Tag Archives: politics

Paying for Health Care

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John Cochrane correctly decried the costs of health care in today’s economy, but he has the wrong solution.

Why is paying for health care such a mess in America? Why is it so hard to fix? Cross-subsidies are the original sin.

No, cross-subsidies, “sinful” as they are, are not the original sin.  The original sin is government involvement at all in the form of any sort of subsidy.  Far from the subheadline’s claim that “honest subsidies” (eliding the oxymoronic nature of that label) would encourage competition and innovation, they’d do the opposite, as all subsidies do: they’d suppress competition and innovation by giving the government-favored recipients a government-mandated advantage over their government disfavored competitors, freeing the one from competition’s pressures to innovate and reducing the other’s access to resources needed to innovate—and stifling competition’s engine, the need to innovate to stay ahead of rivals.

“As Necessary”

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Recall the kerfuffle over whether senior government officials—an ex-CIA Director, for instance—should have their security clearances continued when they leave government services.  As Sean Bigley put it in a recent Wall Street Journal op-ed,

The idea was that senior administration officials should be allowed to retain their security clearances after leaving government so they could consult with successors as necessary.

Bigley suggested that this particular rationale even “makes sense for a brief, defined period.”

He’s overstating the case, though.  “As necessary” doesn’t justify an automatic continuance of a clearance that’s no longer automatically needed, nor does “as necessary” come close to representing a continued need to know that is a Critical Item in granting clearances.

All government personnel, regardless of rank, should lose completely their security clearances as soon as they leave government service.  “As necessary” is not continuous; it’s case-by-case.  Post-government service clearances should be granted on that case-by-case basis and no other.

Are Syrian Refugees Human?

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Syrian MFWIC Bashar al-Assad wants Syrian refugees to come home.  The civil war is winding down, after all, and soon everything will be jake.

But obstacles the regime is throwing up to their return show that President Bashar al-Assad—mindful of the strain refugees are putting on neighboring countries—is willing to use the exiles as bargaining chips to secure foreign aid and sanctions relief, Western diplomats and analysts in Beirut say.

Al Assad still doesn’t see his own people (I’m using “his own” loosely) as human beings. To him, they’re not human at all, just chits to be cashed in for dollars and euros.

Are Tariffs Protectionist?

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Certainly, they can be.  And tariffs, for a long time, were intended to protect domestic industry from foreign competition as well as being a major source of income for a nation.  Our own nation was a skilled practitioner of the tariff arts for our first 125+ years and again during the Great Depression and the aftermath.

And that’s the line the Koch brothers are taking with regard to President Donald Trump’s tariff impositions.

The urge to protect ourselves from change has doomed many countries throughout history.  This protectionist mind-set has destroyed countless businesses.

That’s also the line Trump says out loud, often, when he talks about tariffs.  As the old saw goes, though, actions speak louder than words, and it’s useful also to consult the actions Trump has taken vis-à-vis tariffs.  Those actions include the following:

  • offering markedly lower tariffs on all goods and services to Mexico as part of NAFTA renegotiations
  • offering a zero-tariff regime to the G-7
  • offering a zero-tariff, zero-subsidy, zero-non-trade barrier regime to the G-20
  • agreeing in principle to a zero-auto tariff arrangement with the German auto companies, the latter which are pushing their government to push the matter with the EU
  • despite the G-7’s and G-20’s craven refusal even to discuss the matter, getting agreement with European Commission President Jean-Claude Juncker to work toward a zero-tariff, zero-subsidy, zero-non-trade barrier agreement between the EU and the US

Tariffs also are a tool of national policy and have little necessarily to do with protectionism.

Stop Tiptoeing

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Most Federal Reserve officials agree on the path for interest rates over roughly the next year: proceed with gradual increases until borrowing costs reach a level that neither slows nor spurs growth.

You bet.

The big question, however, is what to do after getting to that so-called neutral setting. The answer will largely depend on how inflation behaves as unemployment falls, and they are poring over recent research for clues.

The Fed should stop agonizing and being namby-pamby.  If it wants a 2% basic inflation rate, the rate it says is consistent with growth neutrality, as its existing goal stands, the Fed should set its benchmark rates at levels historically consistent with that rate of inflation, accept that inflation will fluctuate around that level, and then sit down and be quiet.

Those historically consistent rates are the Goldilocks level—or more accurately, the Goldilocks band.