Friday, July 24, 2009

Massimo Pigliucci's mistakes about health care reform

Massimo Pigliucci's post on health care demonstrates some profound ignorance. This surprised me. I like Pigliucci's writings on scientific skepticism and rationality, but here he seemed to throw his usual rationality to the wind, just to spew vitriol, without defending his points rationally. It saddens me when I see smart people compartmentalize.

The post is a treasure trove of fallacies and mistakes, probably just because he's shooting from the hip. This is to be expected from most people when they comment on politics, but I figured because Pigliucci is normally such rational person, he would at least honestly examine an opinion with which he disagrees. The comments on his post are an echo chamber, so I might be the first to offer dissent. Pigliucci writes:

Steele complained that “this is unprecedented government intrusion into the private sector.” Well, I don’t know about unprecedented, but Republicans don’t seem to have noticed that the almighty private sector has recently managed to bankrupt the country because of its endless (but not mindless, these people ain’t stupid) pursuit of greed. Steele added, again flagrantly demonstrating either his viciousness or his stupidity, that the current plan means “more debt our children will have to pay because this reckless administration has an unrestrainable urge to splurge.” This is rich coming from the chairperson of the very same party that has acted on its unrestrainable urge to splurge on open ended war efforts that have significantly decreased national and international security, or to waste money in huge tax cuts for the richest few in the country. Tax cuts whose cost is comparable to several of the initiatives that Obama wants to pursue with the rather different objective of making our lives a little better. Compassionate conservatism my ass.
This idea that the private sector bankrupted the country because of greed persists in leftist circles. Economists see self-interest as a constant. Does Pigliucci really buy this? If he's actually interested in this topic, has he really not read about how involved the government was in producing the financial crisis? This narrative from the left has baffled me since the crisis started. What does Pigliucci think changed that made people all of the sudden more greedy? Maybe he concedes that businesses are greedy, and deregulation is to blame, but does he really believe that people in government are any less greedy?

He's right of course to challenge the Republicans on their massive spending on the war machine, which is hypocritical, but that's just a partisan point. Let's focus on actual policy, instead of jeering at irrelevant problems. It's just as easy to challenge the Democrats for their failure to end the wars that they campaigned so much against. I doubt Pigliucci brings up Iraq because he values consistency. He's doing it because he's against the war. So is he willing to defend Obama's continued big spending on the United States's military presence in Iraq, since Obama is consistently growing the government? I don't think so.
Do the Republicans at least have a credible alternative to the much despised Democratic plans? Of course not. When asked directly at a recent press conference, Steele’s flippant reaction was: “Look I don't do policy, I'm not a legislator. My point in coming here was to establish a tone.” Right, and that tone included stating that he hopes health care reform is going to be Obama’s Waterloo. Bipartisanship my ass.
So, by "bipartisanship," Pigliucci means that he just wants Republicans to be Democrats. Bipartisanship is a wacky idea that receives much deference in the media. I see bipartisanship as quite ominous. If there's anything that both the Crips and the Bloods in Congress agree on, it's usually expanding their own power at the expense of their constituents.
Let us start with the public vs. private straw man. First of all, Republicans seem to forget that health care is about the welfare of people, not about profit. So even if it were true that a public option were unfair competition for private insurers, who gives a hoot, if that results in better health care for more people? Secondly, since part of the Republican creed is that the private sector always does things infinitely better than the public one, then what are they worried about? Surely the perennially wise “market” will soon make clear for all to see who’s got what it takes to run national health care, no? Thirdly, what keeps being underestimated here is the simple and indisputable fact that we already have a public health care system, it comes in the two varieties of Medicare and Medicaid. The first one is an example of the much dreaded single-payer system, run by the federal government, and which kicks in when people are over 65. The second one aids poor people throughout the country, it is funded by both the federal and state governments and run by the latter. Guess what? These public programs are much more efficient in terms of costs and overheads than any available private option, and they deliver one of the highest quality health care systems in the world. Indeed, I do not understand why Obama and the Dems aren’t simply going for the obvious solution, expand Medicare/Medicaid to the entire nation and be done with it. Oh, and next time you hear a Republican making the stupid pronouncement that government-run programs are by definition bad, ask him why he is so darn proud of our largest government-run program: the US military.
Saying that health care is about the welfare of the people instead of profit is really silly. Is the food industry about alleviating hunger, and not about profit? Grocery stores make profit, and they are not extracting money that would otherwise be used to feed people. Profit is a signal to firms that they are are producing something of value. I "give a hoot" about a public plan that might result in better health care for people, if the cost is higher than the benefits. Pigliucci is conveniently ignoring the existence of costs. Costs are abstract, so they're difficult for non-economists to understand, but they are very real. It's either quite dishonest or profoundly ignorant to just deny the existence of costs.

Pigliucci's description of crowding out is fallacious equivocation. A public plan that outcompetes a private plan has nothing to do with the difference between a free market and central planning. When free-marketeers say that the private sector "does things better" than the public one, they're not referring to the competency and effectiveness of government workers as against people working in a private business. They're referring to the system as a whole. In a free market, profit and loss signal creation and destruction of value, respectively, and profit and loss provide incentives to create value. Central planning has no such signals, and those incentives to create value are missing. The fear from free-marketeers is that the public plan will offer services provided for a much lower price to consumers and cause consumers to switch over to the public plan. Why would they pay more for a plan when they can pay less? This would effectively end private medicine, which one should see as troubling.
Now for this business of putting a bureaucrat between us and our doctors. Perhaps Steele and his colleagues haven’t noticed, but we already have plenty of bureaucrats between us and our doctors. They are the administrators of HMO’s (so-called “Health Maintenance Organizations”) and other private health providers who do precisely what Republicans dread a federal middleman might do: judge whether you have “pre-existing conditions” (and can therefore be turned down from any benefit whatsoever), or if your doctor wants to apply a treatment that is judged to be too costly to the insurance company (regardless of whether it may benefit your health or save your life), and so on. The difference is that a federal employee will not have the same motivation to increase at all costs the already fat bank account of the insurance companies at the expense of your health. Incidentally, what Republicans and some Democrats want to deny you is precisely the sort of high-quality public health care that they regularly enjoy as members of Congress. Now, how disingenuous and hypocritical is that?
This is another example of not understanding what a profit is. Profit doesn't drive up the price of a good in a free market; it provides an important signal. It's also laughable to say that health care in America is a free market, but that's the straw man that we hear from the left all the time nowadays. Pigliucci might actually be correct to be skeptical of profit though, but only because he's describing a sector that isn't a free market. Profit outside of a free market is often rent-seeking. Government interference is the problem, not the solution.
Look, I am not being naive here. I do not think that the government is the solution to all our problems, and I certainly do not think that the private sector is intrinsically bad. There are plenty of things that are best left to entrepreneurs (though I don’t think we should allow any private operation to become “too big to fail,” but that’s another story). I simply think that health care is one of those fundamental conditions that ought to be in place to allow us our constitutionally guaranteed pursuit of happiness (second section of the Declaration of Independence, adopted on July 4th, 1776). For one of the richest and most powerful countries in the world to allow 50 million of its people to go completely uninsured, and for many millions of others to risk bankruptcy every time their families might be hit by a catastrophic illness is immoral. Serious health care reform including a public option is the decent thing to do, and Republicans are acting viciously by opposing it. It really is as simple as that.
Well, yes, this is actually extreme naïveté, but nothing that can't be cured by studying economics with some intellectual honesty. Also, it's mildly amusing to see Pigliucci use the reference to Locke from the Declaration of Independence to try to advocate for central planning. I recommend a history book.

Arbitrarily calling attention to the fact that the United States is rich does not mean that costs don't exist! Authoritarian justifications for managing economies are an entirely wrong approach. There is no collective agent that "allows" people to be uninsured. Pigliucci should be asking what the institutions are that create wealth; the vast majority of humans have suffered abject poverty for the better part of our hundreds of thousands of years of existence.

Update: Pigliucci and I exchanged some comments on his original post.

Seth Goldin:
July 24, 2009 2:53 PM

Let me be the first, it seems, to offer some substantive dissent. I don't mean to just plug my blog, but I think that I've written too much as a response to fit into a comment here.

-- Seth.

Massimo Pigliucci:
July 24, 2009 3:20 PM


interesting (though, frankly, a bit insulting) post. Now, I'm sure you realize that the government's involvement in causing the financial crisis was due to the fact that the Bush administration was in the thralls of private corporate interests and dramatically reduced the pertinent regulation, right?

Or am I still "shooting from the hip"?

Seth Goldin:
July 24, 2009 3:33 PM


If I bared my teeth a bit, I apologize; I just wanted to highlight some things with which I found problems.

I love to hate on the Republicans as much as the next guy, but for the right reasons.

I will absolutely not defend Bush. I am no Republican. You are correct, and I agree with you that the Bush administration advanced a kind of nasty corporatism in many sectors.

Massimo Pigliucci:
July 24, 2009 4:52 PM

Seth, no need for apologies. Yes, we need to disagree with Republicans for the right reasons. Of course the discussion is open about what exactly (or even approximately) the right reasons are...

July 24, 2009 5:34 PM

"Now, I'm sure you realize that the government's involvement in causing the financial crisis was due to the fact that the Bush administration was in the thralls of private corporate interests and dramatically reduced the pertinent regulation, right?"

No. Bush was working on stronger regulation over lending standards for housing right before 911. The Bush admin realized full well that the standards were too loose. And at that point they made moves in this direction and it is well documented.

After attacks on US soil, those things got placed more or less on a back burner.

That only the entire world wants to see you fall flat on your face economically, that's not cause enough to call Bush's admin an actual failure.

Seth Goldin:
July 24, 2009 5:46 PM

I should clarify. It was bad government policy that primarily contributed to the financial crisis, not deregulation. I suspect that the myth that Bush was a deregulator will persist anyway.

Thursday, July 23, 2009

Saturday, July 18, 2009

Friday, July 17, 2009

More on utilitarianism

I wrote earlier that I'm an individualist utilitarian. That's not quite right; even if I properly describe this personal utilitarianism as only appealing to ordinal utility, I don't ever want to be accused of advancing the idea cardinal utility, and I doubt that the label "utilitarian" meaningfully reflects the difference. Mill had his differences from Bentham, but I don't think Mill reasoned entirely by ordinal utility, nor that Bentham reasoned entirely by cardinal utility.

Why am I so against the idea of cardinal utility? I find it dangerous to make decisions by trying to maximize cardinal utility, because it implies that one agent has the moral justification to make a moral choice for another agent. That's a basis for totalitarianism. So it's not exactly utilitarianism that I advocate, but rather a kind of deference to ordinal utility that produces a consequentialist justification for individual rights.

Thursday, July 16, 2009

Peter Singer urges the government to ration health care

Peter Singer offers some thoughts on health care and rationing in the New York Times. It's refreshing to hear a leftist acknowledge the existence of scarcity and costs, instead of asserting wild, paradoxical delusions that a monopsonist could somehow not choose what goods and services to purchase, which is what I often hear from the left, maybe because leftists love to ascribe agency to a group of people and label it a collective will. In the article, today's most prominent utilitarian delivers some fascinating utilitarian calculus:

As a first take, we might say that the good achieved by health care is the number of lives saved. But that is too crude. The death of a teenager is a greater tragedy than the death of an 85-year-old, and this should be reflected in our priorities. We can accommodate that difference by calculating the number of life-years saved, rather than simply the number of lives saved. If a teenager can be expected to live another 70 years, saving her life counts as a gain of 70 life-years, whereas if a person of 85 can be expected to live another 5 years, then saving the 85-year-old will count as a gain of only 5 life-years. That suggests that saving one teenager is equivalent to saving 14 85-year-olds. These are, of course, generic teenagers and generic 85-year-olds. It’s easy to say, “What if the teenager is a violent criminal and the 85-year-old is still working productively?” But just as emergency rooms should leave criminal justice to the courts and treat assailants and victims alike, so decisions about the allocation of health care resources should be kept separate from judgments about the moral character or social value of individuals.
That he keeps adding what factors should be considered for life and death in different instances for different people almost brings him to a moment of clarity to reject cardinal utilitarianism and acknowledge the value of respecting individual rights. It seems to me that when people label utilitarianism, they imply that there is such a thing as cardinal utility. I believe that utility is ordinal, not cardinal, so I'm an individualist utilitarian.

Tuesday, July 14, 2009

Sunday, July 12, 2009

Chomsky promulgates the broken windows fallacy

Frequent readers of the Paltry Press know that here, Noam Chomsky is a favorite intellectual opponent. Who needs straw men when Chomsky steadily spouts forth such economic nonsense? Just quickly skimming through the transcript of a recent talk of his, I found the broken windows fallacy:

It's been done before. So, during World War II, it was kind of a semi-command economy, government-organized economy. The whole -- that's what happened. Industry was reconstructed for the purpose of war, dramatically. It not only ended the Depression, but it initiated the most spectacular period of growth in economic history. In four years, US industrial production just about quadrupled, and that -- as the economy was retooled for war. And that laid the basis for the Golden Age that followed.

Saturday, July 11, 2009

Cognitive Errors and Hypocrisy of the Left

While I wish to avoid pathologizing a political persuasion that is different than my own, I find latent evolved cognitive errors that contribute to popular distrust of markets highly explanatory. These errors highlight how uphill the fight is for libertarians. It doesn't help that humans do not reason to their conclusions. This is not an excuse for irrationality, but information to help overcome such irrationality. Only when a person is aware of their propensity to reason around an intuition can they possibly overcome that flaw and step closer towards intellectual honesty. At least people generally pay lip service to reason, which is probably better than dismissing rationality altogether, provided that lip service to reason is a complement to actual reason and not just a substitute.

The combined wrongness and entrenchment of an anti-market bias is similar to a religious idea, which is similarly grounded in cognitive errors. The difficulty of trying to convince someone who intuitively distrusts markets that markets are actually desirable is on the order of magnitude of trying to convince a religious person to reject their religious ideology.

Humans are prone to all sorts of biases. Let's not forget either that we human beings are in danger of drawing on our own contexts as the source of policy prescriptions for all other people. On the other hand, we can hold beliefs that contradict our own experience. Our brains are complex enough to maintain complicated models of the world, but we can partition those models fairly easily to alleviate cognitive dissonance. A productive person who creates value, helps other people, and takes a wage for that labor can nevertheless believe that a market is fundamentally unfair, and that there is some process by which people with higher incomes are exploiting others, even for purely Pareto-optimal interactions.

All this makes sense considering an evolutionary context. Our ancestors that waged war over resources cultivated the meme of distrust from a zero-sum environment that still plagues us today. We intuit that if one party is richer, it must be because another party is poorer. Biologically based evolved cognitive errors mean that anti-market bias is quite strong, strong enough to remain prevalent even in a modern capitalist society.

Just like religious scientists, leftists can easily compartmentalize contradictory beliefs. Will Wilkinson recently detailed, "American liberals talk a good game about equality, but their rhetoric, like conservative talk about liberty, is mostly empty." The default economic policy prescription of mainstream American leftists to grant more power to government officials clashes with the liberal idea of limiting power to protect the most vulnerable in society. These egalitarian ideas also clash with their authoritarian prescriptions that politicians can know better how to make decisions for their constituents than those constituents themselves.

I hear less from leftists about how to structure government policy than I do from libertarians. My hunch is that because their focus is on alleviating what they perceive as social or economic problems, they just assume that when the government sets out do fix something, the structure of the policy doesn't matter because the government, unconstrained by the profit motive, more easily acts in the public interest. Ignoring how people in government respond to incentives might be due in part to wishful thinking that public officials don't act in their self-interest. It may also stem from unawareness that special interests capture democracy.

College students' consumption of alcohol and game theory

An interesting new study suggests that when college students become aware of how much their peers actually drink, they tend to drink less. Social drinking is best described with game theory; drinking is a game because it depends so much on socialization. I hypothesize that most of the utility derived from drinking is due to signaling to peers, not only because drinking alone is stigmatized, but also because drinkers will always blatantly signal and seek status by displaying, discussing, and deliberating about what they drink and how much they drink. Because of psychological tendencies towards conformity, if a person thinks that their peers are drinking more, they will drink more. So, the Nash equilibrium is an artificially high number of drinks, due to incorrect information available to each agent, about the other agents. Each individual agent believes that the other agents are drinking more than they actually are, which drives up the consumption of each individual agent.

I know at UVA there have been campaigns to inform of how much other students actually drink. The campaigns presented the results of surveys about drinking habits that had been administered to students. The existence of these campaigns were probably predicated on the ideas presented in this study.

Thursday, July 2, 2009