Month: May 2017

In a comment to my “Two Paths for America” post, a friend made some interesting observations. Two of the points raised in those observations are worthy of this separate post.

“. . . the argument [whether collectivized healthcare is good or bad] will never be settled until America universalizes healthcare and we find out what happens here and in the rest or the world.”

There are two reasons this is incorrect. First, no matter what happens, there will be no counterfactual against which to measure irrefutably “what happened.” There will be no agreement as to what was proved by the experiment. [i] But, second, there should also be little doubt that if America “universalizes” (I prefer the term, “collectivizes”) healthcare, the rate of innovation of medical treatments and drugs will slow. [ii]  How much faster healthcare would have improved had America not collectivized healthcare would be the subject of interminable speculation; and multiple bias driven and confirming “empirical research.” (If sound theory and history tell us anything, however, the truth is that the rate of innovation will slow.) Similarly, if America does not collectivize there will be no way to measure how much more slowly healthcare would have improved had it been collectivized. Either way, we would see endless “studies” purporting to prove each side of the argument. This is why sound economic theory is the only way to make a reasonable judgment about how to proceed. The economic theories are good enough now to justify minimizing the degree to which the healthcare system is collectivized to the greatest extent politically possible. (This is not to say that there should be no collectivization. As I’ve conceded in prior posts, that bird has flown.)

“. . . that America subsidizes all the other ‘model’ countries universal health care programs, if true, is an unfair situation.”

Yes, it is unfair. Much of life is unfair. So what? The choice before America is whether to continue to reap the advantages of inventing new and better medical treatments and drugs at a fast pace or to slow the pace of improvements to medical treatments and drugs. Collectivizing healthcare would also mean forestalling the benefits of the advances that would be built on top of the deferred advances. I urge the country not to slow the pace of healthcare improvement any more than necessary despite the fact that it is unfair that other countries will not carry their fair share of the burden[iii]. (I don’t get the logic of pointing a loaded gun at my foot and declaring, “If you guys don’t do your fair share, I’m going to pull the trigger.”[iv])

Unfair assumptions of burdens are ubiquitous (check out the discussion at 52:25 of THIS OUTSTANDING TALK) and unavoidable if progress is to be made.  Consider what life would have been like had Steve Jobs never lived. His influence on the advancement of smartphone technology was tremendous. To be sure, had he never lived, smartphones would eventually have acquired features very similar to those that we enjoy today–but probably many years from now. It is probably fair to say, that had Jobs never lived, smartphones today would be comparable to those we had five years ago. (Compare specs[v], and consider all the apps that were not invented five years ago—and how many of today’s apps would be unable to function on an iPhone 5 had those apps been nevertheless invented.

Steve Jobs became fabulously wealthy. But consider the raw deal he got in return for the joy and productivity he bestowed on humanity. All inventors of today stand on the shoulders of all previous inventors in their fields. (For example, high-efficiency fuel injectors could not have been invented to replace carburetors had the internal combustion engine not yet been invented.) Jobs and Apple Inc. received a fraction of the income made by creators of all of the iPhone apps that were made possible by the platform his company created. But he received little or nothing for all the apps on other platforms that were inspired by his creations. Apple received only a small fraction of the value of the customers’ enjoyment of their phones—and most iPhone customers would have paid more if they’d had to. How much would someone have to pay you to forevermore use a five-year-old phone? Multiply that number by the number of smartphones in the world and figure out the percentage of that amount Jobs got paid. Outright piracy of Jobs’s innovations was commonplace around the world.

The innovations made possible by Steve Jobs rendered obsolete generation after generation of smartphone. Millions of those no-longer-cutting-edge phones wound up in the hands of much poorer people around the world, to their great benefit. Jobs and his company received none of the value of the entertainment and productivity that those people have enjoyed.

It is unfair that Jobs did not receive a greater share of the wealth he bestowed on the world. It is also unfair that America should foot most of the bill to fund innovation of medical treatments and drugs[vi] while also being the most charitable provider of foreign aid the world has ever had.

This is the tradeoff, however. Either America continues to bestow those benefits from the faster pace of innovation on its own citizens and all citizens of the world, or no one will. It is unfair. But we should do it anyway because no one else can, and it needs to be done. The more collectivist America becomes, the less able it will be to fill that role.

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[i] It would be much like the continued debate about the effects of minimum wages. The weight of evidence against collectivized medicine could be as overwhelming as the weight of evidence against minimum wage, but the debate would go on.

[ii] See PART I and PART II of my posts about repealing and replacing Obamacare. Also note that Germany was the leader in medical innovation before it collectivized its healthcare systems.

[iii] It is equally unfair that other countries do not bear their share of the burden of defending Western (liberal) ideals. That does not mean that America should not continue to defend those ideals.

[iv] It strikes me this as similar to the logic people use to defend imposing tariffs on less expensive goods from other countries. “If you (foreign country) do not quit subsidizing our purchases of your goods (making the things we want and need less expensive), we’re going to pull the trigger.”

[v]

iPhone 5	iPhone 7
CPU         1.3 GHz dual-core 32-bit                              ARMv7-A “Swift”	CPU                         2.34 GHz quad-core (two                                      used) 64-bit[3]
GPU         PowerVR SGX543MP3	GPU                         Custom PowerVR Series 7XT GT7600 Plus
Memory  1 GB LPDDR2-1066 RAM	Memory 7              2 GB LPDDR4 RAM Memory 7 Plus     3 GB LPDDR4 RAM
Storage   16, 32 or 64 GB	Storage                  32, 128 or 256 GB

[vi] The same is true with respect to defense and disaster aid.

As I was writing PART III of “Obamacare – Repeal, or Repeal and Replace?” I realized that any recommendation for what government should do about healthcare (or any other policy) largely depends on which of two paths the country will take going forward. The vast majority of Americans wish that all people, everywhere were healthy and had access to the healthcare they need. They do not believe that distinctions as to who gets government benefits or punishments should be made on the basis of race, religion, sex, age, political beliefs, country of origin, or whether the person was born in America or elsewhere. Americans also believe that it is society’s and the government’s responsibility to improve the lives of the poor—especially the American poor, but also the poor everywhere. Americans should be happy and proud about these aspects of American culture.

All wishes, however, must be tempered by reality. America should pursue no policy, no matter how great the benefits, with goals that are impossible to achieve or if its costs – in both money and other forms – are greater than its benefits. Because people are so apt to focus on the bright and shiny benefits of every policy that politicians dangle before their eyes and sing into their ears, we should sort out some costs that are all-too-often overlooked.

Despite its many shortfalls and shortcomings, over the last 100 years or so, America has advanced the People’s wishes related to equal protection, due process, and non-discrimination[i] and in terms of improving the standard of living of the poor to a substantial degree.[ii] Certainly no other country has ever accomplished so much in so little time. The benefits of these accomplishments have swept (some would say “trickled down”) across the world.[iii] Other countries have contributed to these accomplishments, but no country has so consistently and for such a long time contributed as much prosperity and peace with freedom to the world as America has. In addition, no other country has come close to America’s ability to innovate and create wealth (which also “trickles down” across the world).[iv] I’m not saying this to boast, I’m presenting what I believe to be a fact for your consideration.

America’s accomplishments are primarily attributable to certain traditional attitudes, philosophies, and morals, which can be summarized as follows:

1. Attitudes: Tradition should not be too much of a restraint to positive change.[v] It is legal to do/try anything that is not explicitly made illegal (in contrast to the European attitude that everything is illegal that is not explicitly declared to be legal). Success should be encouraged and honored.
2. Philosophy:
   1. All humans are created equal and have the inalienable rights to life, liberty, and property. “. . . the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately. . . .”[vi] “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”[vii]
   2. Extolling individual liberty over collective results fosters better outcomes than the reverse.
3. Morals: The Protestant work ethic. For the majority of the last 100 years, most Americans refused or were at least embarrassed to accept welfare. People generally believed that it was their duty not only to avoid being a burden to their fellow humans unless physically or mentally incapacitated, but also to add to the common wealth of the country or humankind. Able-bodied and sane people who refused to “do their part” were dishonored. The distinction between “the deserving poor” and “the poor” made a big difference.[viii]

As America has moved away from its exceptional traditional attitudes, philosophy, and morals, it has slid back toward the pack of humankind.

In my estimation, the benefits demonstrably derived from America’s traditional attitudes, philosophy, and morals are exceedingly valuable for Americans and everyone else in the world, and the cost of abandoning them is very high and often overlooked. See my blog posts Wealth, Wealth Creation – No Happiness, Why Bother?, Wealth Creation – It’s For The Children, and their children, and their children. . . ., and Income Inequality Is More Than It is Cracked Up to Be.

Going forward, America will choose between two paths:

1. Continuing to be (a) the primary fountain of innovation and wealth creation and (b) the only country with the power to make a significant difference in maintaining semblances of world peace (and quit stirring up world agitation, as it has done in recent times);

OR

2. Continuing to shut down the engine of prosperity and the force for peace in the world by abandoning its traditional attitudes, philosophy, and morals, i.e., becoming more collectivist.

Given the intensity of current public sentiment in favor collectivist policies, America will not eliminate all (or even many) of its collectivist policies anytime soon. There is reason to strive for better public understanding of the issues so that America changes paths before falling headlong off the collectivist cliff. The next step with respect to healthcare could be the step from which there is no turning back. Obamacare is an abject failure, except for its primary purpose. Its primary purpose was to create a right to obtain healthcare. Mission accomplished! Because it is manifestly unworkable, it must be drastically amended or replaced. That can be done in a way that maximizes the collectivist damage it is doing to America (and the rest of the world), or in a way that minimizes that damage. I’ll attempt to sort this out in future posts.

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[i] As America gains more achievements with respect to the listed categories, people have a tendency to want to create new categories about which to complain and clamor for protection.

[ii] In 1900, racial discrimination was commonplace and generally accepted, and racists had political power. Today, racists are shunned more than almost anyone else, and no politician dares to engage in overtly racist activity. In general, poor people had no sources air conditioning other than wood or coal fires, lived at or near the brink of hunger, had little to no healthcare that actually cured anything, were limited in entertainment to what they could produce themselves as well as many other depravities.

[iii] See also, THIS.

[iv] Obviously other countries have outperformed America in certain aspects of those areas in which America has excelled, and in areas in which America has not excelled. On balance in the key areas Americans value most, however, America has been truly exceptional.

[v] In general, “progressives” and libertarians see little to no value in tradition, while conservatives believe “progressives” and libertarians fail to sufficiently consider and appreciate the received wisdom and evolutionary selection embodied in tradition. Note, however, that conservatives in America are far more open to change than conservatives in many other places.

[vi] Thomas Jefferson.

[vii] The Fourteenth Amendment.

[viii] It has never been fun telling a person who is choosing to be a slothful ingrate that the organization’s scarce resources should be allocated to those who could want to improve their lives (and possibly become helpful members of society). People who did this had to fade a lot of heat. As the government took over more and more of society’s obligation to care of the poor, fading that heat was an unpleasant duty of the bureaucrats who dispensed welfare. Consequently, over time, the concept of the “deserving poor” was officially abandoned. The human understanding and acceptance of the concept was not so easily dispensed with, however. Therefore, people keep dreaming up new grievances to justify (in some people’s minds) the giving of welfare to those who do not take advantage of the many things that society tries to do to improve their lives, e.g., providing free education.