Obamacare’s A Success: What Does That Mean?

I wrote earlier this week about Paul Krugman’s claims that the health insurance market in New York is evidence that the Affordable Care Act is a “huge success.” Somewhere in that post I made the point that success is probably going to be hard to define for the ACA, and it’s going to vary a lot from beholder to beholder.

Ross Douthat wrote a blog post yesterday that captures this on a more nuanced level, and I think it’s really worth reading. Click the link and check out the whole thing, but here’s a little taste.

Ezra Klein, in his new capacity as one of the impresarios behind Vox, has written a pair of attention-grabbing posts — here , and then here — defending the proposition that Obamacare has, in some sense, “won,” and that conservatives who can’t come to terms with that victory can’t come to terms with reality itself. Reading them, it struck me that this argument would benefit from laying down some specific markers for the near future, because Klein seems to move back and forth between two definitions of success. At times, as when he writes that Obamacare “has won its survival” and allows that that “there are still many good critiques to make” of the law, he seems to be using a narrow definition, with which I mostly agree — the law won’t collapse under its own weight, the enrollment levels are high enough to make a return to the coverage status quo ante unlikely, etc. But when he uses language like “the individual mandate … is working” and “the law is back on its expected track,” and concludes that ”[Kathleen Sebelius] can leave with the law she helped build looking, shockingly, like a success,” it implies a stronger definition of victory, in which Obamacare isn’t just continuing, isn’t just unlikely to be swiftly repealed, but is clearly succeeding as a policy in basically the way its advocates predicted that it would.

So I think it would be useful for the law’s supporters to specify the metrics/numbers/outcomes that would vindicate the latter claim.

Douthat goes on to recommend some specific ways that we could go about nailing down whether or not the ACA is successful. Like I said, worth reading in its entirety.

As a brief note, I scrolled through the comments section and it looks like a couple readers have responded to Douthat with some variation of the idea that even a net increase of one beneficiary would constitute a success for the ACA. I think what they mean is that, if after all of this everything–budget, premiums, outcomes, etc–totally evened out but one more person than before was enrolled in a health insurance plan, that would be a success. I can see where they are coming from, I suppose, but that seems like quite a stretch. After all, for such a limited bump in enrollment, it would have been far easier and less intrusive to simply levy a modest tax and use that to finance premiums for a small percentage of the population. These obviously aren’t particularly realistic ways of thinking about the ACA, but the point I’m trying to make–the point I’ve been trying to make for months and even years when it comes to the health care reform–is that this is about trade-offs.

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Censusgate 2014: The ACA, The Administration, and Enrollment Numbers

The New York Times made waves earlier today when it reported that the Census Bureau will be making extensive changes to the surveys it uses in order to gather information on health insurance status across America. The changes, which will purportedly help provide a more accurate view of insurance statuses across the population, will also apparently be so vast as to render side-by-side comparisons with data from old surveys impossible.

The Census Bureau , the authoritative source of health insurance data for more than three decades, is changing its annual survey so thoroughly that it will be difficult to measure the effects of President Obama ’s health care law in the next report, due this fall, census officials said.

The changes are intended to improve the accuracy of the survey, being conducted this month in interviews with tens of thousands of households around the country. But the new questions are so different that the findings will not be comparable, the officials said.

As pretty much everybody knows, shifting survey methodologies from year-to-year would totally confound any patterns that emerged from the data, which is why many (including myself) responded quickly and negatively to this development. If the pre-ACA data from the year 2013 was collected using the old survey methods while the newer post-ACA data from the current year was collected using the revamped method, we’d be left in a position without a meaningful and reliable way to interpret any of the changes. Did the enrollment numbers go up? Did they go down? Either way, how much of that was the ACA and how much of it was the differences in the method themselves? To perform such an alteration between the last year before the full implementation of the ACA and the first year after it would have destroyed an opportunity to try and observe the effects of policy playing out on a national scale.

As Sarah Kliff quickly pointed out, however, the changes to the Census Bureau’s methods may not actually have all that much of an effect, because the information for this survey is collected on a one-year lag. That means that the data from 2013 hasn’t been collected yet, and when it is collected it will be collected using the new methods. Kliff apparently got this information from a senior official within the Obama administration.

It might not be time to freak out quite yet: What’s being missed here is that the Obama administration will use the new survey questions to collect data for 2013, the year prior to Obamacare’s health insurance expansion, a senior administration official says.

The Census Bureau reports the health insurance rate with a one-year delay; in September 2013, for example, the agency reported the percent of Americans without coverage in 2012. It will most likely report the uninsured rate for 2013 sometime this coming fall.

In other words: The survey will make it difficult to compare the uninsured rate for 2012, the last year for the old questions, and 2013, the first year for the new questions. But making the change now means that 2013 and 2014 – the year before and after Obamacare’s big programs started – are using the same question set.

If that’s accurate (I have no reason to believe it isn’t), then it is welcome news indeed. It’s still possible that new survey methods could weird up the results somehow, but as others have already pointed out all over Twitter, the Census Bureau is hardly the only source of information on health insurance and enrollment across the population (though the NYT does refer to the Census Bureau surveys as “authoritative”). Multiple other polls exist, so they could be used for reference should any unforeseen issues arise with the Census polls.

The fact that new Census Bureau methods will capture at least one year of pre-ACA info is important, but it’s worth stating the obvious: one year of pre-ACA info gives us way less to work with than many years of pre-ACA info. The ACA didn’t drop into existence out of a vacuum in 2014, and people, employers, and insurance companies have been changing their behavior since its passage all the way back in 2010. To compare 2013 to 2014 still will not be able to give us a clean look at exactly what is going on, but it’s definitely a lot better than being left without any single point of reference whatsoever.

Any information we can get our hands on is going to be valuable (though I doubt much of it will be definitive enough to really settle debate and win believers from one side to the other). I tend to sympathize, though, with the point that Tyler Cowen made in response to this news, in a blog post entitled “Dept. of Pure Coincidence.”

Obviously with a big new law you need new questions too, I suppose, plus the old questions ought not to hang around.  You can read more here .

As a side note, I have been reading far too many blog posts about “numbers enrolled” as a metric of success for Obamacare. That has never been a good test of the serious criticisms (and defenses) of ACA.

I’ve written in the past about the fact that the problems with the online exchanges and enrollment numbers have never been, at least in my eyes, the main area of concern when it comes to the administration’s current health reform efforts. Think about it this way: is there a single high-profile example of anybody changing their mind on the ACA, one way or the other, on the basis of the numbers that we’ve seen thus far? It is just too early to interpret data this messy with any degree of confidence in your conclusions, and the ACA is about a lot more than the sheer volume of people who sign up for health insurance. It’s going to be a long time before people really have a good idea of how well or poorly the ACA has performed, and I suspect that even then its supporters will support it and its opponents will not.

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Paul Krugman, the Affordable Care Act, and “Huge Successes”

Over the past few weeks, Paul Krugman has written frequently on the subject of the ACA, both in columns and on his blog. I haven’t had the time to read everything he has written (much less draft my own responses), but, from what I’ve seen, a running theme has been that the health reform has developed into something of a success. the economist wondered why, then, more would-be supporters of the law don’t seem to realize this.

The current state of public opinion on health reform is really peculiar. If you’ve been following the issue at all closely, you know that the Affordable Care Act is one of the great comeback stories of public policy: after a terrible start, it has dramatically exceeded expectations. But hardly anyone seems to know that.

Over the weekend I had dinner in NYC with some very smart, sophisticated people; yes, all of them liberals. And almost everyone in the group was under the impression that Obamacare is still going badly — they wanted me to tell them whether it could still be turned around.

Meanwhile, New York (which created its own exchange) is a huge success story : enrollment is 60 percent higher than federal projections, premiums have been cut in half.

The author doesn’t include any other information from that linked article, but if you click the link you’ll be taken to a New York Times article from Sunday, April 13th entitled “In New York, Hard Choices on Health Exchange Spell Success.” Unlike Krugman’s blog post, which focuses less on the hard choices part and more on the success, the article reads as a testament to something that most people who chime in on this debate have recognized all along: some people are going to be helped by the ACA, and others are going to be hurt by it. How the average American feels about it probably depends on where they fall.

The state’s success was no accident. It began with a receptive customer base and the benefit of experience, since New York already had some of the country’s most generous insurance coverage for the poor and sick. Resistance to the health exchange among Republicans in the state may, oddly enough, have helped make it more successful.

But New York also took some aggressive and unpopular steps that few other states have taken, by creating a highly centralized system limiting consumer choice, essentially giving insurance seekers little incentive to shop off the exchange.

As a result, most New Yorkers who are not insured through an employer are effectively barred from choosing any doctors or hospitals they want.

At least 100,000 people have lost their old health plans because they did not conform to new federal requirements. Thousands more freelancers and other “sole proprietors” were barred from banding together for group insurance rates, a change in longstanding practice that almost certainly pushed more consumers to buy insurance on the exchange.

The sickest customers tend to be the most upset, like Abigail List, a 53-year-old therapist in Manhattan, who said she had to choose one of the most expensive plans, costing $300 more a month than others, so she could have coverage for her longtime cancer doctors at NYU-Langone Medical Center . “I’m being railroaded, that’s why I’m so furious,” Ms. List said.

The most prestigious and specialized hospitals tend to take the fewest plans on the exchange . Memorial Sloan-Kettering Cancer Center , the renowned cancer hospital, takes only two exchange plans for individuals, Health Republic and .

I’ve cherry-picked the above quotes from the article to demonstrate that the story is a bit more complicated than Krugman explains. There is a lot more “good news” in the article that I haven’t included here but I think that, at the very least, reasonable people can agree that ACA implementation is young and declaring anything a “huge success story” might at this point in time be just a little bit premature. The law, after all, is a massive shake-up of the existing health care infrastructure, so “success” and “failure” in a lot of areas is going to be less than clear cut.

A lot of people might also say that I am comparing apples to oranges, and that a loss of network diversity is a reasonable trade-off to make for higher enrollment numbers. That is true for some people, but like I said above, different people are going to feel different ways about making trade-offs such as that one. Whether or not it’s “worth it” at a larger level is probably difficult to say.

What I have yet to discuss is why Krugman refers to New York as a “huge success story”: that fifty percent drop in premiums. And the reason I’ve waited to bring that up until now is that, just like the story of the ACA in NY overall, it’s a little bit messier than Krugman’s brief treatment really has time to get into. Krugman mentions in an aside that New York was “already a community-rating state,” which he defines by saying that “insurers weren’t allowed to discriminate based on medical history.” This is a pretty loose characterization of the market for health insurance in New York over the past two decades, and it’s worth going into a bit more detail.

In the early 1990s, New York broke ranks with other states by adopting the community rating provision that Krugman describes. Some other states had no community ratings on the books and others had something like a 5:1 band, meaning that an insurance company can charge its most expensive beneficiaries at most five times the price it collects from its least expensive beneficiaries. When New York rewrote its rules, it instituted a drastic 1:1 band across pretty much all categories so that rating was no longer permissible for health status, age, gender, or even industry. (You can check the rate restrictions by state on the individual market using this Kaiser Family Foundation table ). This means that the young must pay the same premiums as the old, the healthy as the sick, those who work at a desk the same as those who work in dangerous industries prone to accidents. Since the insurer can no longer adjust the premiums of every individual to reflect the risk they pose, rates will be equal for everyone but will rise overall.

And rise they did. You can make an argument that this rise is worth it, and that we should all pay higher premiums to support others, or even that it will even out in the end as we all become sick and save money later in our lives. But that’s a different point. The point I am trying to make right now is that the state of New York’s health insurance market was thrown into a bit of turmoil as a result of this development, something that an editorial from the WSJ captured well in July of last year.

Premiums shot up 30% to 40% on average in the first year, often much more, and continued to spike. Insurers shed books of business, while customers cancelled their policies. Enrollment fell 38% in three years. About a dozen major insurers at the time sold the dominant style of indemnity coverage, similar to traditional fee-for-service Medicare. By 1996, every one had fled the state.

Bad incentives caused the exodus. The majority of people under 65 with low risks can avoid community rating’s economic distortions by not buying coverage, especially because another rule called “guaranteed issue” lets them wait until they are sick before they buy coverage.

And that is what they do. Mutual of Omaha, by far the largest New York indemnity carrier at the time, watched the average age of its membership increase by 11 and a half years before it became the last one to turn out the lights. The average age of people who dropped coverage was 37.5.

In 1996 Albany tried to fix Mr. Cuomo’s mess by requiring any managed-care insurer doing business in New York to also sell on the individual market, but the market never recovered. In 1992, some 1.2 million New Yorkers bought individual plans, which fell to 128,000 by 2001, and a mere 31,000 today. Think about that: Out of 19.5 million residents, and with three out of every 15 non-elderly adults uninsured, 0.0016% of the population uses this market.

As the New York Times article linked to above points out, the result of this was that New Yorkers who lived in the city were recently paying an average of $1,534 in premiums, an astronomical figure which has diminished since the implementation of the ACA in recent weeks and months. So, how typical of the U.S. is the New York experience? Can we take the data Krugman provides as evidence of a “huge success story” in the near future?

Well, for one thing, Krugman calls New York “a community-rating state,” which implies that there were others, but there weren’t–at least not on the level of New York. Look at the Kaiser Family Foundation chart below for a better idea of just how much of an outlier New York has been when it comes to health care and the health insurance markets.

Small Group Health Insurance Market RateRestrictions

As the chart makes clear, New York is in a league of its own when it comes to community rating within the United States. And this is the reason that it may not exactly be the best case study when it comes to predicting how the ACA is going to affect premiums in other states and their health insurance markets. Most of the states in the U.S. have community ratings bands that are not higher than the 3:1 band that ACA introduces. Since New York does already have a higher rating band at 1:1, it’s not going to show the same bump in premiums as a state that will be going from 5:1 down to 3:1. New York already suffered its sticker shock with its original reforms back in the ’90s and, now that the ACA requires everyone to enroll in a health insurance plan by law, it is alleviating that sticker shock 20 years after the fact. In fact, that’s why even the law’s opponents have been saying for years that New York would be among the states most positively impacted by the reform.

In other words, New York might be less of an example of how the ACA is going to wind up affecting other states, and more of an example of what would have happened if the ACA had been instituted simply without an individual mandate. In fact, Krugman cites the New York experience as evidence of why the much-maligned mandate is so integral to the law.

But the result of that system was that healthy people tended to stay out of the individual market, creating a bad risk pool that drove up rates. Now everyone has to be in, dramatically improving the risk pool. As such, the New York experiences demonstrates the essential role of the individual mandate for reform.

So, yes, in many ways, things do appear to be improving for New York. But the question is how much of that should be attributed to whatever cost-saving capabilities the ACA has, and how much of it should just be chalked up to the fact that the health insurance market in New York was in a relatively awful condition to begin with. In other words, the ACA’s individual mandate in the nation’s only community rating state is an improvement over a community rating with guaranteed issue–a recipe for disaster and death spirals–but how much does it mean for the states that will be going from 5:1 down to 3:1? This is the real apples-to-oranges comparison, and I don’t think we have enough information to say one way or the other with any degree of responsibility whether or not this will translate to the rest of the U.S. in the coming years.

As another note, and I don’t want to nitpick here, but the individual mandate as it appears today may actually not be essential for this specific health reform. Certainly some means of enrolling people in a law such as this one is necessary to prevent the same exact sort of trouble in the insurance markets that New York has experienced since the early ’90s, but I think the mandate we have now is an unreasonable encroachment on people’s liberty and may also not be particularly effective. A strong alternative would be to replace the “hard mandate,” which levies a tax on those without health insurance, with soft mandates like auto-enroll functions that individuals must voluntarily opt out of. The argument has frequently been made by supporters of the ACA that enrollment of young people has been sluggish due to the fact that they are not particularly on top of things when it comes to health insurance. If that’s true, and it very well may be, then a soft, auto-enroll mandate could be far more efficient than the hard mandate we have now.

Anyway, the ACA is an incredibly complex force, and judging how it is currently affecting health insurance markets–and how it’ll continue to affect them in the future–is a pretty difficult task. I won’t pretend to know enough to make my own predictions, but I’m just a little bit uncomfortable using New York of all places as an indicator of “huge success.”

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A Libertarian Approach to Anti-Smoking Letter in the NYT

On Friday morning, the New York Times published a guest editorial by Peter B. Bach, a pulmonary physician who directs the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center in New York. The piece, which is called “The Tobacco Ties That Bind,” deals with the relationship between the American Cancer Society and vendors of tobacco products.

I don’t smoke, but if during the day I wanted to buy cigarettes, I could walk into the CVS pharmacy across the street from my office, or the Walgreens two blocks away, and get them. They’re kept right behind the cash register.

But beginning this fall, that is going to change. CVS pharmacies will stop sales of all tobacco products. Walgreens, well, won’t.

So, here’s a quiz. Which chain do you think is more heavily celebrated on the website of the American Cancer Society ? Well, it’s not CVS. Instead, testimonials and profiles hailing Walgreens abound. There is a glowing profile of the Walgreens chief executive that focuses on his tireless efforts to promote healthy living in his workplace and stores. There is no mention of the tobacco sales at the front of those stores.

This, Dr. Bach argues, is no oversight. Although the American Cancer Society highlighted the CVS decision to cease sales of tobacco products, it also refused to sign an open letter that requested that other pharmacy chains do the same thing. Dr. Bach also notes that his own hospital, MSKCC, holds charity events which are sponsored by Duane Reade, a New York City subsidiary of Walgreen’s. In other words, programs that are devoted to curing and ending cancer are accepting money from organizations that are involved in the sale of tobacco products.

None of this represents a conspiracy, obviously, and Dr. Bach accordingly takes a sober approach to all of this different information:

Yes, fig-leafing is widespread. Companies regularly donate money to charities and earn awards and recognition for doing so, even as some of their practices undermine the very goals of the charity they support. Oil companies donate to environmental causes even as they ravage the environment.

Certainly Walgreens has shown leadership in offering antismoking programs to its employees and customers. But at the end of the day a corporate vision “to be the first choice in health and daily living for everyone in America” is incongruous with selling the leading cause of preventable death at your cash registers.

All of this, so far, makes sense. I can see why organizations such as CVS would make a $2 billion commitment (in terms of revenue lost) to removing cancer-causing products from their stores, and I can also see why organizations such as Walgreen’s would be hesitant to make such a move. The latter, for better or for worse, makes even more sense when you consider that Walgreen’s will likely capture increased tobacco sales as CVS customers go to other pharmacy chains in the future for their cigars and cigarettes. And, as the article itself does point out, the fact that Walgreen’s observes a commitment to healthy living in other areas and offers antismoking programs for employees counts for something, too.

I also see why the American Cancer Society and MSKCC–along with probably many other similar organizations–accept charitable funding from Duane Reade, Walgreen’s, and any other vendors of tobacco products. At the end of the day, it is difficult to turn down more research funding when we are in such desperate need of new cures and treatments. And I see why this ruffles the feathers of individuals such as Dr. Bach, who use methods such as public awareness to try and pressure these organizations into behaving differently. I’d say that reasonable people can disagree on everything in this paragraph and the one above it.

And now to my point. As the Director of the Center for Health Policy and Outcomes at MSKCC, I’m sure Dr. Bach has forgotten more about health policy in the past few hours alone than I’ve learned in my entire young life. That being said, I do have to say that the case he makes for “reducing the convenience of buying cigarettes” seems to be based on an incomplete consideration of the consequences such a policy might hold.

Making it harder for people to smoke yields enormous health benefits; some are nearly immediate. When the city of Helena, Mont., instituted a ban on smoking in the workplace and public spaces, rates of admissions for heart attacks fell about 40 percent over six months, only to rise once the city stopped enforcing the law. Were the Cancer Society to publicly call on its donor to follow CVS’s lead, others such as Rite Aid would feel enormous pressure to fall in line.

Limiting sales and reducing the convenience of buying cigarettes would reduce smoking rates, particularly among the young. But don’t believe me; you can read this same assertion on the website of the American Cancer Society .

I am not familiar with the Helena case that Dr. Bach cites and unfortunately do not have the time to look it up at the moment, but I am willing to take the expert at his word here and assume that his explanation of it is accurate. It’s not like the outcome is surprising, anyway–most of us would probably expect certain measures of “healthiness” to increase over time, ceteris paribus , as a population starts to smoke less and less. And, even though many libertarians might object to smoking bans in public places and workspaces, it’s not all that distortionary of an intervention. I would guess that many, if not most, corporate workplaces observe such bans themselves even in the absence of government edicts. We can argue about whether or not any space can truly be “public” and whether or not people should be allowed to smoke in such a place, but that’s a different conversation.

No, what I’m getting at here is that Dr. Bach’s prescriptions seem vague, and it’s not long in any conversation about limiting cigarette sales that the idea of a total ban on tobacco products gets brought up somehow. Again, there are basic libertarian positions on bans, taxes, and freedom of choice that can be made here, but I think the best way of weighing a potential tobacco ban across different political viewpoints is by examining its unintended consequences. In New York City alone, for instance, attempts to limit cigarette sales via taxes and age restrictions have resulted in a booming black market, in which 60% of the cigarettes smoked in the city are smuggled in and bought and sold illegally.

I’ve written before about an in-depth and informative 2003 policy analysis from the Cato Institute that showed that past efforts in New York to dampen tobacco markets resulted in violence and bloodshed, with smugglers linked to organized crime and even, in some cases, organizations such as Hezbollah. This is certainly shocking but it is less surprising when we consider that the prohibition of drugs and alcohol have had similar effects.

It is worth noting that the numbers Dr. Bach cites–a 40% reduction in rate of admissions for heart attacks over a six-month period following a smoking ban–constitute only one measure of societal well-being. The fact that New York City is already experiencing such a struggle with black markets for tobacco products demonstrates there is no silver bullet for ameliorating the woes we experience from the adverse effects of tobacco usage. A ban may save lives and money in one area but cost us both in another, and it is difficult for a small group of legislators to weigh those realities in a way that represents the interests of everyone whose well-being is involved.

To be clear, nowhere does Dr. Bach express support for any sort of outright ban on cigars, cigarettes, and/or other tobacco products (though he certainly seems to support the bans instituted by the government of Helena, Montana). He seems here to be favoring a means of promoting change that involves educating citizens and focusing the public’s attention on large organizations in order to pressure them into altering their behavior, which is an approach that most libertarians would probably view as superior to state intervention. I would encourage him to continue pursuing this method of attempting to influence others to change their ways voluntarily, and to perhaps reconsider any more centralized solutions that he might be entertaining.

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What I’m Reading

The hiatus continues, but regular (as in more or less daily) posting will resume in early to mid-May. In the meantime, I’m going to try to make some sparing contributions.

I thought I’d make a quick post on what I’ve been reading lately. I finished a very fruitful re-read of Thomas Pynchon’s Gravity’s Rainbow last month, and have since been working through Dan Simmons’ Hyperion . GR dovetails with much of the material I discuss here and in my column for the Duke Chronicle– Hyperion , not so much.

I intend to finish Hyperion within a week’s time, if work allows, at which point I’ll move on to Matthew Bruce Alexander’s Withur We . From what I gather, the novel explores the philosophy of anarcho-capitalism within a science fiction-style setting, so I’m sure that I’ll have a thing or two to say about it once that gets underway.

On the non-fiction front, I’ve been tearing through Gary Chartier and Charles Johnson’s collection of left-libertarian essays in Markets Not Capitalism: Individualist Anarchism Against Bosses, Inequality, Corporate Power and Structural Poverty . I picked it up off of the shelf intending only to flip through an essay while killing time the other day, and have since become engrossed. The collection includes recent work from a collection of thinkers as well as older pieces from names like Proudhon and Benjamin Tucker. As someone who is not particularly familiar with the left-libertarian literature I am finding the book to be a strong ambassador for this school of thought, and will certainly post on it once I get the time to make informed and substantive contributions again.

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A brief comment during my hiatus.

I have made a strong effort over the past year not to comment on Paul Krugman’s blog posts here, since I feel that they are generally not particularly conducive to an informed and useful discourse. Because I am planning a column on the topic of personal research and personal politics, however, I feel that in this particular instance a brief comment is warranted.

Yesterday, Krugman penned a blog post entitled “Stupidity in Economic Discourse 2,” in which he chastised conservative economists for “literally being unable to read what [his] side writes.”

I’ve written before about the myth of the stupid progressive economist . Many conservative economists have a fixed idea in their heads — it’s more than just a presumption, because it seems completely impervious to evidence — that progressive economists are dumb guys who don’t understand basic economics. And because of this fixed idea, conservatives appear literally unable to read what my side writes; they criticize the dumb things they’re sure we must have said, without checking to see if that’s what we actually said.

In the linked post I wrote about health reform issues, but you also see this in macro: five years and more into this discussion, freshwater economists still can’t wrap their brains around the notion that modern Keynesians (both New and eclectic) have actually done a lot of hard thinking over the past few decades. I’ve called this a failure of reading comprehension , but it’s actually an unwillingness to read at all, to so much as glance at what the actual argument might be.

And I mean that quite literally. Brad DeLong quotes from a John Cochrane paper (no link) which declares that those stupid Keynesians don’t understand why monetary policy is ineffective. It’s not because of the zero lower bound, it’s because bonds and monetary base are perfect substitutes.

John Cochrane, for his part, for committing exactly that sin which he is criticizing here, and asks if there are no mirrors at The New York Times .

Now, Krugman regularly argues that he receives a lot of criticism from people who do not understand his position, and that’s probably true (see, for instance, the Joe Scarborough-Paul Krugman debate on Charlie Rose. I can’t find a proper link to the entire thing right now, but if someone can find one please post it in the comments section) So, it is easy to understand why he feels that many conservatives don’t understand the arguments of their opponents. But is that a case against reading any conservatives ? That, after all, is a position that he himself has openly taken.

Some have asked if there aren’t conservative sites I read regularly. Well, no. I will read anything I’ve been informed about that’s either interesting or revealing; but I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously. I know we’re supposed to pretend that both sides always have a point; but the truth is that most of the time they don’t. The parties are not equally irresponsible ; Rachel Maddow isn’t Glenn Beck; and a conservative blog, almost by definition, is a blog written by someone who chooses not to notice that asymmetry. And life is short …

Now, I’m not exactly representing Krugman faithfully here. What he says in the post from yesterday is that conservatives criticize progressives without reading them, whereas what he is saying in the older post is that he does not regularly check conservative blogs unless he has already been informed that they are interesting or revealing by someone else. We all do that to a certain extent–there’s too much out there to get to it all and so everyone relies on recommendations and word-of-mouth–but this necessarily confounds the lens through which we view things. Krugman is a smart man and astute analyst; as an honest intellectual, he should recognize that by saving time and not sifting through conservative reporting on his own, and relying instead on those who share his viewpoints to condense the conservative narrative for him, he is opening himself up to the same strong, blind bias he criticizes in his intellectual adversaries.

When it comes to Krugman’s charge that he “doesn’t know of any economics or politics sites on that side that regularly provide analysis or information [he] need[s] to take seriously,” I would defer to Tim Carney for a response. Weeks ago, when Krugman argued that he couldn’t find a single instance of supposedly anti-government tea party supporters denouncing the federal government’s bailouts of investment banks, Carney commented that “it is hard for Paul Krugman to find conservatives denouncing the bailouts while he steadfastly refuses to read conservatives.” Krugman opened himself to similar criticism several months ago when he criticized Ludwig von Mises on the basis of a blog post that he seemed not even to have read all the way through.

In my opinion, intellectual honesty and a real search for truth requires more than reading your opponents only when your counterparts tell you their positions are interesting or revealing. It is commonly observed, for instance, that the more you learn in life, the less you really “know,” which means that the more informed you are the less willing you become to give final pronouncements of certainty on any given complex issue. This, in my experience, has been a result of reading my intellectual opponents more frequently than my intellectual counterparts. You don’t learn lots by reading stuff you already know, and mixing that with a vocal political position can be a recipe for disaster.

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A Hard-Line Libertarian in a Classical Liberal’s Clothes

Yesterday, Richard Epstein published an article entitled with a tagline that read “why classical liberalism is superior to hard-core libertarianism.” The thrust of the article is more or less as follows.

The renewed attention to Paul exposes the critical tension between hard-line libertarians and classical liberals. The latter are comfortable with a larger government than hard-core libertarians because they take into account three issues that libertarians like Paul tend to downplay: (1) coordination problems; (2) uncertainty; (3) and matters of institutional design.

I don’t want to summarize Epstein at length here, and would encourage anyone interested in questions of libertarianism, classical liberalism, and their relative merits to check out Epstein’s article for themselves. I want to stress that it’s far more nuanced than the brief excerpt I’ve posted here makes it seem, and I think most members of either camp would find it to be fair and enjoyable to mull over.

One criticism I would make is that Epstein, perhaps for reasons of space and brevity, can seem to be begging the question at certain points. He argues that hard-line libertarians misfire by considering voluntary contracts sufficient for ensuring social order, says that classic liberals “recognize the need for taxation to support institutions of social order,” and also “realize” and “recognize” a host of other things as well. This makes it sound as though those of the more hard-line philosophy simply haven’t encountered these issues when, as Epstein himself implicitly admits in writing the piece in the first place, the big distinction between classical liberals and hard-line libertarians is the relative emphases they place on these problems, and the approaches they take to solving them.

When Epstein writes, for instance, that classical liberals “recognize” the need for taxation he is using a rhetorical flourish that implies that this need really does exist, and thereby lends credence to his assertion that the classical liberals are superior for being able to see it when hard-line libertarians cannot. But it’s not that hard-line libertarians can’t see it; it’s that they fundamentally dispute that such a need exists. They have considered and examined it, and have come to the conclusion that it is a falsehood. They may be right or wrong about that, but it seems a little unfair for Epstein to suggest that those who argue that taxation is necessary are right, simply because…taxation is necessary. It’s like telling an atheist that we can be certain that God exists because it says so in the Bible.

Again, I’m sure that Epstein has long considered these questions, and can offer nuanced and thoughtful answers as to why taxation might actually be necessary. Likely he omitted these for reasons of space, and because many readers are already familiar with them.

Anyway, the point of this post is not to quibble with Epstein over how he presents hard-line libertarianism. The point that I’m actually interested in making is that, rather than a strict dichotomy between classical liberalism and hard-line libertarianism, I think there is room for a position that flexes between the former and the latter depending on if we’re discussing the real world or the ideal world.

Let’s start with ideals. It’s interesting to note at this point that Jonathan Haidt says self-described libertarians tend to be more concerned with being “consistent” in their policy recommendations than either conservatives or liberals. (One does wonder where Epstein style classical liberals would fall within those three categories–I’m not sure). Either way, this seems to ring true to me. Speaking purely anecdotally, it seems to be the case that libertarians, both in informal conversation as well as in formal argumentation, place a large emphasis on pointing out inconsistencies in the positions their opponents holds.

Haidt has written a completely separate scholarly article analyzing the “ Psychological Dispositions of Self-Described Libertarians .” While one can quibble with such things, his findings seem largely persuasive to me. In that article, Haidt applies the same tools to self-described libertarians and concludes that there are distinct psychological correlates to to libertarian morality that distinguished libertarians from both liberals and conservatives. Perhaps most striking is the libertarians emphasis on systematization. Now this, I think, is an important insight. For it explains a point that seems to be highly distinctive to libertarians: the recognition by libertarians, often with a high degree of pride, that libertarianism offers the only “consistent” ideology and that is one of the most compelling aspects of it. Well here’s Haidt’s point: Most people simply do not care whether their ideological views are consistent . For most people (liberals and conservatives), consistency is simply not a relevant variable or axis for determining what you believe or your ideological worldview. This explains, I think, the frequent bewilderment that libertarians face when they try to persuade someone to change their mind about, say, a social policy because it is “inconsistent” with their economic policy beliefs. It simply is not a relevant argument to them. This has obvious implications for communicating libertarian ideas to non-libertarians (i.e., the overwhelming number of people in America!).

That comes from a great post over at the Volokh Conspiracy, summarizing some of the work Haidt has done in this area. My point is that if libertarians are generally concerned with pursuing a “consistent” stance across different policy recommendations, or at least are more concerned about this than their less libertarian counterparts might be, then it probably shouldn’t come as surprise that more of them bite the bullet and commit fully to their views against taxation and violence. That’s not necessarily to conclude that they are correct in doing so–perhaps they are wrong about taxation and violence, and perhaps certain forms of them can be complementary to and even necessary for a free society. But it’s not surprising that a philosophy that attracts people who emphasize consistency sees many of its adherents advocate for the purist’s hard-line application of their viewpoints.

Now, there’s a difference between viewing all taxation as theft, and viewing all taxation as theft while also rejecting any reforms to it short of its total abolition. I really can’t speak from anything other than speculation on this point but it seems clear to me that, although many libertarians probably oppose almost all taxation from a philosophical point of view, they also recognize how limited they are as a segment of the population in general. As a result, I’d guess that many libertarians treat hypothetical situations encountered in their college philosophy class differently than they would treat an actual policy debate with the potential to influence real outcomes. Most libertarians probably oppose the income tax, in other words, but I think many would concede some small level of taxation–a flat tax is sometimes proposed, but that’s just one example–in exchange for a lessening of the overall burden. Those who are seriously involved in any policy debate realize quickly that the perfect can be the enemy of the good.

(In fact, my own thinking on this has been shaped by a growing interest in health policy and economics. It is easy to suggest that markets represent an obvious solution to health care woes but the fact of the matter is that we are a long way from markets, and many of our fellow citizens are heavily opposed to them. Short of absolute collapse and a market-friendly rebuilding, progress along these lines will likely proceed at a snail’s pace, so it’s important to be open-minded and willing to work with those of different viewpoints.)

And this brings me, finally, to my overall point. As I read and enjoyed Epstein’s piece on why he feels classical liberalism is superior to hard-line libertarianism, all I could think about is that hard-line libertarians tend to leave the house in a classical liberal’s clothes. By that I mean that hard-line libertarians may be characterized by their strict adherence to a clearly defined set of principles, but recognition that they are few and far between can lead them to argue, debate, and push policy proposals as though they are traditional classical liberals. Obviously this is a gross generalization, but I don’t think it’s a wildly inaccurate point of view.

Another way of observing this, as perhaps a hard-line libertarian yourself, is noticing how often you respond to questions for your policy ideas as follows: “Well, ideally, we’d do 1, 2, and 3, but given this constraint and that consideration, we could at least do A, B, and C.”

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The Chronicle: Markets for a Neutral Net

Check out my latest article for the Chronicle, on how non-legislative and market-based approaches may be our best way of ensuring net neutrality.

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Et Cetera – 25 January 2014

  • Michael Munger, in a response to James Stoner, distinguishes between “voluntary” and “euvoluntary” exchanges, and argues that government should allow them both. He also extends Stoner’s insight that men and women do not always behave morally in markets to the voting booth. This is well worth reading.
  • Michael Munger, again, this time arguing that greed isn’t good, it’s just a fact. Munger here takes that insight and examines it from a number of different angles to point out that we would do well to embrace a system that is capable of harnessing or channeling (NOT endorsing) that greed in order to improve the allocation of resources. This post is longer, but equally well worth reading.
  • Art Carden and Steve Horwitz argue that cries of “market failure” rarely recognize the shortcomings inherent in state intervention, and that it is often not obvious that states can improve on market failure-type situations. An insightful and nuanced piece.
  • This will, I think, be the most controversial of the articles in this Et Cetera, but clarifying the use of the word “privilege” in libertarian conversations. This is an issue that has been coming up a lot recently (at least in the circles I follow), so I thought it’d be nice to tack on an article related to it here. I’ve not thought through his issue enough to really take a stand one way or the other but my initial face-value reading of it seems in line with what Shaffer has written in her post.
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Patrick Kennedy Misses the Mark on Marijuana Legalization

Earlier this week, former Representative Patrick Kennedy argued on MSNBC’s Hardball that President Obama’s comments on marijuana legalization reflect a misunderstanding of the issue that marijuana use represents. Specifically, Kennedy claimed, the president’s idea that the plant is less harmful than alcohol or tobacco is based on shoddy science and fails to appreciate the potency of today’s marijuana strains.

“I think the president needs to speak to his NIH director in charge of drug abuse,” Kennedy said on MSNBC’s “Hardball” on Monday night. “[She] would tell the president that, in fact, today’s modern, genetically modified marijuana, so it’s much higher THC levels, far surpass the marijuana that the president acknowledges smoking when he was a young person.”

Kennedy said government research shows that marijuana is harmful.

“He is wrong when he says that it isn’t very harmful, because the new marijuana is not the old marijuana,” Kennedy said. “We need to have presidential decisions made based upon public health and the sound science that the federal government’s invested in.”

No matter how you feel about marijuana legalization, it seems that Kennedy here may be employing an argument that simply begs the question. In other words, to successfully say that marijuana legalization should be opposed on the grounds of today’s potency, you’d probably have to be pretty confident that the potency is not itself a result of the drug’s illicit status over the past handful of decades.

That’s not a foregone conclusion. Economist Mark Thornton, who grants that the potency of street drugs has been increasing over the past few decades, argues that the increasing concentration of illicit substances is a direct result of prohibition itself, which manifests itself wherever substances for ingestion are made contraband by the state.

Super potent pot is not a market failure. It is simply the result of government prohibition. In fact, it is one of the best examples of the iron law of prohibition . When government enacts and enforces a prohibition it eliminates the free market which is then replaced by a black market. This typically changes everything about “the market.” It changes how the product is produced, how it is distributed and sold to consumers. It changes how the product is packaged and in particular, the product itself. The iron law of prohibition looks specifically at how prohibition makes drugs like alcohol and marijuana more potent. The key to the phenomenon is that law enforcement makes it more risky to make, sell, or consume the product. This encourages suppliers to concentrate the product to make it smaller and thus more potent. In this manner you get “more bang for the buck.”

Thornton looks to the prohibition of alcohol in the early twentieth century as an example and finds that low density drinks like beer and wine virtually disappeared in America at the time, giving way to high density “rotgut whiskey,” which would be watered down at the point of consumption. This may be similar to the way that many drugs are “cut” with something before eventually making their way to consumers. (This, in fact, is frequently cited as the origin of the cocktail’s widespread popularity in America, as providers of this harsh and potent whiskey sought to cover up its unpleasant smell and taste–although the anecdote does seem to be disputed).

Thornton emphasizes that this effect is not endogenous to the market for marijuana itself but rather results from outside interference:

Therefore, the current high potency of marijuana is not a market phenomenon, nor is it a market failure. It is primarily driven by government’s prohibition and the odd incentives that this produces on the sellers’ side of the market. Under these conditions consumers may prefer higher potency marijuana, ceteris paribus, but it is not primarily a consumer driven phenomenon.

When marijuana is legalized we should expect the market to reemerge and to commercialize the product. In fact, we should expect to see a variety of products offering different potencies. Individual brands would be expected to emerge offering a relative stable potency along with other product attributes, such as, taste, flavor, smell, and packaging.

Thornton has written extensively on this topic, so if you’re interested in what he’s got to say there are plenty of other pieces to choose from. In the end, Patrick Kennedy’s analysis misses the mark as far as a criticism of marijuana legalization goes. There are plenty of sound reasons why somebody might be opposed to marijuana legalization, but opposing it on the basis of a potency that is likely the result of its prohibition in the first place begs the question, and does not meaningfully contribute to the debate on this issue.

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