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    Maxine's Essays

    • 21st Century Regress
      Sometimes it seems like the world is going to hell and there's absolutely nothing a girl economist can do about it.
    • What Exactly Are We Crowding Out?
      The current economic downturn isn't a random draw of a black ball from an urn containing white balls and black balls. There's no sampling distribution. Very specific policies and actions landed us here. Now we must decide not only what policies need to be put in place to prevent it happening again, but also what policies would best drive us out of the ditch faster and sustainably.
    • I Wish It Were Only Butter
      We should be giving up some butter if we must. We should not give up education or health investment (or infrastructure or the environment (hello, BP). They may be the only legacies of any value that we pass on to our children and grandchildren.
    • Rational Health Investment?
      The obvious "market solution" is to improve the long run return on investments in health among the disadvantaged through meaningful and effective publicly funded education. The obvious short run "market solution" is to reduce the costs of investment and the shadow price of health for the disadvantaged by providing health insurance cover and reduced out-of-pocket costs.
    • The Socrates Parameter
      To the extent that our limbic systems respond to such engineering by over-riding the judgment of our frontal lobe and to the extent that our frontal lobe is deprived of the information it requires to make a rationally self-interested judgment, we are not only pigs and fools, we are slaves.
    • The Economic Rewards of Virtue
      If individual virtue tempers our "piggy" desires and conditions our choices to something that is both individually and socially better, then the economic rewards of virtue as embodied in and promoted by societal norms and institutions are far greater than we have ever suspected. As economists, we would do well to recognize this when we teach U max.
    • The Market for Morals
      Markets then are places where more is exchanged than goods and services, labor and product, credit, and interest. They are places where we also develop the personal virtues of temperance and prudence and the social virtues of benevolence and justice. When they function well, they produce trust, loyalty, and sympathy among those who trade there.
    • Post-Modern Applied Economics: It’s the Error Term, Stupid
      Maxine believes it’s time to refocus attention and discussion on the error term. It is often where much of the action is in our models. It is where unexpectedly catastrophic events dwell resulting in fat tails. It is where our animal spirits manifest and cause us to do the right thing or the wrong thing or the thing everyone else is doing rather than the self-interested, fully-informed rational thing. It is where God and miracles and chance dwell.
    • Intergenerational Win-Win: Health Insurance, Education, Environment, Infrastructure
      So when we’re talking about fiscal stimulus packages and we’re borrowing from our grandchildren to finance them, we should be thinking about how to use stimulus monies to create value for those grandchildren AND stimulate our economy.
    • Short-term Private Payoffs, Long-term Social Costs
      The real health reform discussion, the one we should be having, is “What must we do to create a health system that is both efficient and fair?” The answer will almost certainly include relegating the private sector to markets where market forces or regulation are effective at aligning short-term private incentives and goals with long-term societal interests. If such markets are scarce or non-existent in health, then the private health sector will be of limited value.
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    "I personally don't know what to say to people for whom rationing health care based on price and ability to pay is no different from rationing housing based on price and ability to pay."

    Get out of the way.


    It's interesting to criticize and deconstruct the moral rationalizations that people of privilege use to comfort themselves: the more arbitrary the privilege, the more elaborate and unrealistic the rationalizations. It's interesting to note that those with a little bit of privilege are often the most hard-core and extreme adherents of these rationalizations.

    But I've come to the conclusion that it's the privilege that causes the rationalizations, not the other way around.

    I've seen much the same thing in my ten or so years as a "militant" atheist. There are a few people who are really persuaded by argument, but the increase in atheism and other form of non-theism (and theism-lite) has come not from the arguments, but from the general erosion of social religious privilege. Nonreligious people are no longer economically and socially selected against, and natural variation is taking care of the rest. Indeed the task of the "militant" atheists is not really to rationally convince people (although we do want to be rationally convincing for other reasons) but rather to make religious superstition unfashionable and disreputable.

    Unfortunately, it seems like most of the "natural" individual-level selection forces under capitalism select against mutualism, leaving the more selfish "I've got mine, Jack" types standing, especially in the middle and ruling classes. No one, not even Bill Gates or Warren Buffet, has enough that they don't have to worry that if they're not selfish, someone else will come along and steal their power and influence. "Uneasy lies the head that wears the crown" has a more sinister connotation than just responsibility: the more power you have, the more you have to worry about keeping it, and the more constrained you are about using it.

    (Similarly, when the US just had a big economy, we could pretty much take over the world militarily (in the Second Imperialist War); now that we have a boatload of nukes, we're much more limited.)

    I'm a revolutionary communist not because I think a revolution would be tons of fun, but rather because I see a repeat of the 1930s: Short term selection pressures make the ruling and middle classes narrower-minded and more bound to a fantasy ideology, until they are selected against as a group. I want to be on the right side of that group selection process.

    The capitalist ruling class really is working hard to "turn off the lights of New York," but not out of any real moral principle. They're doing so, I think, in a desperate internecine struggle against their peers. The first to act will definitely lose; even those forced to act first know they will lose and won't do anything actually productive.

    The ruling class is still complacent; they think they can survive chaos and catastrophe (they do really think they are privileged by nature, not by circumstance). But if we know anything from history, once the lights go out, all bets are off.

    Perhaps one argument that would persuade is that places which do not have good health care for all also turn out not to have the best health care for anyone, however rich. I don't think anyone knows why this is so, but it does seem to be true.

    "but didn't bother to explain that markets fail for a variety of reasons that are rampant in health care. "

    Indeed....but that's sadly not the end of the story. Government, bureaucracy, legislation, also fail for a variety of reasons....reasons that are rampant in US health care at present.

    That there needs to be intervention into the health care market is not the same as saying that there needs to be this intervention into the health care market after all.

    Dear Maxine,

    1) I enjoyed your comments in "Economic Science Fiction." I regularly teach "The Economics of Health and Medicine," and so agree with everything you say on the demonstration therein of numerous health market imperfections (when compared to the platonic ideal that economists often compare real markets to). But, also in that class, I regularly observe as well the frustrating inability of students to really see how that makes any difference to knee-jerk reactionary views on how mysterious "market" forces would obviously improve health care markets, if only those markets were exposed to these magical forces. Additionally, I know what you mean when you say that if one does not see a difference between "health care and beach houses," there seems to be little room for further rational argument. Then I, like you, am at a loss over how to argue against this viewpoint. I personally, do not want to resort to the lack of reason implied by such suggested replies as "get our of the way" or "Croak!." Am I just being too polite?

    More importantly, have you got any ideas on how to overcome this frustrating tendency?

    2) I think that the link is broken that you give in the reply to my comment on last week's post "Protecting Our Grandchildren: The High Price of Motherhood," I tried clicking on it and it goes to an error message.

    Thanks for the enjoyable post,

    Mike Lawlor

    So, if healthcare is a right, why not food, water and shelter. Most people will live longer without healthcare than they will without water, food or even shelter.

    Your mindless argument is baseless because most Americans, including rich Americans, believe in a social safety net for those truly unable to take care of themselves. The problem is we have too many people riding in the wagon and not enough pulling the wagon.

    The real question is why do more than 40 percent of Americans pay no income tax and in many cases receive income tax payments. Everyone needs to pull their weight and even if we had a flat tax, the rich would always pay more.

    Again, I just love your posts. Seems like someone has taken the time to download and organize the random thoughts that float through my own brain.
    Have you ever read Neal Stephenson? I highly recommend "The Diamond Age" - seems to be right down your alley of sci-fi futures that incorporate plausible socio-economic structures based on our current society.

    There is a nice parallel (unfortunately I forget where I read this) between health care and national defense. Both are economically useless (nobody wants them, in the sense of wanting most things they purchase), yet both are essential to having an economy. And in neither is there a natural upper bound to cost, especially if you ask the providers "How much money do you need to do this right?"

    The comments to this entry are closed.

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