board.
Objectively speaking, though, he writes better than we do. Bastard.
Of course, this would all hang together better if we hadn't gotten the idea from him in the first place. But we feel that this could be considered points on the board.
Objectively speaking, though, he writes better than we do. Bastard.
The (New) Most Important Graphic I've Seen
If you want to discuss America's deficit problem, you need to be familiar with this graph:
More info at the New York Times. It's created in part to show how little you accomplish with a non-defense discretionary spending freeze, but it's also instructive on the nature of government.
There's a pervasive myth that big government it some sort of mistake, and we can reduce is spending while still receiving the services we like. It's not: Government spends most of it's money on services we ask for.
More info at the New York Times. It's created in part to show how little you accomplish with a non-defense discretionary spending freeze, but it's also instructive on the nature of government.
There's a pervasive myth that big government it some sort of mistake, and we can reduce is spending while still receiving the services we like. It's not: Government spends most of it's money on services we ask for.
My Big Fat Greek Monetary Crisis
I don't have much to say about the ongoing crisis in Greece - Eurozone monetary policy is not my area of expertise.
It does bear to mention, though, that this highlights the dangers of giving up control of your money supply without getting any political clout in return. It also raises some pretty significant questions about the viability of the European Union, at least for smaller member countries.
Back in the heady days of aught-five, I started to have my doubts about the EU. At that time, Ireland was being held up as the conservative European model: low regulation, low wages, and low taxes was spurring a rage of economic growth. It was, as I recall, something of a favoured son for the new conservative movement.
Since then, things have gone badly off the rails. Ireland is a telling case study. They had a great policy in the boom times, but when the bust came, they had no way of responding to the sudden drop in global demand.
What Ireland's export-heavy economy could use is a fair to drastic devaluation of their currency, to help float demand and keep them above water. But the European Central Bank has no intention of devaluing the Euro - generally speaking, the ECB does what it's largest member states, like France and Germany, tell it to do.
It was a bit of a horse-before-the-cart problem: joining the Eurozone has always meant that the ECB takes control of your monetary policy, while the Union promises political unification at some undetermined point in the future.
That doesn't work. We tried something similar once (sans central banking) back in the days of the Second Continental Congress. What we ended up with was a loose confederation of states that didn't pay much heed to a central political authority.
At some point, the EU is going to have to press for more control over the economic behavior of it's member states. Either that, or countries like Greece and Ireland should start to question why they signed up for the union in the first place.
It does bear to mention, though, that this highlights the dangers of giving up control of your money supply without getting any political clout in return. It also raises some pretty significant questions about the viability of the European Union, at least for smaller member countries.
Back in the heady days of aught-five, I started to have my doubts about the EU. At that time, Ireland was being held up as the conservative European model: low regulation, low wages, and low taxes was spurring a rage of economic growth. It was, as I recall, something of a favoured son for the new conservative movement.
Since then, things have gone badly off the rails. Ireland is a telling case study. They had a great policy in the boom times, but when the bust came, they had no way of responding to the sudden drop in global demand.
What Ireland's export-heavy economy could use is a fair to drastic devaluation of their currency, to help float demand and keep them above water. But the European Central Bank has no intention of devaluing the Euro - generally speaking, the ECB does what it's largest member states, like France and Germany, tell it to do.
It was a bit of a horse-before-the-cart problem: joining the Eurozone has always meant that the ECB takes control of your monetary policy, while the Union promises political unification at some undetermined point in the future.
That doesn't work. We tried something similar once (sans central banking) back in the days of the Second Continental Congress. What we ended up with was a loose confederation of states that didn't pay much heed to a central political authority.
At some point, the EU is going to have to press for more control over the economic behavior of it's member states. Either that, or countries like Greece and Ireland should start to question why they signed up for the union in the first place.
Monday, February 8, 2010
A Note On Incentives
The Strawman Blogger is quite the fan of the dismal science - because of this, we find it stimulating to look at the world as a system of incentives. For example:
As we've discussed previously, you have no reference point about the cost of your insurance. Because of that, the only feedback you can provide is based on quality. Did you see you favourite doctor? Did you get your treatment? Was your copay too large?
If you don't get want you want, you complain. And insurance companies have every incentive to respond to your complaint. They can make preferred provider plans more expansive, provide better access to treatment, and reduce your copay.
This, of course, costs money. Your employer, certainly, can shop for more affordable policies, and they do. But in the war between quality and price, there's really only one thing you respond to.
If that doesn't sound crazy, it should. Think about it - Everything else you purchase is a balance between quality and price. The Strawman Blogger does not drive a Subaru Impreza because it suits his bloody image. We make decisions about food, clothing, shelter, and transportation, all based on the premium we're willing to pay for the product we get. Everything except healthcare.
Boggles the bloody mind.
As we've discussed previously, you have no reference point about the cost of your insurance. Because of that, the only feedback you can provide is based on quality. Did you see you favourite doctor? Did you get your treatment? Was your copay too large?
If you don't get want you want, you complain. And insurance companies have every incentive to respond to your complaint. They can make preferred provider plans more expansive, provide better access to treatment, and reduce your copay.
This, of course, costs money. Your employer, certainly, can shop for more affordable policies, and they do. But in the war between quality and price, there's really only one thing you respond to.
If that doesn't sound crazy, it should. Think about it - Everything else you purchase is a balance between quality and price. The Strawman Blogger does not drive a Subaru Impreza because it suits his bloody image. We make decisions about food, clothing, shelter, and transportation, all based on the premium we're willing to pay for the product we get. Everything except healthcare.
Boggles the bloody mind.
In Which We Interact
Over the weekend, someone raised a laudable point in our comment thread: "Why?" they ask. Why healthcare, why the expense? In other word: Why worry?
Life isn't perfect. If 10% of the population lacks health care - well, 10% of the population should try harder. It's America, dammit.
And we can see their point. The Strawman Blogger is no friend of the lower classes. We were born with the silver spoon so far up our mouth that it seriously impaired our gag reflex. Our trust fund is so large it exerts a significant gravitational pull. In our minds, poor people should only be seen at charity events, or when we happen to drive past a bus stop.
But the problem of health care is not a problem of the poor. It is a problem for all of us. And the Strawman Blogger has perfectly selfish reasons to extend health care to the underclass.
Our Perfectly Selfish Reasons
The Strawman Blogger is a man of almost unlimited patience. But even we are beginning to tire of repeating the same, basic refrain: In America, healthcare is broken.
This is a very important point. Let's repeat it:
American healthcare is broken
American healthcare is broken
American healthcare is @$^*% broken
We feel better.
Somewhere Along The Way, Life Happened
But why is it broken? you ask. My healthcare is just fine. I can see any doctor. Get any surgery. All without coughing a single bloody cent.
That's the trouble with American healthcare. It feels free. But it's not. And it's designed in such a way to screw over exactly one person, and screw them so thoroughly and deeply that they may never walk the same again.
You.
Getting Screwed By American Healthcare: A Reference Guide
Part 1 - Costs are Out Of Control
Each year, health care costs rise. Usually, somewhere between 5-12%. By comparison, a vibrant economy grows about 4-6%. Middle-class wages average a terrible 0% - over the past ten years, they haven't grown at all.
Given these rates, health care will consume 50% of government spending by 2082. That's money required for transportation, law enforcement, debt payments and Social Security.
It would be bad enough if health care were pretty cheap already. But it's not. Health care in America is more expensive than any other industrial country in the world:
This is a graph of our health care costs and our health care outcomes. On the left is how much we pay for health insurance - on the right, how long we live. America doesn't just pay more for health care. We pay a LOT more, over 40% more than anyone else. Maybe this would be a good deal if we lived longer, but we don't: our outcomes are rated 37th in the world.
Wondering where that money comes from? The Strawman Blogger is glad you asked.
This graph comes from the eminitable Ezra Klein. Click on it: he has a lot more like it. It's about unit costs - the cost of a procedure in America versus a procedure in other countries. They are not comparable, and they are not cheap. Unit costs are killing us.
Part 2 - You Don't Feel It
Surely you exaggerate, you say. If things were that bad, I would know.
But you wouldn't, you poor simpleton. And here's why: For godawful reasons practically lost in the midst of time, your insurance is provided to you by your employer. Why this should be the case defies all belief. The Strawman Blogger cannot imagine a world were his employer provided his auto, home, or renters insurance.
As long as you're employed, you don't feel health care getting more expensive. Your employer simply soaks up the excess cost behind your back. Whenever health care costs rise, your company absorbs the difference, then hands out any money left over as wages. If costs rise too much, you just get a smaller raise that year.
Skeptical? You probably shouldn't be.
Of course, if you're unlucky enough to be fired, or if you happen to be on the individual market, the pain is very real. Insurance companies don't care how broke you are, or how hard you've worked. They'll simply calculate how much your illness could cost them, and they'll make you pay it. And if it gets too expensive, they'll stop insuring you. You've just been the victim of recission, and it happens every day.
Part 3 - The System Screws You
So that's our situation: We have out-of-control costs, hidden from you by your employer, that you'll rarely see but will be quite the nuisance if you ever lose your job. Perversly, people are quite happy with this situation.
Employers love it because it gives them power. Sure, they're loving it less and less over time, because power is ungodly expensive. But as long as they provide health care, you can't change jobs or quit without risking the individual market. They get to make you unhappy, and you get to take it.
Insurers love it because they don't have to bargain prices down. In a normal world, insurers would have to negotiate with doctors over their fees. The companies that were better at it would be able to offer cheaper policies, and thus would get more customers. The free market in action. But because the costs are hidden by your employer, they don't have to bother. They can pay your doctor whatever he asks for and pass the bill on to you.
Doctors love it because they get paid a lot. Much, much more than doctors in any other industrial country. Remember that unit cost graph? That's what you're paying so your doctor can buy another yacht. It's no coincidence that Medicare, the one insurer who can be ballsed to negotiate with it's doctors, controls costs better than it's private counterparts.
Part 4 - It's About To Get Much Worse
So we've set up a system that doesn't just allow costs to get out-of-control: it encourages it. And if everyone is having second thoughts, if insurers and employees are thinking, "Slow down, we might have underestimated the size of this particular fucking problem," it's too late.
The individual market is already a mess, but it's going to get much worse. The only way insurers can control costs is through recission - they just stop insuring people who are too expensive. As costs rise, more and more people simply won't have access to insurance. It will be too expensive, and insurers aren't a bloody charity.
Employers don't have that option. So healthcare costs will continue to exert downward pressure on American wages. Eventually, they'll stop offering health care all together, or they'll ratchet down the quality of your policy until it makes no difference. Either way, you'll have to get something on the individual market. Good luck.
Final Lesson - There Are Other Options
Let's not kid ourselves. The current system isn't free market. There's nothing free about it. You have no choice - your employer chooses for you. You have no information - if you're an individual, insurance companies are required to tell you $%*# all.
It can be fixed, though. You can have a public option, like Medicare, that uses it's size and market position to bargain aggressively with providers. You can have government owned hospitals, like the VA, that simply sets the wages of their staff. Or you can try reform through a mix of subsidies, regulation, and oversight of the existing private market, and hope that incremental policy changes and public awareness will begin to move prices downward.
That last bit is the administration's plan. And it does a fair job of it: It shaves over 100 billion off the deficit over the next ten years. Of course, you say, that's not near enough to rein in costs - and I agree with you. But given how hard you fought the most conservative piece of healthcare legislation in history, you'll forgive us if we don't sing the praises of the public option quite yet. The Strawman Blogger will take what he can get, thank you very much.
And if all this isn't enough? Well, we can always make a moral argument. Over 45,000 people die a year from underinsurance. That's not 45,000 car accidents, 45,000 random murders, or 45,000 people who died because they were just too fucking lazy to go to the hospital. It's 45,000 preventable, treatable illnesses that went untreated, simply because we chosen an asinine, jackass way of running a health care system. And it's a number that's only going to get larger.
Life isn't perfect. If 10% of the population lacks health care - well, 10% of the population should try harder. It's America, dammit.
And we can see their point. The Strawman Blogger is no friend of the lower classes. We were born with the silver spoon so far up our mouth that it seriously impaired our gag reflex. Our trust fund is so large it exerts a significant gravitational pull. In our minds, poor people should only be seen at charity events, or when we happen to drive past a bus stop.
But the problem of health care is not a problem of the poor. It is a problem for all of us. And the Strawman Blogger has perfectly selfish reasons to extend health care to the underclass.
Our Perfectly Selfish Reasons
The Strawman Blogger is a man of almost unlimited patience. But even we are beginning to tire of repeating the same, basic refrain: In America, healthcare is broken.
This is a very important point. Let's repeat it:
American healthcare is broken
American healthcare is broken
American healthcare is @$^*% broken
We feel better.
Somewhere Along The Way, Life Happened
But why is it broken? you ask. My healthcare is just fine. I can see any doctor. Get any surgery. All without coughing a single bloody cent.
That's the trouble with American healthcare. It feels free. But it's not. And it's designed in such a way to screw over exactly one person, and screw them so thoroughly and deeply that they may never walk the same again.
You.
Getting Screwed By American Healthcare: A Reference Guide
Part 1 - Costs are Out Of Control
Each year, health care costs rise. Usually, somewhere between 5-12%. By comparison, a vibrant economy grows about 4-6%. Middle-class wages average a terrible 0% - over the past ten years, they haven't grown at all.
Given these rates, health care will consume 50% of government spending by 2082. That's money required for transportation, law enforcement, debt payments and Social Security.
It would be bad enough if health care were pretty cheap already. But it's not. Health care in America is more expensive than any other industrial country in the world:
This is a graph of our health care costs and our health care outcomes. On the left is how much we pay for health insurance - on the right, how long we live. America doesn't just pay more for health care. We pay a LOT more, over 40% more than anyone else. Maybe this would be a good deal if we lived longer, but we don't: our outcomes are rated 37th in the world.
Wondering where that money comes from? The Strawman Blogger is glad you asked.
This graph comes from the eminitable Ezra Klein. Click on it: he has a lot more like it. It's about unit costs - the cost of a procedure in America versus a procedure in other countries. They are not comparable, and they are not cheap. Unit costs are killing us.
Part 2 - You Don't Feel It
Surely you exaggerate, you say. If things were that bad, I would know.
But you wouldn't, you poor simpleton. And here's why: For godawful reasons practically lost in the midst of time, your insurance is provided to you by your employer. Why this should be the case defies all belief. The Strawman Blogger cannot imagine a world were his employer provided his auto, home, or renters insurance.
As long as you're employed, you don't feel health care getting more expensive. Your employer simply soaks up the excess cost behind your back. Whenever health care costs rise, your company absorbs the difference, then hands out any money left over as wages. If costs rise too much, you just get a smaller raise that year.
Skeptical? You probably shouldn't be.
Of course, if you're unlucky enough to be fired, or if you happen to be on the individual market, the pain is very real. Insurance companies don't care how broke you are, or how hard you've worked. They'll simply calculate how much your illness could cost them, and they'll make you pay it. And if it gets too expensive, they'll stop insuring you. You've just been the victim of recission, and it happens every day.
Part 3 - The System Screws You
So that's our situation: We have out-of-control costs, hidden from you by your employer, that you'll rarely see but will be quite the nuisance if you ever lose your job. Perversly, people are quite happy with this situation.
Employers love it because it gives them power. Sure, they're loving it less and less over time, because power is ungodly expensive. But as long as they provide health care, you can't change jobs or quit without risking the individual market. They get to make you unhappy, and you get to take it.
Insurers love it because they don't have to bargain prices down. In a normal world, insurers would have to negotiate with doctors over their fees. The companies that were better at it would be able to offer cheaper policies, and thus would get more customers. The free market in action. But because the costs are hidden by your employer, they don't have to bother. They can pay your doctor whatever he asks for and pass the bill on to you.
Doctors love it because they get paid a lot. Much, much more than doctors in any other industrial country. Remember that unit cost graph? That's what you're paying so your doctor can buy another yacht. It's no coincidence that Medicare, the one insurer who can be ballsed to negotiate with it's doctors, controls costs better than it's private counterparts.
Part 4 - It's About To Get Much Worse
So we've set up a system that doesn't just allow costs to get out-of-control: it encourages it. And if everyone is having second thoughts, if insurers and employees are thinking, "Slow down, we might have underestimated the size of this particular fucking problem," it's too late.
The individual market is already a mess, but it's going to get much worse. The only way insurers can control costs is through recission - they just stop insuring people who are too expensive. As costs rise, more and more people simply won't have access to insurance. It will be too expensive, and insurers aren't a bloody charity.
Employers don't have that option. So healthcare costs will continue to exert downward pressure on American wages. Eventually, they'll stop offering health care all together, or they'll ratchet down the quality of your policy until it makes no difference. Either way, you'll have to get something on the individual market. Good luck.
Final Lesson - There Are Other Options
Let's not kid ourselves. The current system isn't free market. There's nothing free about it. You have no choice - your employer chooses for you. You have no information - if you're an individual, insurance companies are required to tell you $%*# all.
It can be fixed, though. You can have a public option, like Medicare, that uses it's size and market position to bargain aggressively with providers. You can have government owned hospitals, like the VA, that simply sets the wages of their staff. Or you can try reform through a mix of subsidies, regulation, and oversight of the existing private market, and hope that incremental policy changes and public awareness will begin to move prices downward.
That last bit is the administration's plan. And it does a fair job of it: It shaves over 100 billion off the deficit over the next ten years. Of course, you say, that's not near enough to rein in costs - and I agree with you. But given how hard you fought the most conservative piece of healthcare legislation in history, you'll forgive us if we don't sing the praises of the public option quite yet. The Strawman Blogger will take what he can get, thank you very much.
And if all this isn't enough? Well, we can always make a moral argument. Over 45,000 people die a year from underinsurance. That's not 45,000 car accidents, 45,000 random murders, or 45,000 people who died because they were just too fucking lazy to go to the hospital. It's 45,000 preventable, treatable illnesses that went untreated, simply because we chosen an asinine, jackass way of running a health care system. And it's a number that's only going to get larger.
Subscribe to:
Posts (Atom)