Those Pesky Death Panels

The Reality of Death Panels - Mike Stopa

SUPPORTERS OF President Obama’s health care reform law have relentlessly derided Sarah Palin’s notion of “death panels’’ as a vulgar rhetorical technique, with no basis in reality, devised merely to scare a gullible, uneducated citizenry into rallying to repeal the law. The death panel notion persists, however, because it denotes, in a pithy way, the economic realities of scarcity inherent in nationalizing a rapidly developing, high-technology industry on which people’s lives depend in a rather immediate way. G.K. Chesterton once wrote that vulgar notions (and jokes) invariably contain a “subtle and spiritual idea.’’ The subtle and spiritual idea behind “death panels’’ is that life-prolonging medical technology is an expensive, limited commodity and if the market doesn’t determine who gets it, someone else will.

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To the extent that ObamaCare ultimately succeeds in imposing uniformity on basic health care, it will likely lead to the creation of secondary markets for providing insurance against various health eventualities and access to “heroic’’ procedures to extend life. Water runs downhill and it’s a good thing that it does. First, we need to have people buy the expensive medicines and experimental technologies. Europe has discovered this as its regulated system of medicine has driven its pharmaceutical industry farther and farther behind that of the United States. Capping costs kills innovation.

But, in addition, Palin is right. Death panels are an inevitable consequence of socialized medicine. The law of scarcity demands them.

A mature discussion of health care must recognize basic economics so that we can think ahead on how to satisfy the demands of those who are not satisfied with base-level care.

Study Skills

To Really Learn, Quit Studying and Take a Test - Pam Belluck

Taking a test is not just a passive mechanism for assessing how much people know, according to new research. It actually helps people learn, and it works better than a number of other studying techniques.

The research, published online Thursday in the journal Science, found that students who read a passage, then took a test asking them to recall what they had read, retained about 50 percent more of the information a week later than students who used two other methods.

One of those methods — repeatedly studying the material — is familiar to legions of students who cram before exams. The other — having students draw detailed diagrams documenting what they are learning — is prized by many teachers because it forces students to make connections among facts.

These other methods not only are popular, the researchers reported; they also seem to give students the illusion that they know material better than they do.

The Economy - January 2011

Memphis Blues Again - Scott W. Johnson

Malpasss puts it this way (if I understand him correctly): "Since inflation is a deeply lagging data series - the Fed was able to claim throughout the 2003-2007 monetary bubble fiasco that inflation was 'moderating' even as the core PCE deflator, upon revision, was rising and always exceeded the Fed's 2% ceiling -- it's unlikely that inflation will ride to the rescue in time, nor does anyone other than commodity buyers really want that outcome."

Can this really be the end? Bob Dylan's lyrics run through my mind: "An' here I sit so patiently/Waiting to find out what price/You have to pay to get out of/Going through all these things twice."

UPDATE: Reader Carl Pham takes my concerns a step further:

if you've lived long enough, you'll notice the *order* in which inflation picks up is always the same, or at least it has been for the past 50 years or so: first gas and heating oil prices go up steeply (oil is priced in dollars, after all), then food (lots of transportation in its price), then durable goods and rents, and only last wages and real estate. . . .

I think the mistake many commenters make is assuming that these facts are not already well known to the policymakers, e.g., the Fed or the administration, or even older media talking heads, and that they need to have these facts pointed out to them.

I think that unlikely. I think they know exactly what they are doing, and they rely on muddling the connection between, say, rising gas and food prices on the one hand and what they are doing on the other.

In this particular case, I think both the administration and the Fed feel the inevitable pain is worth it for their goals, which are dominated by the urgent wish to get investors -- potential homebuyers, or potential employers -- to stop cautiously hoarding their cash and start forking it out, buying houses or employing people.

They have (probably correctly) deduced that Democratic re-election prospects in 2012-14 are tied to the unemployment rate and the price of houses, and they will do anything to move those numbers, regardless of future damage. (Besides, a roaring inflation later is just another crisis that cannot be allowed to go to waste! Wage and price controls are lovely avenues for centralized power.)

It's little different than FDR in 1934-35 observing that businesses were sitting on cash instead of hiring people (because of the insane regulatory environment, among other things), and determining to pry that cash out of them. In those days he took the blatant approach -- the undistributed profits tax of 1936. Nowadays a more subtle approach is called for: in this case, inflation, which is essentially a massive tax on savings and retained profits.

It probably doesn't hurt that in addition the one party that does well in a strongly inflationary environment is he who owes loads of money (the debt is rapidly eroded by inflation) and who has an income that is fully indexed to inflation, meaning it automatically rises in lockstep with nominal prices and wages. That of course describes state and federal governments today.

Constitutionalism

Constitutionalism - Charles Krauthammer

Americans are in the midst of a great national debate over the power, scope and reach of the government established by that document. The debate was sparked by the current administration's bold push for government expansion - a massive fiscal stimulus, Obamacare, financial regulation and various attempts at controlling the energy economy. This engendered a popular reaction, identified with the Tea Party but in reality far more widespread, calling for a more restrictive vision of government more consistent with the Founders' intent.

Call it constitutionalism. In essence, constitutionalism is the intellectual counterpart and spiritual progeny of the "originalism" movement in jurisprudence. Judicial "originalists" (led by Antonin Scalia and other notable conservative jurists) insist that legal interpretation be bound by the text of the Constitution as understood by those who wrote it and their contemporaries. Originalism has grown to become the major challenger to the liberal "living Constitution" school, under which high courts are channelers of the spirit of the age, free to create new constitutional principles accordingly.

U.S. Home Mortgage Crisis

The Last Trillion-Dollar Commitment - Peter J. Wallison, Charles W. Calomiris

The government takeover of Fannie Mae and Freddie Mac was necessary because of their massive losses on more than $1 trillion of subprime and Alt-A investments, almost all of which were added to their single-family book of business between 2005 and 2007. The most plausible explanation for the sudden adoption of this disastrous course--disastrous for them and for the U.S. financial markets--is their desire to continue to retain the support of Congress after their accounting scandals in 2003 and 2004 and the challenges to their business model that ensued. Although the strategy worked--Congress did not adopt strong government-sponsored enterprise (GSE) reform legislation until the Republicans demanded it as the price for Senate passage of a housing bill in July 2008--it led inevitably to the government takeover and the enormous junk loan losses still to come.