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.


Rikesh said...

Seth, Seth, Seth, you know that insurance companies don't economically work the same as other free market entities don't you? They don't signal costs and benefits in the same way.

Seth Goldin said...


That's news to me. The product is diminished risk. Profit is still the signal that the firm has created value. Purchasers buy it to reduce risk. How is this not valuable?

Rikesh said...

You don't really know what you're getting into when you buy health insurance as there are many unknown unknowns as you do not "know" what you will ailment you will receive in the future. Therefore, as you don't "know" what's happening, your direct utility from receiving the service cannot be calculated.

Seth Goldin said...


Maybe I'm missing something, but I was under the impression that different plans offer different amounts of coverage, with different rates for deductibles, because consumers want to curb their risk in different ways.

Rikesh said...

That might be true but you still wouldn't know what plan to boy because of the unknown unknowns.