for price controls: a solution to healthcare costs in America

Like many a crank before me, I am unhealthily attracted to arguments about economics.

This last week there has been a lot of fun activity in the blogosphere around that perpetually arousing topic, is economics a science or not? Science, here, doesn’t mean a social science. The problem with economics, I think, is that there is an impulse within the discipline to understand it as something more like a natural science – a science like physics.

This is, I think, a bogus credentialing move with serious consequences for the way economists think and advice.

Being held prisoner by a bunch of assumptions both about what science is and about what the economy is about, economists all too often end up leading those who listen to them into dead ends.

A good case in point is the matter of price controls.

Economists now, whether chicago school or MIT school, show the same horror for price controls as the Victorians showed for the  mention of sex. It just shouldn’t be done! Economics decorum is a bit different than Victorian manners, but they both start with assumptions that are highly fictitious. In the Victorian case, all the speakers were, actually, products of sex – and in the economics case, all the speakers are actually products of highly non-competitive non-markets.

But as we get out of the asphyxiating world of the economists assumptions, we often find “markets” that would be well served by price controls. For instance: the American healthcare market.

At the moment, there is much handwringing over the fact that the cost of American healthcare is way out of synch with healthcare costs elsewhere. This handwringing has resulted in many a clever suggestion about rearranging market arrangements for healthcare. These suggestions, however, turn a blind eye to the fact that the healthcare market is shaped by two government backed monopolies – on the one hand, the monopoly granted to medical device and pharmacy companies from the out of control patent and ip laws – and on the other hand, the various guild monopolies granted to the pool of labor, from doctors to dentists to nurses to pharmacists, enforced by the government.

This, then, is a market in which price controls that are heavily government influenced are already in place. The laws, for instance, that require a patient to get a doctor’s prescription to gain access to prescription drugs makes a mockery of any notion that the healthcare “market” is “free”.

In such situations, price controls can be imposed rather easily.  The room for black markets, here, is pretty narrow. Add this to the fact that the medical device and pharma industries count on the government protecting them from competition – for instance, from foreign drug marketers – and you have set up a situation which would respond perfectly well to price controls.

Don’t expect, however, anybody anywhere to point these things out or discuss a price control policy. That would violate the sensitivities of mainstream economists.  

a post on the pareto rule - rerun

 

Pareto and petit bourgeois nietzschianism

“His belief in man's freedom of thought and action, whether in the marketplace, in the press or in the university lecture halls remained unshaken till the end of his life. His economic liberalism was similar to that of the classical school; he upheld the freedom of markets, defended the merits of a free competitive system and was responsible more than any other economist for turning economics into a positive science, devoid of ethical considerations.”

Such is the summing up of Pareto’s work by one of his modern admirers, Renato Cirillo. The last phrase, with its combination of the petit bourgeois and Nietzschian grandiosity, is meant seriously. But of course it is nonsense: you do not uphold the ‘freedom of the markets”, or think that “freedom” even has a meaning in relation to ‘markets’, unless you are jammed full of ethical considerations, unless they dictate your whole view of the social hierarchy.

Pareto optimization, or “efficiency”, has been enfolded in the neo-classical tradition as something like a law of economics – or at least that branch which deals with ‘welfare”. Now it may seem that efficiency has little to do with needs and satisfactions except as, at best, a measure of the number of steps involved in performing an action. But efficiency has been elevated from humble origins far above the other conceptual gods by the economists, who have found in it a mantra to defend every kind of inequality and turn the tables on the carpers. The classical formulation of the Pareto axiom is this, from Alan Peacock and Charles Rowley: “if any change in the allocation of resources increases the social welfare of at least one person without reducing the social welfare of any other person, then this change should be treats as improving total social welfare.”

It is a dog’s body of a formula, but of course one can see at a glance that – skipping lightly over the exploitation of labor, which we will now pretend never happens and has nothing to do with value – from a neo-classical point of view, this is nearly heaven. To justify the enormous fortunes of the wealthy on the grounds that they somehow earned it runs into the absurdity of ‘earning’ millions for sitting at a desk and making decisions, or for having come up with a nifty device once upon a time in one’s youth, etc. Far better, then, to derail the whole critique by boldly claiming that the rich not only harm no one, but improve the total social welfare every time the dividend check comes in the mail.

Pareto’s own formulation of this maxim is heavily mathematical, which is, of course, another strike in its favor. Mathematizing relations is a very handy way of avoiding the conceptual analysis of same.

Otherwise, of course, this oracular pronouncement seems unlike to help us understand almost any real situation of “allocating” resources.
Let’s go for the first and most obvious problem, which is the presumption that the social welfare is defined in terms of positive gains. As anybody knows, though, this is simply not a general rule for life. In fact, it is often the worst rule to follow. If the allocator of ice cream at the party allocates me a bowl and my friend, Mr. Cardiac Arrest, a bowl, his social welfare would be improved if I stole his bowl of ice cream. Such situations of limits and overindulgence, writ large and small, are all over our “social welfare”.

Which, of course, gets us to questions of the allocator. The allocator is a strange beast, having no self interest of its own, but begin able to read exactly what the self-interest of all individuals in the collective are. Even the neo-classicals back away from this idea – which is why they prepose the much more wooly idea that interest and aggrandizement of goods is the same. Of course, this shreds into little synchronic strobe lit bits the true temporal dimension of the social. That x get wealthy and I don’t may, at time 1, seem to be no skin off my nose – but it is one of the funny things about wealth that you acquire it to acquire power. Wealth is as much a part of a position vis a vis others as it a quantity of purchasing power. This means that there exists a distinct possibility that, at some time in the future, the wealthy man will use his wealth to raise the bar to entry for the non-wealthy man.

How, of course, is our magic allocator to know this? The neo-classical solution, of course, is to pretend that this allocator is dumb to such things, and make a virtue of that dumbness. It is dumb because the future is uncertain! This distributor of cards, this dealer behind the curtain, turns out to be, of course, the market. The, as they like to say, “free market”. And furthermore, we are to believe that this free market is exquisitely sensitive to our needs and wants. Like a tongue tied beau, it woos us with poetry. The market’s poetry happens to be prices.

Even granted that something like “a market” can be extracted from the thousands of real markets in existence in this world – which, I confess, I doubt – the idea that the market is extremely smart and extremely dumb at the same time is curious. In fact, as one of Pareto’s commentators sheepishly admits, Pareto just assumed Say’s law – that markets always clear. Say’s law is the black sheep of neo-classical economics – it dare not speak its name, but – of course – it is believed with the ardor of true love among their ranks. 

to: future historians of the reign of the Bush the great

Prufock, contemplating old age, asked “do I dare to eat a peach.” Myself, near that same dire portal, am asking myself “do I dare to read Peter Baker’s massive fluffing of the Bushies?” I think the medically sound answer should be no. Any reporter who proves that Bush was not bossed around by his VP by quoting Bush’s and Cheney’s friends –well, that reporter should go quail hunting with the monster formerly known as the Vice President. What did Baker expect? Interview the friends of Vlad the Impaler and I’m sure you’d get a picture of a man who saved the lifes of small birdies who had tumbled from the nest. Especially if they know Vlad can still fuck with them.

But it was ever thus with Peter Baker. No, he did not reach the heights of ludicrousness ascended by certain of Bush’s flatterers – oh who can forget – or who wants to remember – Fred Barnes Rebel in Chief, a book where asslicking and orgasm tinge the pages (and will probably transmit a sexual disease to you if you turn them – beware!). But Baker was no slouch in the sycophant department. On my blog, I have a post from september, 2008, in the midst of an unexpected meltdown that seemed to be happening under the reign of the bestest guy you’d ever want to chop brush with. Baker, at that point, began to sing of the true heros of the day: Paulson and Bernanke

It is nice to see that some of the bigfoots – Greider and Krugman, and even the Bushite pinhead, Sebastian Mallaby in the WAPO – are coming out of the shrubbery to denounce the Treasury department’s theft in the offing. The NYT, in contrast, has set Peter Baker to the task of licking up a monument of bubble gum and marble for those two superheroes of this Bushian time, Paulson and Bernanke. Baker is the man for the task: on the Washington Post, he strove mightily to apologize for mass murder and torture, covering President Backbone with the same objectivity that might be expected from one of Nero’s catamites, reviewing Nero’s acting abilities in the Coliseum. His description of the brain (Bernanke) and the man of action (Paulson) is like a Damien Hirst piece, if Hirst took to carving Pierrots out of his own shit: it is kitsch cast in excrement: 

“The two men have been working early and working late, tracking Asian markets and fielding calls from their European counterparts, then reconnecting with each other by phone eight or nine times a day, talking so often that they speak in shorthand. Mr. Paulson has powered through the long days with a steady infusion of Diet Coke. Asked twice to testify by the Senate last week, he begged off. 
“He told me he had like four hours of sleep,” said Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking Committee. But there were limits to Mr. Dodd’s sympathy. “The public wants to know what’s going on,” he said he replied.
Mr. Bernanke (his drink: Diet Dr Pepper) has made a point of leaving the office by midnight to get at least some rest, but friends say the toll on him is clear as well. Alan S. Blinder, a longtime friend and former vice chairman of the Federal Reserve, recalled seeing Mr. Bernanke at a conference last month in Jackson Hole, Wyo. “He looked like he had the weight of the world on his shoulders,” Mr. Blinder said. And that was before last week.”
Baker, whose effusions about the heroic, surge-right Bush in the NYT Magazine a couple of weeks ago did had a dramatic effect on LI (we wanted to vomit after the first couple of paragraphs) is in the fortunate position of the right sycophant at the right moment, and one can feel him wiggling with excitement. And he has that eye, doesn’t he: diet Dr. Pepper. Don’t you feel his maternal, servile ache as he longs to perhaps bring one of his action heros, a true Batmen out to free Gotham from its bad debts, another can. He understands, as does the NYT, that this huge crisis in the Bandit class can only be assuaged by an obsessive, massive theft that will make our successful and oh so smart masters feel, well, masculine again; one that will exist like a burning yearning brand on the hides of Americanus bovus, all of us lower downs: bought and sold at undermarket prices. But of course, we out here in the fields, we cant understands theft! So hard! Maybe the smarter peoples will figure it all out for us! Then we votes for them!
Of course, in the UK, the New Labourites have already figured this out and have translated it into the ineffable language of toadeating. This is one of the Blairites, explaining, oh so delicately, that we can’t, just can’t, return to cutting into the hides of the wealthy, who are generating our prosperity at a fearful rate. Such genius brains!
“But is an economy which promotes minority wealth and privilege and requires the state to tax the beneficiaries to support those it excludes really the only alternative to the current order? An agenda based on the redistribution of wealth rather than the redistribution of opportunity can only ever deliver justice as compensation; mitigating the worst effects once the damage is done. It is morally unambitious and likely to fail in the long run because by taxing the beneficiaries more heavily, the wealth-generating capacity of an already underemployed economy is further compromised.”
Oh my! Such butter and shit on the tongue, lodged firmly in the City asshole! We have to (sob) redistribute opportunity! We need Blair, with all his evangelical fervor, that wondrous Uriah Heep persona, to intone things like this, so that the press guys in the pew can say Amen, and explain it to the plebes.

news from nowherre

Well, two news items about that old festering crime we’ve all forgotten, the occupation of Iraq, recently came to the surface – giving us a really sweet juxtaposition of the 00s. One comes from the NYT world class suckup, Peter Baker, whose reporting in the 00s was to reality as Oz was toKansas – quite a distance away. In his opus of insiderdom (he talked to all ofBush’s friends and ministers! And it turns out he was an excellent president!),he reports that Bush, during some rough spots in the war in 2006, ground histeeth so much they hurt. The darling! One can tell that Baker is himself moved,and probably, as he typed, had to swallow tears himself, such are his feelingsfor the great man. 

The other is a rather unimportant item. Item: best estimatesare that nearly 500,000 Iraqis died in the 2003-2011 period due to our bigadventure.

But Bush’s aching teeth! My, how we sacrificed to set the Iraqis free. I get all well teary eyed thinking about Operation Enduring Toothache.

our lulu

Adam is one year old today. A year! And yet, it is, on some days, hard to imagine we were ever without Adam - the laughter in the morning, the falling asleep to either ocean waves or cricket sounds via YouTube, the unpredictable enthusiasms for the stuffed gorilla, the slow, concentrated way he will at first point and then press his finger on a button, a piece of lint, some presque rien that, for reasons I'll never know, has come into his consciousness for a moment and reigns there, like the full moon lights up a dark night. What is rarely said - because we have to hide this behind complaints, otherwise the world would fill up with babies - is how enjoyable a baby is. Nobody wraps their arms around your neck with such utter, trusting abandonment like a baby - or makes such marvelous burbles, or makes ordinary things - standing, rolling, looking out the window - seem so never done before. 
Ah, our lulu!

In praise of firbank

I’m interested in a tone.

This sentence, for instance, in Ronald Firbank’s Caprice.

“My dear, I once was thought to be a very pretty woman. ... All I can do now is to urge my remains.”

This comes from an otherwise mildly repulsive secondary character, a Mrs. Smee, who Firbank mingles in with the theatrical set he is writing about. A woman whose first and abiding characteristic is her two moles. When two moles are thrown at the reader first thing, the reader backs up a bit, and a quick bit of mental business equating moles and witches occurs in the subconscious. Yet, Mrs. Smee’s remark implies a sort of conversational intelligence that is both bound to a certain class, or idea of class, and a certain ambiguous sexuality, the degree of which corresponds to the legal rigidity with which it was persecuted. One might well say that camp sprang from the law book.

One can in a way divide writers as followers of the law book or eccentrics from its captiousness by using the test of Firbank: those who can’t stand him – such as Kingsley Amis – will never find Mrs. Smee anything other than repulsive. Auden wrote that those who could not stand Firbank were all very well in other respects, but as for himself, he avoided them. It was Auden who saw the sly genius, the religious genius, in Firbank:

“All that really matters is in fact that the Firbank world should exist,  a world in which a country church can have the “scheming look of an ex-cathedral” and a choir-boy who has been taking the lead in a mass of Palestrina’s “the vaguely distraught air of a kitten that had seen visions”, in which an inflamed girl can “leave the room warbling softly “depuis le jour,’”, and a queen motor for hours and hours with her crown on, it “was quite impossible not to mistake her”…

“Firbanks extraordinary achievement was to draw a picture, the finest, I believe, ever drawn by anyone, of the eafthly Paradise, not of course, as it really is, but as, in our fallen state, we imagine it to be, as the place, that is, where, without having to change our desires and beihaviour in any way, we suffer neither frustration nor guilt.”

The distinction between paradises – those we can imagine and the unimaginable paradise beyond our reckoning – is perhaps an Auden touch, whereas Firbank could reckon very well with the paradise in which his dolls hold sway. Still, what Firbank presents, and what Auden sees well, is that Firbank creates a world where, in spite of scandals and insinuations, nobody gets hurt. Innocence, here, is invulnerability – and it is that invulnerability which threads its way into the prose, into the style.

Style is, to use Barthes’s distinctions, a matter of the punctum, not the studium. A style is the equivalent of the italicized word – we recognize the difference in that word from its plain print kin, but at the same time, it is the same word. The style is meant to establish a clique – and to brave the dislike to which it is inevitably destined, the dislike of the rough and tumblers on the playground come to adulthood and hard liquor – the Kingsley Amises of the world. Firbank abounds in felicities – while it is the rough and tumblers glory to leave them out. Yet it is obvious to me that the greatest roughs in twentieth century literature – writers like Hemingway – learned how to write from the felicity-mongerers. Hemingway is forever paired with Stein in my mind.

  

the family luck

I’ve never murdered anyone. My father never murdered anyone. My grandfather never murdered anyone. Alltogether, we’ve lived a shelter life, us Gathmann men, in the twentieth century, for the state’s nets were out, and millions fell into them, drafted and turned into murderers. Or lets not exaggerate – there were those among the drafted who did not serve in the infantry, sail the seas, or fly in bombers and fighters. But millions did. It was in fact a generational experience for American men, a first blood kind of thing. World War I, World War II, Korea, Vietnam – duty or at least the law armed the stripling male and commanded him to murder. The same thing, of course, was demanded of British men, Russian men, German men, French men, etc. It was always the same thing: see the woman there, nursing the child? The command was simply to roast her and her suckling, make sure it was good and hot, and that around her the houses burned and the streets buckled from the heat. Simple. See the man advancing to murder other men with his rifle? Put a bullet in his skull, or perhaps blow his legs off, double quick! Its an order.

And so it goes down to now. I’ve recently been reading Randall Jarrell’s war poetry. Jarrell, like all the generation of poets that experienced WWII, was permanently seared. Robert Lowell said that Jarrell’s war poetry was the best to come out of those particular years of mass slaughter. There are small perfect poems, and larger ones that are more drafty. But the eye is on what it means:

The other murderers troop in yawning;

Three of them play Pitch, one sleps, and one

Lies counting missions, lies there sweating

Till even his heart beats: One; One; One.

O murderers!... still this is how its done:

This is a war…

I hope the family luck continues. Never to be a soldier, always a protester … oh what bliss.