Tuesday, April 19, 2016

Capitalism, Patents and Healthcare.

I am a strong believer in capitalism who also realizes the need for government intervention in healthcare.   How can I reconcile such apparently divergent views?

The United State's of America does NOT use capitalism in it's healthcare system - and never has.  

Wikipedia list six separate characteristics of Capitalism:

  1. Private Property
  2. Capital Accumulation
  3. Wage Labor
  4. Voluntary Exchange
  5. Price System
  6. Competitive Market
If you don't have those features, it's not capitalism.   Socialism is famous for preventing capital accumulation via taxes and the competitive market via regulating prices.  Communism goes further, wanting to get rid of the rest, but even the Soviets at their height claimed that was an ideal utopia they aspired to, rather than something they could implement.

But Capitalism predates Communism by more than 100 years.  Lets' compare it to Mercantilism, the system we had before Capitalism.

In Mercantilism, there was Private Property, Capital Accumulation, Wage Labor and a Price System.  They did not have really have Voluntary Exchanges, nor a Competitive Market.  Specifically, they had government control of exchanges - what you could buy and sell was strictly controlled.   They were known for banning the importing of many protected goods and the export of gold.  They also were known for monopolies.   Lots and lots of monopolies created by the government, given to favored people.    Queen Elizabeth of England granted monopolies on everything from coal to wine.

In Elizabethan England, under Mercantilism, they called these monopolies "patents of monopoly".

Yes, that's right, patents are not part of Capitalism.   Patents restrict people from engaging in business, which directly prevents a competitive market. They are a hold over from Mercantilism.    If you are defend the concept of patents, you are not a pure Capitalist, you are at least partly a Mercantlist.

Why do we still have patents?   We needed a way to incentivize invention, so we took the old concept of a patent, reworked it, and now they only apply to things you invent, rather than any old thing the government wanted you to have a monopoly on.

Capitalism is a pretty strong systems.  It is more than robust enough to handle some flecks of impurity.  Patents have always been a problem for Capitalists, but it's something we can usually live with.

As long as we keep the other five characteristics of Capitalism, it works well enough.

But that brings us to Health Care.   Here, we don't just have patents on medicines, techniques, and devices.  If you don't buy necessary health care or you die.  That's involuntary, not voluntary.  No different from putting a gun to your head - or ordering people to buy this or go to jail.

Notice how hospitals don't list prices?  Name one other business where that happens.  I can't think of any.  The reason is simple:  you have to pay or you die.  It's not a voluntary exchange, and they know it, so they don't even bother to tell you the cost till after it's done.

Still, it would be mostly OK, as long as we didn't also have the patents and other restraints on free trade.   If there was open market, where you could get the stuff you need to live from multiple sources, the free market would keep the price down.  When you take away both the voluntary exchanges and the patents, there is no free market - that's Mercantilism, not Capitalism.

Which   is why the US has such a problem with Healthcare - we don't use capitalism, we use a mercantile system.  That's not something new that Obama created, it's been that way for more than a hundred years.

I'm not saying we have to get rid of patents* - and by it's very nature, we can't make health care "voluntary".  (Note, we could at least require hospitals to list prices and stick to them).   But we can recognize that system is not capitalist, and that it requires government intervention in this case, because we have already intervened to help out the suppliers (by enforcing patents, among other things).  We need to counter the aid to the suppliers by also helping out the patients.

Price limits are a totally reasonable method.   We don't want to do it directly, so we chosen let the insurance industry negotiate the prices, rather than have government legislate it.  But that means everyone has to have insurance to do the price negotiating for them.  If you don't want to let the government legislate the prices, you have to require that all people have insurance to do the negotiating for them.  Or we could simply rule that the government sets prices if you don't have insurance. 

Health care is not and never has been a free market.  That's why we need consumer protections and pro-patient regulations, on top of the many pro-business regulations such as patents.**

*Note 1:  I am also not saying we can't get rid of patents - a bounty system could be established by the government rewarding innovation might work.  So could a set 10% royalty systems where anyone would be allowed to sell patented objects as long as they paid a 10% royalty would also work.

**Note 2:, I do know that not all health care involves patents, but  the far majority of medical care is involuntary, rather than voluntary, and even without patents there are other issues with the competitiveness of the market (see hospital prices mentioned above, one sided information, limited providers with barriers against entry) that similar issues apply throughout the entire industry, not just patented medicine.

Friday, February 12, 2016

The problem with low interest rates

Money is a complicate concept.  For the purposes of this discussion, we shall treat money as grease for an economic engine.

While there are other explanations for it, this is the one that is most applicable for current economic theory. 

First, some back ground - current economic theory has changed dramatically since the 1950's.  Before then we did not attempt to use interest rates to fight inflation.  In the 60's that changed.

The basic idea was that inflation was caused by not enough grease in the system, so we applied more grease (lower interest rates = more lending from banks = more money available for use).

The problem is this what happens when you lower interest rates and the banks don't lend more money?  This began to happen recently, mainly because interest rates hit extreme lows.  Small difference in interest rates give little if any impact.  Lowering from 15% to 7% will have a huge impact, but from 7% to 3% is small, and from 3% to 1% is no impact at all.

You see, you can't just apply grease to the system and hope it goes where it is needed.  There are times when banks won't lend more even if you PAY them to borrow money from you (negative interest rates to the banks).  Once you go negative, the bank can simply borrow money, hold on to it without lending anything then give less back to you and make a profit.  No need to lend at all.

We need a more modern system of applying the grease.   We need to apply the grease not to the banks and hope they lend more, but directly to the parts of the economy that need it the most.

What would those parts look like?   There are several places to look at.  One is new businesses.   If you want to rev the economy up, offering to make more generous Small Business Loans - for guarantees, surety bonds, and Venture Capital, - works well.

Another is to look at parts of the economy that NEED the grease but aren't getting it.   Currently a major source for that is College debt loans. They can't be refinanced, no matter what happens to current interest rates.  Often they are held by hard working, intelligent college graduates.

So another thing the Fed could and should do is to refinance any education loan that has no late payments for the past 5 years.  It could even be set up to automatically work whenever the Fed lowers interest rates to banks - boom, instant refinancing allowed.   The people that benefit from this would be exactly the ones who could make use of the grease.

Wednesday, August 12, 2015

"Check Your Privileged" is evil.

Sometime before April 2006, an autocratic idiot, possibly at Shrub.com came up with an incredibly  evil concept. They coined the phrase "check your privilege" in a rather inept attempt to explain to racists that the reason why blacks, latinos, women, lbgt, non-christians, etc. etc. do poorly is because of systematic biases that do not affect tall, white, straight christian male Americans.

Some people still think it is a socially acceptable way to explain things.  Let me be clear, those people are wrong.  It does not in any way explain anything to a prejudiced person.  It makes things worse.  Yes, often people that have never had their rights violated do not understand how pervasive the problem is.  But using the word privilege makes it harder, not easier, for them to understand the problem.

This is partly because it is often used as an insult, but that is a side issue.

It is NOT a 'privilege' to:

  • Walk down the street without being catcalled.
  • Not be stopped by a police officer for walking/driving/standing while black, latino, etc.
  • Wear my religious gear, including artifacts of faith - such as a kirpan blade.
  • Get a mortgage based on my financials without regard to race, gender, etc.
  • Get married to the man/women of my choice without regard to my own gender

Those are not privileges. These are Rights.  Constitutional Rights in America, Chartered Rights in Canada, Human Rights in England, etc.

When you call these things as privileges, not rights you are saying these violations are not so bad.  You are saying that certain people get the advantage of not having to deal with them.   These things do not happen to tall, white, straight christian male Americans but that is not an unearned privilege that can/should be taken away from them, putting them in the same place as minorities.

That is the idea of an autocratic, dictatorial tyrant, not a democracy.

When you talk about "privileges" in this manner, including the incredibly obnoxious phrase "Check  Your Privilege", you are being totalitarianist.  You are making the problem worse, not better.

Anyone using the words "Check Your Privilege" is worse than the racists they are talking to.    The racist may not be aware of rights being violated, but at least they know Rights exist.

Sunday, May 31, 2015

In Defense of PACs

Political Action Committees are almost universally despised.

They allow politicians to avoid responsibility for 'their' advertisements, raise ridiculous amounts of money, and have a history of poor use of the funds.  (Some of them have been accused of diverting money raised for political speech into the hands of the people that run the PAC).

While all this is true, I have recently come to see certain benefits to PACs.  I'm not entirely sure (yet) that PAC's are not evil, but here are the ideas I have been mulling over.

1) PACS, while they may increase (or at least maintain) the big money in politics, put a wall up between the politicians and the money.   Which means large donations to PACs can not hide the kind of outright corrupt bribery made famous by Boss Tweed.   While the money may still be stolen for non-political speech, it will be stolen by the people running the PAC, not the politician.  The politicians may still be corrupt, but we have cut out at least one major method of them stealing from the people.

2)  Attack ads are not anything new, they have always been around.   While the PAC's do protect the politicians from blame, it also allows truly ethical people to run.   At one point in time a saintly man could NOT win an election because he could never get down and dirty enough to beat the devilish men willing to do or say anything.   Some people think this is why McCain lost the 2000 GOP Primary (Bush's people accused him, among other things of being the father of his adopted black child, while McCain said nothing that bad about Bush).  The existence of PACs allow a saintly man to run and still win, if only because his less saintly allies can act without his knowledge or permission.  

Let's assume that PACs are here to stay.  What can we do to make our elections fair while keeping the PACs.

  1. Start actually enforcing strict "no cooperation" rules.   If you run a PAC, you can never talk to anyone connected to a political campaign you are funding.  Not on the phone, not in person.  Put in an exception for listening to public addresses (speeches, ads, etc.)
  2. Require that only US citizens election may donate to a PACs.   Foreigners, and corporations (which may be secretly owned by foreigners) are not allowed to donate to a PAC - but they may of course independently pay for their own advertisements.  
  3. Require the PAC to list on their website - WITHIN ONE DAY, any donation that exceeds $10,000 and whose name was on the check.  We can set this to some other limit, such as the cut off for the lowest possible tax bracket, currently about $9,000.  When you check your bank account on-line you see it that same day, no reason we can't do a similar rule using modern technology.  Free Speech is a legal right - but there is NO right to anonymous free speech.  
  4. Make a "No Shouting" rule.   Limit spending by any one PAC to more than 1/2 as much the second candidate raised.   Money may be speech, but we don't let one person monopolize the conversation.  Both candidate's speech should be far more important than someone that isn't running.  Similarly, no person may contribute more than that same limit to PACS - so no one can give 1 billion to two PACs that proceed to each spend the maximum allowed.
If we enact these rules, PACs lose a lot of the problems we have with them.  No more will US politics be dominated by anonymous speech from the wealthy.

Wednesday, July 10, 2013

Obama's successes

Obama's successes are fairly well known (and despised by the GOP).

The death of Bin Laden, the passage (and sustance) of the Health Care bill, and the two Supreme Court Judges, and the destruction of DOMA

In addition, he dealt a near mortal blow to Fox News, by proving them oh so very, very wrong about his election.  

It is looking more and more to me like he will also get a win major immigration reform.

The reason he has won is that the GOP is dysfunctional.  They got caught up in the idea of beating the liberals at all costs, even at the cost of what's good for the country.

As such, they moved very far to the right, so as to avoid compromising in any way shape or form. 

The thing is, as much as this ensures that the President will be a Democrat for the foreseeable future (at least the next presidential election - the GOP continues to push candidates that have no chance of winning), it is bad for the country.

The US needs a loyal opposition, not just an opposition.  The entire concept of Democracy depends upon it.

We need a Republican Party to yell at the Democrats for letting the NSA invade privacy.  We need a Republican Party to yell at government agencies from time to time, just to keep them honest.

We need a Republican Party to ensure that we get the best possible Democratic candidate, and not just some schlub that knows the right people.

And honestly, the GOP needs us Democrats as well.  Without our shining example, they would continue to believe their favorite lies - chief among them is that Americans like the GOP's political philosophy.

But most importantly, the GOP needs as incentive to raise their game.  They need to forget about the Minor leagues (state governments) and get back into the Majors.  They need to focus upon the things that americans focus on.  

Instead of letting the Democrats steel Healthcare right out from under their presidential nominee and make it our issue, they could have made it their issue.  They failed.  They failed BIG time when it came to healthcare.

Honestly, what they really, truly need is for the GOP to take David Frum's advice.

Specifically, they need to get rid of their sacred cows, talk about income inequality, deal with environmental issues instead of deny them, accept Healthcare, and stop labeling Obama as the devil incarnate. 

Because quite frankly, at this point it is obvious to all Democrats and quite a few independents that Obama is a very good President and their attempts make them look as stupid and out of touch as a Holocaust denier.

Monday, July 1, 2013

Interesting take on China

There is an interesting speech given by Eric X Li at TED.

In it he offers five basic statements:

  1. Democracy is not for everyone
  2. China does quiet well with it's non-democratic, Bureaucracy
  3. Bureaucracy is not for everyone either
  4. Democracy has it's own problems that China doesn't.
  5. China does have some problems but it is working to solve them and will succeed.

I agree with the first three.   I don't believe Democracy is for everyone.   To have an effective Democracy you truly need many things, including but not limited to an intelligent, educated public.   You can't run a democracy with people that are too stupid and uneducated enough to sell their votes cheaply.

China has been doing well in large part because it has a path to follow, blazed by the west.  Bureaucracies don't innovate well, but they follow very well.  As long as they are behind the west, they can follow at breakneck speed.  But they can't innovate.

Which of course is why I agree with part 3.

Now for the last two.  Those I find to be laughable.   All the problmes that US democracies have, China has as well, they just don't publicize them.

Key problems that the US currently has include Congressional stagnation caused by dramatically different political views.  China has that as well, they just cover it up by letting one side win and burying their opponents.  

Other issues that the US deals with include things heavily involved with morality, of which China ignores one side completely.   Whether it's homosexuality, abortion, torture, we lead the way on issues they sweep under the rug.

Ignoring an issue is not dealing with it.  The US looks so combative because we face the major issues head on, rather than sweeping the other side under the rug.

He brags about China's leader's experience, and the lack compared to US politicians.  Experience is the enemy.  We want innovative solutions, not the same old stuff.  We want new blood, which is why terms like maverick, new blood, outside the beltway, are all positive terms.

Honestly, if we already knew the solution, then it is easy to solve the problem.  That is why bureaucracy works so well in those situations.

But the US is not following the path of another country. We are blazing the path. China is, to use a  Nascar analogy, drafting behind us.    We solve problems that NO ONE knows the solution to.   To do that, you need the innovative power of Democracy, not Bureacracy.

Mr. Li. knows a lot about China's history.  But fails to understand why it has succeeded.  He fails to recognize that it's success is on the back of the work done by the West.   Just as we taught them how to make cars, computers, etc, we also taught them how to run a country.  

He thinks China will continue it's growth.  He predicted that China will become the largest economy in the world.  That is likely - population counts.  He also predicts it will do well on a per capita basis, that is not going to happen.   When you pass the lead car, you can no longer draft, and that's the only economical technique they know how to do.  They can't get anywhere near us without the drafting.  I can see their per capita rising to about half of what the US will have, but not much more than that.

He thinks corruption will be curbed but not eliminated.   That is likely.  He also thinks they will do a good job of curbing.  I doubt that.  Their system by it's very nature lends itself to corruption.   Bureaucracy is not good about curbing it's corruption.  Their culture and system is about respect, not challenge, which lets corruption flourish.

He also thinks that economic reform will accellerate.  I disagree.  It is already near the economy they are drafting against, they have to put on the brakes to avoid cruising past the west's car.

He also thinks political reform will continue, which is a given, and the one party system will hold firm, which I also agree is likely to happen.  It takes a generation to realize your mistake, and they haven't made the mistake yet.  China has at least 40 years of one party system left to go.   

Not because their system works so well, but because they are blind to the fact that they are drafting behind the west's economies.

Friday, June 28, 2013

Three Surpreme Court Decisions.

There are three interesting Supreme Court decisions I want to talk about.  Two of which I agree with and one is clearly a bad decision by 5 out of 9 judges.

First the bad decision.  SCOTUS had no business tearing apart the Voting Rights Act.  (Huffington Post News story)

They specifically declared the formula in Section 4 unconstitutional. "The formula in that section can no longer be used as a basis for subjecting jurisdictions to preclearance.”

Specifically they said that our country has changed and they the formula must be updated.

This is a bad decision because they admitted that at one time the formula was good.   Roberts said  "Congress must ensure that the legislation it passes to remedy that problem speaks to current conditions"

But you see, that is CONGRESS's decision, not the Courts.  The court is there to determine if the Congress overstepped it's bounds, NOT to determine if they did a good job or a bad job.  If Congress has the power to  make that determination, they have the right to do so poorly.

Honestly, I believe that Congress should simply say, screw it, EVERYONE has to be subject to jurisdiction for preclearance.   That is, every single state and every single county should be forced to ask the DOJ if their voting procedures are racist.

It would end a lot of vile and corrupt practices, such as gerrymandering.

Second, the good news.  SCOTUS said that the Federal Government must recognize the Marriage of Gays, done by states.  Gays are people too, and as such have the rights to obtain the legal status of married, with all the tax, medical, etc. benefits. (CBS news story)

This is fairly obvious and not that surprising.  Scalia himself predicted it would happen 10 years ago  - although he was too preejudiced to understand it is a good thing.  He was kind of like an old racist from the 1860's saying "Why if we free the slaves, they might marry our white people."  Yes, his prediction was true but he was too prejudiced, and frankly, illogical to see that it was not a bad thing.

Thirdly, the Supreme Court also confirmed a lower courts decision that said being homeless does not mean you are not allowed to own anything.  Specifically they stated that the state of California could not take the possessions of homeless people and destroy them simply because they were on 'public grounds' and the homeless people had stepped away from them (to go to the bathroom or get on a food line.)  (Death and Taxes Blog)

Note, California had previously stolen and destroyed such possessions including identification (such as driver licenses, social security cards, etc.) and cellphones (if you don't have an address, a cellphone is vitally important to stay in touch with people.)

Frankly it was a rather evil attempt by the state of California and not that surprising that the Supreme Court sided with the homeless people.