Monday, October 28, 2013

Discuss Among Yourselves

To be concrete about the threads I've been writing, particularly the last one on Pareto Improvement, please consider the following examples of what I would call "1st person" sources of a key part of our discussion.

Saturday, October 19, 2013

Cool Men in the Water: 1958

During the last election campaign, the Obama/Biden team charged that the Romney/Ryan team somehow wanted to take America back to the 1950s. I was never quite sure what that meant as an attack. Returning to a period of ending wars and a (growing) economy is a bad thing? It could have been a code phrase for the 1950s as time of the Jim Crow laws of segregation. Of course, Obama and Biden would have to talk about that in code, because (as I have discussed before on this blog) to talk about it in fact would be to talk about how Jim Crow was a tool of the Progressive movement (see Woodrow Wilson)  and enforced largely (although not completely) by the Southern segregationist wing of the Democratic party. Perhaps it was a veiled dig at Mitt Romney's very 1950s-style traditional family, and hence a "dog whistle" dig at his family's Mormon religion. Or, perhaps it was part of the Obama/Biden's larger campaign to portray Romney and Ryan as "uncool" to younger voters.

Even the latter motivation seems ahistorical to me, because the 1950s saw the birth of that remarkable part of American culture known as "Cool." In a blog today, Scott Johnson at Powerline blog paid a direct tribute to an awesome find from Steve Allen's variety show in 1958. For those younger readers, Steve Allen was a radio host/comedian who first hosted the Tonight show on NBC (across over 50 years that chair has been filled just by Allen, Jack Parr, Johnny Carson, Jay Leno, and Conan O'Brien). In the course of his tribute, Johnson compared the Allen clip to the famous opening of Orson Welles' A Touch of Evil. What struck me is that both of these episodes are from 1958, and they are both, without a doubt, Cool.

Here is the Steve Allen clip on the Poweline site.

Johnson has one link to A Touch of Evil, here is another which seems to have a better version of the famous Henry Mancini score, which is only in some of the release versions.

Several things strike me about watching these snapshots of 1958 Cool. First, yes one might notice that the Steve Allen panorama did not include an African-American. But neither was it a parade of WASPS in the usual sense. I'll leave you to figure out who is whom, but there wasn't one typical establishment WASP in the entire clip. There was a daughter of Jewish Russian immigrants, raised in the American South,  the son of a Jewish cantor from Brooklyn, the daughter of Sephardic Jewish parents from the Middle East, and the sons of Irish-American and Italian-American stock. The one person who may have been an American Protestant was actually born in China, a daughter of missionaries. Not a Roosevelt, Bush, Cabot or Lodge in the group. I know that at least three of the troupe were active in the civil rights movement that was coming to life at that time.

Second, while a Biblical world view would warn us against Coolness for Coolness sake, "This Could Be The Start of Something Big" is basically about mature adults finding love. The good time and joy that they are having is infectious. There is no snark; no putting down of other people, no complaining or whining. Just Cool.

Finally, it's worth pointing out that Scott Johnson is a rock-ribbed conservative/libertarian Republican, who as you can see is no fan of President Obama. Steve Allen was a lifelong Democrat. Orson Welles' career started in leftish theater. My recollection of Steve Allen was that if I was going to live in a world in which my mayor or governor was a liberal Democrat, then I would really like it to be someone like Steve Allen. According to Wikipedia, Steven Allen and his wife Jayne Meadows were married until he died and Jayne remained a lifelong Republican, Allen a Democrat.

I think Welles was brilliant, and I don't know what his later politics was at all (I have no reason to believe that he ended up voting for Barry Goldwater, but I could be wrong), but I kind of have the idea that I wouldn't have wanted Welles as a mayor regardless of what his politics was. But I think it is a tribute to Scott Johnson that he can write for a political blog and, at least for the moment, put the partisan politics of his subjects aside and just talk about people. Talented people. People who, because of or despite their politics have made America a more interesting culture.

The ability to appreciate the culture of America through the lens of something other than political partisanship is something that I fear we are losing. Jay Nordlinger of National Review Online repeatedly requests that we try to return to an era of "politics free zones" or, as it has been less graciously put in other circumstances, "Shut up and sing!"That sounds as thought it is disrespectful to the performer who doesn't check their political views at the concert gate, blah blah blah. But some of these folks don't understand, "I really like your talents, and I want to live in an America where we can develop a common culture that isn't lexicographic in peoples' political preferences". If you want to see examples of other people who I think are beyond talented but whom I might never vote for County Clerk, take a look here, or here, or here or here. (OK, I probably would have voted for Jack Webb). But again, let's go beyond partisan, beyond "red' and "blue". I have tremendous respect for Joan Baez' stands on human rights, and I once went to a charity concert for an educational charity that Linda Ronstadt supported, but I probably disagree with just about everything else they've ever said with regards to partisan politics. But that's OK. That's Cool.

Thursday, October 17, 2013

If you like the what you have.....Efficiency Vs. Pareto Improvement

Both many Republicans and many Democrats agreed the the pre-Obamacare health system in the United States was built around many institutional details that locked economic inefficiencies into the system, primarily the attaching of one's health care to one's job. After all, most of us don't live in mining towns where we get our food from The Company Store, why should we get our health care from The Company Plan? The are numerous historical accidents that led to this problem: World War II wage controls and disastrous post-War tax decisions central among them. That said, the idea of community plans (like among all the workers in a large corporation) makes sense, and was one of the original sources of medical insurance (now less correctly called health insurance).

The problem was, and is, is that somewhere around 70 - 85% of the American people were happy with their pre-Obamacare health insurance plans, economists'objections notwithstanding. That why, when Sen. John McCain proposed some decoupling of the work-health link, candidate Obama skewered him with it. It is also the source of the numerous versions of the "If you like your current coverage...." argument that supporters of Obamacare put forward during that debate. They wanted to make the plan seem what is called by economists "Pareto Improving," meaning that not only does it get rid of inefficiencies, but it does so in a way that no one would be made worse off. What we see everywhere now is that Obamacare is not even close to being Pareto improving. But, then, neither would Sen. McCain's plan have been Pareto improving. Many Americans who supported comprehensive health insurance reform, both those who favored more markets and those who favored more government, probably envisioned a world in which their reforms could have been implemented in a Pareto improving way. In so many ways, that was simply not realistic. Hence our irate Obamacare supporter who didn't realize that her good intentions would make herself worse off. I don't want to pick on her too much. We can easily imagine a McCain supporter being upset that a "market oriented" reform process cost him his well-beloved company health care coverage. This is a fundamental problem in policy reforms, and one that economists would be wise to study more intently, and to make sure that politicians of all political persuasions address more honestly.

Tuesday, October 8, 2013

Lesson # 1: No Free Lunch

Economics exists because the human condition is one of economic scarcity. If every person on Earth could say "I want" and then freely get, then there would be very little need for economics (or economists). But that's not not state of the human condition. For every "I want" that is satisfied there is cost: both direct costs and/or "opportunity costs" (the foregone value of the next best use of the resources).

To say that "I want everyone to have access to a health insurance policy as good as mine" is to say that if the political system attempts (and I do mean attempts) to satisfy that want, then someone is going to have to pay for it. That can't can as a surprise to anyone who understands Principles of Economics 101. It may however be a surprise to learn that you are the one that is going to have to pay for it, "personally."  Why that may be surprising will be addressed in a subsequent post.

Monday, October 7, 2013

What was the question again, Art*?

Sorry for going all JEOPARDY! on the readers with yesterday's post about the person who wanted other people to have expanded access to health insurance, but she didn't realize that she would be the one to pay for it. That quote lined up with a number of standard economic lessons, which gives me the chance to summarize them in a series of posts:

1 ) In static equilibrium analysis, the "no-free-lunch" postulate.

2 ) In discussion of dynamic reform, the difference between Pareto optimality and Pareto improvement.

3 ) The "Public Choice" of taxation and regulation.

4 ) And, most extensively, the economics of health insurance.

More to follow.

* Hard core game show geeks will recall that the original host of JEOPARDY! was Art Fleming.

Sunday, October 6, 2013

Economics students, Here is your assignment. You may use both sides of your paper.

From the San Jose Mercury News:

Meet Cindy Vinson, Obama supporter and, specifically, a supporter of Obamacare, who just discovered that her individual health insurance policy was going to cost $1,800.00 more per year:

"Of course, I want people to have health care," Vinson said. "I just didn't realize I would be the one who was going to pay for it personally."
(Hat tip to Moe Lane).