Monday, August 13, 2012

No, You Can't...

No, you can't have a 1930 pension system with 2030 demographics. It just does not work, and, if there are no explicit cuts, there will be a soft default, such as no indexing for 15 years. There is a substantial path dependency in both "funded" and unfunded promises, and the clock has been ticking for decades.

No, you can't have real healthcare reform without looking at the real culprit: costs. Healthcare delivery in the US simply costs too much relative to everything: incomes, the size of the economy, other countries, outcomes, you name it. There are three very simple to implement moves that will have an immediate effect on costs. First, mandatory copays on absolutely everything. The consumer must have skin in the game, and providers will have a hard time running up the tab on private insurance or the taxpayer (don't think that abuse is the exception). Two, hard limit on malpractice liability awards, followed by tort reform: sideline the parasites. Finally, minimum mandatory sentences for medical fraud (triple for participating doctors).

No, you can't be a supporter of gay marriage without being a supporter of other forms of voluntary association between consenting adults. If the state should not regulate marriage, should the state regulate voluntary arrangements over work? To translate, do you support minimum wage? How about an individual's freedom to voluntarily provide services to other individuals, such as bookmaking or prostitution? Take it a step further, how about freedom of dis-association? Can a private group disassociate itself from, say, white people? Women?

No, you can't have government "insurance". There is no such thing. Real insurance is based on sound actuarial principles, discrimination to limit risk and pricing underwriting profit. Government "insurance" does neither of these. Old-age, Survivors and Disability Insurance (better known as Social Security) is a wreck. As are Medicare "insurance" and Medicaid "insurance": the payroll tax for these is nowhere near where is should be to cover current and planned expenses. It is simply a transfer payment. There is also the National Flood "Insurance" Program, that apparently ran a $18 bn deficit in 2010. Don't forget that, in the name of increasing homeownership, Fannie and Freddie guaranteed (that is, "insured" for a fee) mortgages in the trillions, and became the largest cost to taxpayers in the financial crisis. Finally, Obamacare is an affront to "insurance" with its removal of copays, limits and coverage restrictions ("yes, psycho, you can rack up $500,000 in IVF treatments without paying a dime on everyone else's back").

No, you can't have a functioning society without inequalities. If you remove the incentive of inequality, then no one will bother to excel. Should Bolt be given a dumbbell to run around with because he's too fast? Should all teams go to the playoffs? Should all students get A's? The reality is that life offers asymmetric payouts that are somewhat reflective of effort, smarts, luck, etc. If the system becomes confiscatory to enforce someone's notion of "equality", people will not bother to achieve. Look at the wasted lives in Eastern Europe between 1945 and 1990: without the possibility to accumulate surplus from your labor, it just does not pay to try harder.

No, you can't be "for" or "against" immigration. Bundling Sergey Brin, George Soros, Andy Grove (and many others) with LatAm peasants and gang members is a major, major mistake, and the US is paying for it by failing to recognize that educated people who play by the rules (and are, hence, more desirable) will leave the country if their visa (student or otherwise) expires. People with nothing to lose will come illegally and stay. Which group do you want to encourage to stay? And which group would an "amnesty" program actually give you? The numbers are not trivial, and, if persistent unemployment is a problem, the answers are pretty clear (and surely non-PC).

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