Jeffrey Miron - Eric Hanneken on Diigo

05 Nov 09

Public option: Treatment worse than the disease

Jeffrey Miron strikes at the root of the arguments for government involvement in health insurance. Being poor sucks. Some people, <em>by accident of birth</em>, have higher costs of living or lower income than other people. Hardcore egalitarian statists believe the government should compensate the unfortunate at the expense of the fortunate, but they should recognize that not everyone agrees with their notion of fairness, and that their approach would degrade everyone's standards of living.

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health insurance egalitarianism politics Jeffrey Miron

Government should not subsidize health insurance -- for the uninsured, the poor, the elderly or anyone else -- or regulate health insurance markets.
Subsidizing health insurance means that patients and doctors are insulated from the costs of health care, so they utilize too much -- often in the form of unnecessary tests or medical procedures whose value hasn't been proven. This excess demand, along with technological progress, means rapidly growing deficits, so governments limit reimbursements to health providers or ration care. This kills innovation and creates its own inequities. The taxes necessary to fund subsidies are a drag on economic growth.
3 more annotations...
- If society wants everyone to have health insurance, the obvious approach is to give the poor enough money so that individuals can purchase on their own. Just because people want government to help the poor doesn't require it to pay for specific kinds of goods.
- the question is whether society should compensate those who face higher prices because of their health status?
  
  The answer is no. Advocates for such compensation would suggest that it is basic fairness for society to insure people against the bad luck of being born with lousy genes. Many differences in health status, however, arise from behavior
- In addition, it is logical for society to treat the differences in financial well-being due to health in the same way it treats differences due to IQ, athletic ability, race, country of origin, family background, and so on. These and other factors mean that some people, through no fault of their own, face hard financial circumstances, whether because of their ability to earn income or because of the higher prices they face for certain goods, such as health insurance.

Financial Market Reform: Why new regulations must avoid moral hazards

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finance crisis regulation moral hazard government politics Jeffrey Miron

According to perceived wisdom, the root cause
of the 2008 financial crisis was excessive risk-taking, and
proper regulation can detect and prevent such excess in the
future.
The Financial Crisis of 2008 did not occur because of
insufficient or ill-designed regulation. Rather, it resulted from
two misguided government policies.

The first was the attempt to promote homeownership.
7 more annotations...
- The pressure to expand risky credit was especially problematic
  because of the second misguided policy, the long-standing
  practice of bailing out failures from private risk-taking. This
  practice meant that financial markets expected the government to
  cushion any losses from a crash in mortgage debt. Thus, the
  historical tendency to bail out creditors created an enormous
  moral hazard.
- any mistakes made by a powerful,
  centralized authority have a magnified impact because they
  distort the behavior of the entire market.
- under the proposed system, bank holding
  companies would forever more regard themselves as explicitly, not
  just implicitly, backstopped by the full faith and credit of the
  U.S. Treasury. That is moral hazard in the extreme, and it will
  create an unprecedented incentive for excessive risk-taking by
  these institutions.
- The only way to limit financial panics is to eliminate
  government-induced moral hazard, and that means letting failed
  institutions fail.
- Rather than being a cause, Lehman’s failure was merely the signal
  that time had come for the U.S. economy to pay the price for all
  the distortions caused by the misguided policies toward housing
  and risk. Given those distortions, a massive unwinding and
  restructuring was necessary to make the economy healthy again.
- The announcement that the Treasury was considering a
  bailout scared markets and froze credit because bankers did not
  want to realize their losses if government was going to bail them
  out. The bailout introduced uncertainty because no one knew what
  the bailout meant.
- The third and perhaps most important way to reduce moral hazard
  is to eliminate the Federal Reserve. As long as the Fed exists,
  it will regard itself as, and be regarded as, the economic
  insurer of last resort.

18 Jul 09

Legalize drugs to stop violence

Jeffrey Miron is also the author of an excellent book on prohibition, <em>Drug War Crimes: The Consequences of Prohibition</em>.

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drug prohibition violence crime politics Jeffrey Miron

Prohibition creates violence because it drives the drug market underground. This means buyers and sellers cannot resolve their disputes with lawsuits, arbitration or advertising, so they resort to violence instead.
Prohibition of drugs corrupts politicians and law enforcement by putting police, prosecutors, judges and politicians in the position to threaten the profits of an illicit trade.
7 more annotations...
- Prohibition erodes protections against unreasonable search and seizure because neither party to a drug transaction has an incentive to report the activity to the police. Thus, enforcement requires intrusive tactics such as warrantless searches or undercover buys.
- By eradicating coca plants in Colombia or poppy fields in Afghanistan, prohibition breeds resentment of the United States. By enriching those who produce and supply drugs, prohibition supports terrorists who sell protection services to drug traffickers.
- Terminally ill patients cannot always get adequate pain medication because doctors may fear prosecution by the Drug Enforcement Administration.
- Drug users face restrictions on clean syringes that cause them to share contaminated needles, thereby spreading HIV, hepatitis and other blood-borne diseases.
- The right policy, therefore, is to legalize drugs while using regulation and taxation to dampen irresponsible behavior related to drug use, such as driving under the influence.
- Legalization is desirable for all drugs, not just marijuana. The health risks of marijuana are lower than those of many other drugs, but that is not the crucial issue. Much of the traffic from Mexico or Colombia is for cocaine, heroin and other drugs, while marijuana production is increasingly domestic. Legalizing only marijuana would therefore fail to achieve many benefits of broader legalization.
- It is impossible to reconcile respect for individual liberty with drug prohibition.

15 Jun 09

Commentary: US health costs out of control

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health care costs subsidies insurance Medicare politics Jeffrey Miron

Most health care is paid for by insurance. When people are insured they do not pay the full costs of the medical care they receive, so they demand the best and pay little attention to the expense.
patients and doctors constantly face the choice between high-cost, state-of-the-art care and moderate-cost, conventional care. If these decision makers face little financial penalty for choosing the best possible care, they will do so every time. Thus subsidized-insurance combined with medical advancement means rapidly increasing expenditure.
This suggests that to restrain government health spending, policy must reduce existing subsidies, not introduce new government insurance.

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Public option: Treatment worse than the disease

Financial Market Reform: Why new regulations must avoid moral hazards

Legalize drugs to stop violence

Commentary: US health costs out of control

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