Archive for the ‘Economics’ Category

The Omnivore’s Dilemma, Part II — Is it OK to eat animals?

January 8, 2020

I eat meat; not a lot, but am troubled by the ethics. Michael Pollan too, discussing this in depth in his book, The Omnivore’s Dilemma. Like me, he’d like to be able to justify meat eating. While recognizing that bias.*

Descartes saw animals as just machines without feelings. We know better. Pollan quotes Jeremy Bentham in 1789, that the question isn’t animals’ mental abilities, but can they suffer? (Note, we’re really talking about higher animals; seafood creatures don’t have much inner life to fret over.) However, Pollan notes, pain and suffering are different things. Humans suffer from pain in great part due to the mental constructs we form around it, which animals generally cannot do. (Having no conception of death or really, even, the future.)

Eating them is defended on the basis of nature. We evolved to do so, part of the overall natural schema of predators and prey. Certainly the ubiquitous animal predators think nothing of eating other animals alive. Ethics is indeed a purely human thing, evolved to regulate relations among ourselves, and absent in the rest of nature.

So we don’t treat other humans like animals, don’t eat our weaker kin. Just because they’re “humans” and animals are not? Thusly privileging humans in a way denied to other animals is called “speciesism.”

Its basis is dubious. As Peter Singer (the leading animal rights thinker) argues, most of us subscribe to an ethic of human equality. But that’s a moral, not a factual, idea. We recognize humans vary greatly in, say, intelligence, yet hold everyone’s lives and interests nonetheless entitled to equal consideration. Hence you may not exploit another for your own ends. Why then are humans entitled to thusly exploit animals — those that are sentient, feeling, and certainly possessed of lives with interests?

While cynics and pessimists deny it, humanity has in fact made great moral progress over time. Yet again, read Pinker’s The Better Angels of Our Nature. People used to accept practices — like slavery — now condemned morally. Will that one day be true of meat eating?

Pollan suggests, however, that Singer is looking at the matter from the standpoint of an individual animal, but he urges a wider species-oriented perspective, positing that species have interests too. The domesticated animals we eat actually represent a mutualism or symbiosis between their species and ours — rooted in an opportunistic aboriginal deal with us, enabling them to survive and prosper better than if on their own. And their populations are now vast, while those in the wild have shriveled. So the deal is advantageous even while individual animals do die. Which of course is true of all individuals in any case. “As a rule,” Pollan says, “animals in the wild don’t get good deaths surrounded by their loved ones.”

(One might counter that a species has no consciousness; only its individual members do. So a species cannot value enjoyment of life as an individual can, and its having larger numbers serves no moral value.)

But meantime, also looking at the big picture, Pollan deems it “doubtful you can build a genuinely sustainable agriculture without animals to cycle nutrients and support local food production.” He doesn’t think it’s practicable for all of us to become vegetarians. A totally plant-based food chain would consume even more fossil fuels and chemical fertilizer, and might actually kill even more animals as collateral damage. If our goal is the fewest animal deaths, we should all eat the largest possible ones grazing the least cultivated land.

But all this assumes animals, before and during slaughter, are at least treated humanely. Finally returning to Bentham’s suffering point. Whatever else can be said about our overall interspecies relationships, inflicting suffering on innocent sentient beings is indefensible. And while it can be avoided, as Pollan’s reportage about a model farm showed, our vast industrial American meat-producing machine tends to sacrifice such niceties to economic efficiency. Though it’s true that absent that industry, the animals would not even exist, their existence is no boon either to them as individuals or to their species when it’s an existence of misery.

Consistent with the book’s title, for Pollan this issue remains a dilemma. He does not advocate vegetarianism. He sees the problem as our simple obliviousness to the reality, modern consumers being thoroughly insulated from how food gets to us.** Transparency is his answer; if only we really knew, we wouldn’t tolerate the animal suffering. Producers would have to heed consumer qualms. Making meat costlier. We’d eat fewer animals, and “with the consciousness, ceremony, and respect they deserve.”

When pigs fly.

And what about me? Giving up meat entirely is hard; making ethical distinctions among meats even harder. Being human, my morality is imperfect. I live with that, perhaps consoled by being at least above average. Of course, everyone thinks that.

However, right after I finished Pollan’s book came an article in The Economist (“Fake Moos”) about great strides in developing plant-based imitation meat. It doesn’t yet taste quite the same, and costs more, but both problems are on track for resolution. So maybe we can have our cows and eat them too.

* He quotes Franklin that the great advantage of being a reasoning creature is that you can always find a reason for whatever you want to do.

** Unwilling to eschew his inner carnivore, Pollan decides he’s honor-bound to, at least once, eat something he’s personally killed. His successful wild pig hunt is detailed at length, with much nuanced meditation on what it all means. Initial atavistic elation mixes with later disgust and shame. But here too Pollan arrives at no definitive conclusion.

What we eat: The Omnivore’s Dilemma (Part I)

January 2, 2020

Michael Pollan is a food thinker and writer. Not a restaurant reviewer; he looks at the big picture of what we eat in The Omnivore’s Dilemma. (Carnivores eat meat; herbivores eat plants; omnivores eat both.)

The book is a smorgasbord of investigative reporting, memoir, analysis, and argument. Pollan does have a strong point of view; cynics, pessimists and misanthropes will find much fodder here. But Pollan is no fanatical purist ideologue. We saw him on a TV piece summing up with this core advice: “Eat real food, not too much, mostly plants.” Seems pretty reasonable.

He’s a lovely writer. Here’s a sample, concluding the first of the book’s three parts, talking (perhaps inevitably) about McDonald’s:

“The more you concentrate on how it tastes, the less like anything it tastes. I said before that McDonald’s serves a kind of comfort food, but after a few bites I’m more inclined to think they’re selling something more schematic than that — something more like a signifier of comfort food. So you eat . . . hoping somehow to catch up to the original idea of a cheeseburger, or French fry, as it retreats over the horizon. And so it goes, bite after bite, until you feel not satisfied exactly, but simply, regrettably full.”

I might disagree with his evaluation, but man, this guy can write.

That first third of the book is all corn. In fact, if “you are what you eat,” we are all corn (well, mostly). Don’t think you eat much corn? Think again. As Pollan explains, a high proportion of our food is derived from corn; even our meat, the animals being mostly corn-fed. Pollan argues that, rather than humans domesticating corn, corn domesticated us. Viewed biologically, that species exploits us to spread itself and increase its population.

Pollan sees food industry economic logic driving us toward a kind of craziness. When the government started intervening in farm produce markets, the aim was to support prices by preventing overproduction. Remember farmers paid not to grow stuff? But in the 1970s that reversed, with the system now incentivizing ever higher yields, aided by technological advances. The resulting glut, in a free market, should drive prices down, signaling producers to cut back. However, if farm prices fall below a certain floor, the feds give farmers checks to make up the difference. Thus their incentive now is to just grow as much as possible, no matter what.

But, even with that government guarantee, Pollan shows, most farmers can barely eke a living, after costs. The bulk of the profit from corn actually being swallowed by the big middleman corporations like ADM and Cargill.

Meantime it’s a challenge to market all that corn. That’s why so much goes to animal feed. The industry has also cajoled the government to require using some in gasoline (ethanol), which actually makes neither economic, operational, nor environmental sense. But it does eat up surplus corn.

Part of the marketing challenge is that while for most consumer goods you can always (theoretically at least) get people to buy more, there’s a limit to how much a person can eat. So with U.S. population growth only around 1%, it’s hard for the food industry to grow profits by more than that measly percentage. But, in Pollan’s telling, it’s been fairly successful in overcoming that obstacle. This contributes, of course, to an obesity epidemic.

The abundance and consequent (governmentally subsidized) cheapness of corn figures large here. It goes into a lot of foods like soft drinks (yes, full of corn too!) that also attract us by their sweetness. Unsurprisingly, lower income consumers in particular go for such tasty fare that’s also cheap — buying what provides the most calories per budgetary dollar.

But the main driver of obesity is simple biology. We evolved in a world of food scarcity, hence with a propensity to load up when we could, against lean times sure to come. Thus programmed to especially crave calorie-rich sweet stuff. But it being no longer scarce, indeed ubiquitous, no wonder many get fat.

Pollan extensively discusses “organic” food. Largely a victim of its own success. “Organic” is a brilliant marketing ploy, it sounds so good. And farming that conforms to the original purist vision of what “organic” should mean may be environmentally cuddlier than conventional farming (though there are tradeoffs, one being greater acreage required). However, in practice, stuff in stores labeled “organic” is not produced all that differently. A key reason is that once “organic” took off and became big business, producers had to use many of the same large-scale industrial practices of conventional farming. Small operators can’t compete. Another is that the USDA rules for “organic” labeling were lobbied hard by producers to give them more leeway. Pollan cites, for example, a rule saying cows must have “access to pasture.” Sounds nice, but if you think about it, what does it really mean? If anything? Here, and in much of the rulebook, there aren’t real rules.*

Pollan muses that salad might seem our most natural kind of eating. But it gives him cognitive dissonance when considering the complex industrial processes that actually put it on our plates. An organic salad mix takes 57 calories of fossil fuel energy for every calorie of food. If grown conventionally, it would be just 4% more. Bottom line: by and large, “organic” is a pretty meaningless label. (Wifey take note.)

However, Pollan chronicles his stint at one actual farm that might be called beyond organic. This read to me like one of those old-time utopia novels. And that farm is actually extremely efficient. But its model doesn’t seem scalable to the industrial level needed to feed us all. Also, it’s extremely labor- and brain-intensive. Few farmers today are up for that.

The farmer profiled there opined that government regulation is the single biggest impediment to spreading his approach. It gives USDA inspectors conniptions. Pollan shows how the whole government regulatory recipe is geared to bigness. One example: a slaughtering facility must have a restroom reserved for the government inspector alone.

The book also delves deeply into the ethics of eating animals, a fraught issue. I will address that separately soon.

* Well, there are some, like no antibiotics. Today’s organic farming is a sort of kludge — Pollan likens it to trying to practice industrial agriculture with one hand tied behind your back.

Teaching kindergarten in Somaliland

December 23, 2019

When we set out for a humanist event in Syracuse, I didn’t imagine the road would take us to Somaliland.

But at the dinner, sitting beside us was one Jonathan Starr, which led to our involvement in his Somaliland education project. I’ve written about it,* and about the country.** Broken free of Somalia, it’s not internationally recognized. My wife and I traveled there with Jonathan, joined by daughter Elizabeth (resident in Amman).

Took 36 hours to get there; 42 getting home.

The capital, Hargeisa, is a dusty desert town (and I do mean dusty). In 1988, in the civil war, Hargeisa was bombed and 90% destroyed by Somalia’s dictator Siad Barre. It’s risen from the ashes, but the words “ramshackle” and “hardscrabble” come to mind. Most structures are single-storey and wretched, though there are some incongruous first-world-like pockets.

Thomas Friedman writes about “the world of order” versus one of disorder. Somaliland is mostly in the latter category, epitomized by a great trash blight. There’s no public sanitation nor any ethic against littering. We sat in on a student brainstorming session about the issue.

Typical dwelling

But Somaliland is not the heart of darkness; it’s poor, but thriving. Its people have positive attitudes. Women in particular are almost all well dressed (fully covered in this Muslim country). And there are lots of cars. Steering wheels on the right, yet they challengingly drive on the right. Many roads are paved, though often it’s hard to tell. No street signs; indeed, no street names. Terrible traffic. So, unsurprisingly, wrecked cars abound. No way to remove them. Another traffic hazard is zillions of goats wandering everywhere. I asked Jonathan how owners keep tabs on them. “Good question,” he replied.

Restaurant, with goats, we visited

There are myriads of tiny businesses, especially hole-in-the-wall restaurants, and — no surprise — numerous car parts sellers. Hargeisa is one giant bazaar. It was great to see so much enterprise. Government regulation being largely nonexistent, Somaliland might be a model of that bugaboo, “unfettered laissez faire capitalism.” Except that government’s absence also means scant rule-of-law protections, so any ambitious business is vulnerable to predation, greatly inhibiting economic development. An important point often lost in arguments over “unfettered capitalism.” Nevertheless, Somaliland’s enterprise culture begs comparison against countries like Cuba or Venezuela whose socialist fetish suppresses businesses. Result: impoverishment.

Me with our team

Was it safe? It’s actually a very peaceable place, with little crime or violence. Nevertheless, as apparently required by law, all our excursions were accompanied by two soldiers carrying AK-47s.

In one respect at least, Somaliland is actually more advanced than America. Most payments are made through a user-friendly system of instant smartphone transfers.

There is no tourism and white faces are novelties. I enjoyed waving to people, especially kids, out of our vehicle window, and getting waves and smiles back. Though once, walking in the street, a passing man said, “Fuck your mother.”

Yes, English is widely spoken. Education is highly valued here, and many little enterprises are schools. Though quality may be doubtful. I saw one sign for a “secendary” school offering English language instruction!

Partial view of Kaabe construction

Which brings me to Jonathan’s schools, with contrastingly high standards. Our first stop was the Kaabe School, which we helped finance, nearing completion as the prototype for an eventual national chain of primary schools. It’s an expansive complex, far better built than Somaliland’s norm, ultimately to educate around 700 students. Project leader Harry Lee does a fantastic job.

Next day we proceeded to the original flagship Abaarso School of Science and Technology, a high school, nearly an hour’s drive outside Hargeisa. (Why that location? Jonathan explained that when he’d started in Somaliland, naive, he’d been tricked.) Abaarso too is quite an extensive campus. Its new head is Trudy Hall, formerly leading Troy’s elite Emma Willard School. I was extremely impressed by what she’s doing here. We stayed in a little guest house; a plaque said it was funded by the generosity of the American people through USAID.

Saturday was “project day.” Wife Therese led an intensive poetry workshop. I delivered a powerpoint lecture on the Enlightenment (view it at www.fsrcoin.com/3.html). Trudy was great in stimulating discussion in the Q&A. A topic arose that’s central to daughter Elizabeth’s current work — using communication to change mindsets.

Elizabeth leading discussion

She had a relevant powerpoint on her laptop, so later gave an impromptu presentation and led a discussion. It was wonderful seeing her masterful performance.

Sunday we visited a sanctuary for cheetahs, rescued from poachers; then Hargeisa’s art and cultural center, modest but quite nice.

Photo by Harry Lee

On Monday we could now see Kaabe’s first classes, of kindergartners, in session. I didn’t really teach, but did help out, assisting one boy making English words with plastic letters, and some girls with block puzzles. The children seemed to have progressed amazingly in just a few months. This school is clearly a great thing, and to have helped bring it about was extremely gratifying.

On Tuesday I set out alone — well, with a driver and the obligatory soldiers — back to Hargeisa to get a microwave for the Abaarso teacher’s mess. I wasn’t sure this could be accomplished, but after a tortuous peregrination, including a change of car and escorts, I finally managed it, returning just in time for an important event:

Trudy. Jonathan, & DPW honcho

A visit to Abaarso by a top level delegation from Dubai Ports World, preparatory to announcing a swathe of scholarships and funding another school on the Kaabe model in Berbera.

On Wednesday, Jonathan, Therese and I had a 45-minute private meeting in the Presidential Palace with Somaliland’s President Musa Bihi Abdi. Democratically elected in 2017, Bihi, 71, was a Somali air force pilot who became a top commander in the civil war against Siad Barre. A soft-spoken man, dignified without pomposity, a wise and decent human being (unlike certain presidents I could name).

With President Bihi (photo by J. Starr)

He spoke of the desirability of cooperation among different religious groups — a real issue for Jonathan’s project, still facing attacks on this score. And he was very strong about educating girls, understanding its importance for a country like his. During the meeting we were served delicious lemonades.

I’ve done a lot of foreign travel, but this was — like much else on this trip — a unique and thrilling experience.

Then we travelled an hour north on a “road” (hardly deserving the name) through a fairly desolate scrubland typical of the country. Passing many goats, camels, and giant termite mounds. With passengers squeezed in tight on this very bumpy ride, one of the soldiers volunteered to travel on the vehicle’s roof.

Barwaaqo

The destination was the other anchor in the schema, Barwaaqo University, a teachers college for girls, to eventually staff the Kaabe schools. Another impressive large campus; looked like a military base. A highlight was the debate club where Therese and I joined one of the teams. The question, chosen by the girls, was whether snacks in the school store should be free. Those girls were feisty debaters.

Somaliland certainly — like every society — has challenges. But its people have what it takes to overcome them. My lecture there ended by expressing the belief that Somaliland can rise to become a “developed” country, and that my student hearers can make it happen in their lifetimes.

Finally: how many wives would (while suffering from an illness no less) enthusiastically join in an intrepid expedition like this? (Jonathan’s soon-to-be-ex-wife never did.) Therese and I have a true marriage in that word’s deepest sense. A blessing for which I’m boundlessly grateful.

* Here: https://rationaloptimist.wordpress.com/2018/09/30/a-non-ugly-american-in-somaliland-jonathan-starrs-abaarso-school/

**Here: https://rationaloptimist.wordpress.com/2019/06/11/somaliland-the-country-that-was-left-for-dead-a-country-doing-everything-right/

How conservatives and liberals both miss the boat on poverty

December 3, 2019

Ask Americans about “poor people” and they’re generally sympathetic. About “people on welfare?” Not so much.

Those on the right tend to see social spending as basically taking from deserving people and giving to the less deserving. Who are thought mainly responsible for their poverty. It doesn’t help if they’re less white.

For the left “inequality” is a cri de couer. But while “poverty” used to be one too, that’s actually largely forgotten. They seem obsessed not about the poor but the rich, and how much they have (with big dollops of resentment and envy). That’s their inequality concern. And also their focus is less on the poor than the middle class. Where their own bread happens to be buttered; but it makes political sense too because that’s where the votes are. Poor people are smaller in numbers and they don’t vote much.

We could argue over how the middle class is actually doing. But, even with admitted challenges, they’re able to live a life that’s, well, middle class. Which in a rich 21st century country, historically speaking, is quite decent. It’s the poor — around 15% of the population, depending how you measure — anyway, those on the bottom — who are obviously in tougher shape. Tougher, indeed, than the corresponding population slice in other advanced countries. This is a special American problem. Concerning our fellow human beings.

“Inner city poverty” was long seen as a thing. But as a recent report in The Economist highlights, “outer-city poverty” has become a bigger thing. Poverty too has been moving to the suburbs. While a lot of the non-white poor do remain urban, the suburban poor includes more whites and Hispanics. And it’s harder to deal with, because while big cities can deploy resources, smaller non-urban jurisdictions tend to be cash-strapped and lacking the necessary public infrastructure.

Sneering at poor people as responsible for their plight is easy when you’ve been handed all the advantages. Mostly, people are poor because they’ve been dealt lousy cards. Poverty is heritable: growing up in a poor family, especially in a poor neighborhood, messes you up in a thousand ways that make it much much harder to achieve the American dream. One pilot study showed that just moving a family from a poor neighborhood into a more affluent one results in 31% higher income for their kids in adulthood.

So let’s focus on children. You cannot argue that children, at least, who are in poverty are somehow personally responsible for that. And even put altruism aside. The fact is that a person who grows up into lifelong poverty costs us all a huge amount — for all the welfare, social services, health services, and don’t forget the cost to society of the crime that goes with the territory. Compared against one who becomes a contributing member of the community, holding a job that grows societal wealth, and pays taxes.

So doesn’t it make sense to invest in kids, so they’ll grow into the latter, not the former? The payoffs would vastly exceed the costs. One California study calculated that the cost to end deep child poverty by simply handing out enough cash would be a quarter of what the state spends on prisons. Not doing this was deemed “insane” by the study’s author.

Education looms large here. America’s poverty scandal is mainly an education scandal. Rather than investing to lift children out of the poverty trap, we disinvest, actually giving poor children inferior education.

Liberals won’t face up to this. They assail charter schools for “draining” money from public schools, which they idealize — as though public schools were providing decent service to underprivileged kids. They are not. Many parents in poor neighborhoods see charter schools as their only hope of escaping the school-to-prison pipeline.

School segregation is a big factor. Poor minority children do poorly when ghettoed in their own schools; better when educated with middle-class kids, whose schools tend to be fine. It’s because those, their own schools, are fine that liberals battle for public schools and against charters. And while liberals notionally endorse integration, they seem oblivious to the reality that America’s schools in recent decades have grown ever more segregated.

That segregation is partly a consequence of high rents in better areas with better schools. “Affordable housing” is another liberal cry. Yet their prescription for it is snake oil: rent control. Sure, it’s tempting to regulate rents to prevent gouging by greedy landlords. But it doesn’t take an economic genius to realize rent control disincentivizes landlords from maintaining apartments and building new ones. This results in housing supply shortages which of course actually drive up rents. Keeping poor people poor — and out of decent schools.

Conservatives meanwhile say all this talk about education is futile because the real problem is families. A kid won’t do well in school if his family situation is dysfunctional. And conservatives blame parents for that, being again averse to helping people whose problems are perceived as their own fault. So for the kids: tough luck. While liberals, for their part, are unwilling to see anything to criticize concerning single motherhood.

So what’s the answer? We have to get past our ideologies and do what it takes to get kids born into poverty onto a better track. This does mean attention both to schools and to family. But that’s not some utopian fantasy. An excellent model for it is Harlem Children’s Zone, a private effort spearheaded by Geoffrey Canada, which has produced great results.

America is a very rich country and can amply afford to do this. We really can’t afford not to; it would actually make us even richer, with every dollar spent coming back many times over. And anyhow, the cost would be far less than what we spend on welfare for the rich.

Medicare for All: a critical look

November 21, 2019

Bill Hammond gave a talk on this to the Capital District Humanist Society. He’s the Empire Center’s Director of Health Policy, and is critical of the single payer concept. CDHS members being mostly well to the left, Hammond was received like a skunk at a picnic.

He started by quoting Bernie Sanders that “Health care must be recognized as a right, not a privilege.” Which Hammond said nobody really disputes; but Sanders and his fans equate it to a “single payer” system. (The “single payer” — seems they’re afraid to say this plainly — would be government, responsible for all health care.)

Hammond noted that a “right to health care” would have been unintelligible to our founders. Health care itself was not even a concept; he described how George Washington was really killed by the medical “care” he received. We’ve advanced a lot since. But meantime they saw “rights” as things the government should notget involved with, whereas for Sanders backers a right means an entitlement. And his “Medicare for All” plan goes even beyond a “universal access” model (e.g., schools, libraries, and indeed existing Medicare), with only government being allowed as a payer for health services.

Hammond also saw equality of access as a big part of it; the idea that people should get the same care regardless of income. This, he said, is a kind of extreme egalitarian moral reasoning we don’t apply in any other sphere (for example, food).

He presented some figures illuminating the status quo. Private insurance penetration is 67%, the bulk of that employment-based. Most of the rest is public coverage — Medicare and Medicaid. Medical costs are paid roughly half from private sources and 42% from taxes. Nine percent is self-pay and charity care.

Major flaws in the existing landscape include millions uninsured; out-of-pocket costs too high even with insurance; a fragmented, poorly integrated delivery system; and health care is 17% of our economy, an excessive burden far above other countries’, with no corresponding benefit in health outcomes. Hammond said “single payer” would not tackle the latter two problems.

He also cited some misconceptions. First, that our private insurance model is the cause of high costs, with too much profit. One audience member, a friend of mine, insisted no one should be allowed to profit providing something as vital as health care. I would turn it around: why should anyone be forced to provide her with any service (let alone one so vital) without compensation? People get paid for their work (she does). Those who expend effort to set up, invest in, and operate health care systems surely deserve compensation in the form of profits too.

But are they excessive? Hammond presented numbers showing that while compared to other countries, our health care overheads, including all administrative costs, arehigher, they’re only about 8% of total outlays, with the bulk of the cost difference being what we actually spend on care. And that’s not for more or better care but, rather, in the prices paid for care — mostly due to much higher salaries for medical professionals than in other advanced countries.

It’s also often asserted that all other advanced nations have single payer systems. Not so. Most actually have mixed systems (which ours is), but are more tightly regulated (hence their lower price levels). Obamacare was a step toward convergence with those other countries. But Hammond noted that even in Britain, which does basically have a single payer system, you’re still allowed to buy private insurance, which many Brits do. Sanders (and Warren) would disallow that.

Another notion is that their plan would merely be an expansion of the existing and successful Medicare system. Hammond pointed out that existing Medicare actually entails a lotof cost sharing; it’s far from free*, and there are out-of-pocket costs at point of service too.

He also discussed the proposed New York Health Act, seemingly on the verge of passage. In Hammond’s telling, this would be a “Medicare for All” plan on steroids; a “carte blanche” with the state simply paying allhealth related costs for all residents. He presented various studies attempting to estimate the costs. While there might be some cost savings, increased demand for health services would likely raise overall spending levels. Total taxation would have to double or triple. Hammond acknowledged that a majority of New Yorkers would probably come out ahead after higher taxes are set against lower health bills. But this would require richer people paying dramatically more. (A notion garnering vocal approval from attendees; but it was pointed out that rich people could simply leave the state.)

A comparable federal plan would, he said, entail similar ramifications. [Though presumably richer people would be less apt to leave the country than the state — FSR.] Hammond cited an Urban Institute estimate that over ten years, $34 trillion in higher federal taxes would be required, replacing $27 trillion in current outlays.

Questioners from the audience gave Hammond a rough time. My own question said I agreed with him about single-payer, but that we’re a rich country and can afford to somehow make sure every citizen gets a minimum level of basic care. (This elicited applause!) Hammond responded that actually this can be achieved with modest tweaks to our existing system. In particular, the Medicaid program already aims to do it for low income people; a problem is that many of those eligible simply don’t sign up for it. [Also, Medicaid requires money from states; red state Republican regimes hate it and try to limit it — FSR.]

Hammond concluded with a story about Fidelis Care, a New York health insurer run by the Catholic Church, which received a $3.75 billion buyout offer. Long story short, Gov. Cuomo figured out a way to get control of $2 billion of that, which he used as a kitty to hand out goodies to favored entities in the health care industry; in return for which he glommed unprecedently large political contributions.

Hammond said that single payer advocates seem to imagine that having the entire health care industry under government control would be a good thing. They idealize government. But the Fidelis story is a cautionary tale about how things really work; tending to be run for the benefit of insiders; and big players in this industry have tremendous clout to make it work for them.

After his talk, Hammond was taken outside, where he was tarred and feathered.

* My own monthly Medicare payments were high enough that I opted out.

Elizabeth Warren’s candidacy

November 9, 2019

Democrats love government; Republicans hate it. Of course that’s a big oversimplification. But in this respect Elizabeth Warren is the quintessential Democrat.

I was long a Republican, with a libertarian/conservative perspective. Not hating government, but seeing unconstrained government power as a problem. Warren doesn’t share that viewpoint.

The word “socialist” is thrown around a lot by people who don’t actually know what it means. It’s not “social welfare” or government regulating the private sector; it’s government replacing it.

Warren says she’s no socialist, and seems to mean it, actually having good things to say about the role of the private sector in creating economic dynamism. At least in concept. However, she does propose what amounts to socialism for one major economic sector: health care, prohibiting private insurance.

There’s much to hate about private health insurers. Typically in free market capitalism, a company makes money by making customers happy. But health insurers perversely make money by limiting what customers get. Nevertheless, it remains a principle of a free society for people to choose for themselves, and many Americans seem satisfied with their health insurance arrangements.

Taking that freedom away, with a government-only system, is not only wrong but unnecessary. Let Democrats instead create a government option as an alternative. If, as they believe, it’s so much better, it will outcompete private insurers and put them out of business that way. Warren’s refusal to accept that logic is politically stupid. Pointlessly so, because her plan can’t be enacted.

She targets inequality, her centerpiece proposal being a wealth tax (also impossible to enact). This reflects the standard left wing mindset of seeing the problem as what the rich have, as if it’s gotten at the expense of the rest (a basic fallacy). Thus their approach of beating down the rich rather than finding ways to uplift the others.

Actually, Warren does have some proposals in the latter vein, and some are actually reasonable. And I actually agree that richer people like me should pay more tax, especially after Trump’s disgraceful tax giveaways. But a wealth tax is a terrible idea, as several countries trying it have found out. Will an army of federal assessors be sent out to evaluate the worth of all rich folks’ assets — all the mansions, yachts, art collections? Which would invite stratagems to hide wealth and otherwise avoid the tax.

Far better to resuscitate the moribund estate tax. That makes much economic and social sense, and the counter-arguments are bogus. But the estate tax has gotten politically toxic. Though I cannot fathom how a wealth tax sounds better.

More broadly, a cause of inequality is corporate power, which Warren seeks to curb. And I find much to agree with here, free market champion though I am. “Free market” really means free, with open competition. With that, consumers capture the lion’s share of wealth creation. But too many big corporations use their power to squelch competition, especially by enlisting government in that effort. It’s one of the reasons I’m leery of government in general. Warren does have some plans, like stronger antitrust enforcement, breaking up “crony capitalism,” that I endorse; yet her idealization of government seems oblivious to how it’s in the very nature of big government to be captured and suborned by powerful businesses in the ways she herself decries.

And when it comes to coddling businesses, Warren herself does exactly that with her protectionist stance toward trade. Historically, Democrats were the party of free trade, understanding how that benefits consumers and the country as a whole, whereas Republicans were the protectors of businesses. But somewhere the left lost its way on this issue — while Republicans saw the light — until Trump came along and blinded them. Warren would not roll back his insane trade policies, that so harm the global economy and our own.

But most fundamentally, I don’t like the tenor of her campaign. The us-against-them stridency. That if you’re not on board with her program, totally, you stand for nothing, you’re weak, part of the problem, even morally deficient. It’s just this sort of scorched-earth partisan bloody-mindedness that’s tearing the country apart. Warren’s favorite word is “fight.” I think America’s had enough fighting; let’s have some peace.

I have endorsed Joe Biden, whose moderation and centrist reasonableness are far more in line with what we so desperately need. And, notwithstanding all the whining about Biden’s supposed electoral weaknesses, I continue to see him as the best candidate to beat Trump. (That’s why Trump viciously targets him.) National polls show Biden beating Trump soundly; with Warren it’s a toss-up. Her high-octane ideological shrillness (not to mention, alas, her gender) turns off a lot of voters. Whereas Biden is seen as a calm safe pair of hands, an antidote to the sturm und drang of Trump’s presidency.

Pete Buttigieg scores even higher on centrist reasonableness. He’s actually by far the best of all the candidates. His being gay would repel some voters, but I think most would be able to get past that when they see his admirable qualities. I believe he too would do better against Trump than Warren. And if Buttigieg did manage to rise to the top and get the nomination, it would be America at its best. Gosh how I miss that America.

And if it’s Warren nominated? What’s at stake in this election far transcends matters of ideology or policy. America’s soul will be dead if — after every monstrous vile thing he’s done — Trump is re-elected. It would repudiate every good principle this country used to embody. Warren understands those principles, and is everything Trump is not: honest, well-informed, competent, responsible, a decent and sane human being. For all I’ve said against her, we’d be far better off with her than Trump.* Another four years of him would be the end of America.

An imperfect world presents imperfect choices. If it’s Trump versus Warren, I will support her more strongly than I’ve ever supported any cause in my life.

* And if Republicans’ Trumpmania winds up resulting in their worst nightmare of a left-wing president, it will be poetic justice.

End Road Work? No!

November 8, 2019

We’ve all seen those signs along highways, saying “End Road Work.” This movement seems very misguided. I can think of many things that should be ended, but road work surely isn’t one of them. In fact, most people would consider it a very good thing if not, indeed, vitally necessary. Having myself sustained a flat tire recently due to a pot hole, count me as strongly in support of road work. What can these people be thinking, wanting to end it?

Sure, it can be an annoyance, slowing up traffic. But traffic would ultimately become a lot slower if the campaign against road work succeeds! One of the many things about modernity we blithely take for granted is good serviceable roads. But there’s no free lunch, everything has a cost.

Maybe road work opponents have been confuzzled by all the rhetoric trying to soft-soap socialism, by claiming that anything government does is socialism. So they think road work is socialism. Well, I’d be happy to see it done by the private sector. But failing that, I still want roads repaired, even if it is socialism. There are a lot worse ways for government to use taxpayer money.

Fortunately, years of “End Road Work” signs seem to have had little or no impact on curtailing the practice. These foolish cranks should give up and find a different issue to protest about.

Corporate Social Responsibility versus profits

September 12, 2019

For decades it’s been gospel that a corporation’s mission is just to maximize shareholder value. But now a group of over 180 heads of top U.S. companies has met and signed a statement saying they must also serve the interests of employees, customers, suppliers, and the wider society.

Perhaps a response to capitalism being assailed for “putting profits ahead of people,” blamed for growing inequality and environmental problems; some Democratic presidential contenders seem to run more against corporations than Republicans.

“Profit” is a dirty word; often coupled with “obscene.” We’re told X corporation or X industry “sucked” X dollars from the economy, as if the plain numbers bespeak evil. What’s never said is how much (or how little) return on invested capital those profits represent. Who’d invest in a business, with all the risks, without the prospect of a reasonable return?

That’s what creates the cornucopia of goods and services making our lives what they are. And the jobs enabling us to pay for them. Some of my friends fantasize a utopia where we get all that without anyone “sucking” profits. But I don’t see them forgoing earnings on their own industriousness.

Adam Smith made the point in 1776: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” That is, earnings or profits.

Maybe you have a different idea that didn’t occur to Smith — government providing everything. That’s what “socialism” actually means. Like in the USSR — where goods and services were notable for their absence. (People said, “we pretend to work and they pretend to pay us.”)

But do businesses in fact garner “obscene” profits? Well, there’s one salient test. I’ve invested in corporate stocks for three decades, and I’ve done nicely, but certainly not obscenely. If corporations were really “sucking” exorbitant returns, we could all easily get rich by buying their stocks. That’s obviously not so.

Which brings us back to the concept of companies existing basically to benefit shareholders. Here are two key points:

First, corporate managers actually work for shareholders, entrusted with a fiduciary duty to serve shareholder interests. Anything they do that’s inconsistent with shareholder interests is an unethical breach of that fundamental duty, an abuse of their trust. Remember too that shareholderincludes pension funds, retirement accounts, university and charity endowments, etc. Earning them a return on their investments is by itself a social good (with no conceivable substitute).

Second, as Adam Smith again showed, the quest for profit benefits society by incentivizing the supplying of things people need or want. When a corporation takes raw materials costing $10, and pays a worker $10 in wages to assemble them into something it can sell for $25, it creates $5 of added societal value. More in fact if you buy it because its value to you exceeds the $25 you pay. While the worker gains as well. So the $5 profit entails something good happening.

This wealth creation is the fundamental logic of free market capitalist economics. Assail capitalism all you like, but this has raised global average real dollar incomes around sixfold in the last century. It wasn’t socialism.

So where does corporate social responsibility, and the recent declaration by all those CEOs, fit in?

It’s lately fashionable to speak of employees, customers, suppliers, and the broader public as a corporation’s “stakeholders” along with shareholders. But this is not a novel or abstruse concept. Rather, it has always held; simply part of the basic understanding we all share as members of a society.

You don’t need a code of “corporate social responsibility” to know that profit maximization doesn’t allow for ripping off customers with shoddy products or failing to pay workers or contractors what they’re due, like Trump. Et cetera. Profit maximizing is always constrained by the universal rules of societal participation. A corporation is in reciprocal relationships with its stakeholders like workers and customers, and such relationships entail responsibilities. Fulfilling them is the necessary premise for being an enterprise operating in a society.

My own business is selling coins. I try to treat my customers according to the golden rule, not only because it’s the right thing to do, but It’s also good for business. And it enables me to gain satisfaction not just from earning profits, but earning them justly. If I had workers, the same would apply. A recent study showed that a firm’s employee satisfaction correlates with its customer satisfaction.

Economist Milton Friedman was the leading voice who saw profit maximizing and a company’s social responsibility as two sides of the same coin. He argued (like Smith) that a business making money does advance the public interest; and also stipulated the assumption that profits are earned legitimately, that is, by creating customer value (and not, for example, by fraud). And, further, that businesses compete.

This is another key concept. It’s competition that holds companies to account. One free from competitive pressures can do whatever it wants. Such untrammeled power is never a good thing. Moreover, free and open competition among businesses ensures that the lion’s share of the value created is reaped by consumers, with profits being only just enough to sustain their operations. Fierce competition forces supermarkets, for example, to set prices to allow a profit of only a few cents on every dollar of sales. So customers actually gain more from supermarkets than their owners do.

Capitalism’s critics say competition is often far from perfect. A big reason for that is actually government intervention, typically at the behest of some powerful corporate interest, seeking to screw competitors. Call this “corporate socialism.”

I always remember one of my first cases as a government regulatory lawyer. My agency went after a small upstart moving company for breaking the rules. Its crime? Rates too low! Who were we protecting? Certainly not the public. Rather, the established movers who hated competition.

Is China our enemy?

June 15, 2019

In 1989, China’s regime followed Mao’s dictum, “power comes from the barrel of a gun,” shooting many hundreds of democracy proponents in Tiananmen Square. (Trump has called this a “strong, powerful government” quelling a “riot.”) Since then, even as China has modernized in many ways, its regime has become increasingly repressive, tolerating not the slightest chink in its absolute power. Its police state in Xinjiang is an Orwellian nightmare. Xi Jinping has made himself president-for-life. China bullies its neighbors, tightening its unlawful grip on a wide swath of the Pacific. It abuses world trade rules, its advance fueled by theft and dishonesty.*

So is China our enemy? Not exactly.

The Communist bloc, during the cold war, was our enemy. Its aim was world domination, ideologically, seeing the U.S. as a bete noir and wanting our failure or destruction. Putin’s Russia today, while non-ideological, has a similar outlook.

This again is not exactly true of China. While some regime elements do see us as conspiring to keep China down, that’s not exactly true of America. Wise heads in both countries understand there’s room in the world for both to prosper; indeed they’re in it together. Not a zero-sum game where one nation’s gain is the other’s loss. China becoming more prosperous and powerful doesn’t necessarily require America becoming less so. To the contrary, trade with a prosperous America is good for China. Thus a win-win mentality.

It’s not Trump’s mentality. This is why he’s a bull in the China shop. A lot of voices say he’s right to confront China on trade, and I actually agree, up to a point. However, Trump sees every thing we buy from China as China raping us; he wants it to stop. That’s idiotic.

The win-win logic is a key concept of economics, called comparative advantage. We buy from China what China is better at producing; China buys from us what we make best. Both countries benefit — even if one buys more than the other.

Do we lose some jobs to China? Sure. But the money U.S. consumers save buying cheaper Chinese goods enables more spending on local products and services, creating jobs. More than are lost. By messing with that dynamic, Tariff Man loses us jobs.

Nations are enemies when their interests clash, in a zero-sum sense. That’s not our situation with China. Again, we have a mutual interest in our bilateral trade. That doesn’t mean we don’t fight China on intellectual property theft, human rights, or territorial aggression. We can have those arguments while still expanding mutually beneficial trade and without being enemies. You have fights with your spouse but you still have intercourse.

The tragic stupidity of Trump’s China stance is that it’s the opposite. He wants no fights with his “great friend” Xi over things like Xinjiang or silencing dissent. Nor is he even really confronting China over intellectual property theft, which is the trade fight we should be having. Instead, it’s the intercourse he wants to curtail.

“Intercourse” doesn’t even begin to cover it, as elucidated in a recent Thomas Friedman column (https://www.nytimes.com/2019/06/04/opinion/us-china-trade.html). Our two economies are totally intertwined. We have huge investments in each other. Both economies rely heavily on vast, interlinked supply chains, each supplying to the other things necessary for their productivity. For example, Apple has products assembled in China; Chinese technology firms need U.S.-made chips. If we rip all that apart, Friedman says, “we’ll all end up living in a less secure, less prosperous and less stable world.”

But he fears that’s happening; stumbling into a new cold-war-enemy relationship with China that’s totally unnecessary. “The erecting of an equivalent of the Berlin Wall down the middle of the global technology market,” dividing it into separate and mutually hostile spheres.

Instead we should be working to coax China into full partnership with the rules-based globalist economic order. Which is really in China’s own long-term best interests. In this, a united front with all our allies would help. But Trump has antagonized them, picking trade fights with them too. (Britain, for one, now sees its trade relationship with China as economically central.) So we’re on our own.

Bad enough that Russia is a big enemy. China would be far bigger. Its economy is already as large as America’s and will soon outstrip it. Its population is more than thrice ours. China’s increasing global importance is an inevitability we must live with; making the best of it. And we can. If instead we opt for all-out battle, we will lose.

* Counterfeiting is a big industry — a major problem in my own business field, rare coins. Maybe bigger than we even know.

“Automating Inequality” — Using technology to screw the poor

June 7, 2019

Automating Inequality is a book by local researcher Virginia Eubanks; I attended a talk she gave. The focus was upon three initiatives ostensibly aimed at using technology to improve delivery of social services to needy people — that in practice do the opposite.

I’ve written about how it’s expensive to be poor in America — the many ways we actually penalize poverty. I discussed the criminal justice system actually preying upon the disadvantaged, extracting money from them. While banks and credit card companies exploit poorer people’s financial precariousness to load them with fees.

“Well, they’re mostly bad people,” remarked a guy sitting beside me at the talk. Referring to the poor. No, they are not mostly bad. They are mostly unlucky people — especially in their choice of parents. It’s easy to be smug if you’ve grown up with all the advantages (like me, and probably him). But if you’re born into lousy circumstances, there are huge obstacles (starting with rotten schools) to rising out of them, even if you are smart and responsible.

The bureaucrats in Eubanks’s reporting are mostly not bad people either. Most are well intentioned in trying to serve the public (somehow or other). Especially the “line workers” in actual contact with the disadvantaged people they’re tasked with helping. But it’s others who design the “advanced” systems she discussed.

One was Indiana’s, for processing applications for public benefits. It moved caseworkers from local facilities into regional ones, putting them in front of computers rather than the human beings they previously dealt with face-to-face. No more single point of contact; applicants would now speak to a different person every time they called. (Ever been in that situation? A recipe for frustration and run-arounds.) Meantime, the whole process was moved online. Fine if you have ready computer access; half of welfare recipients don’t.

The upshot was a million applications denied over three years. Mostly for some error in the process, often not the applicant’s fault. A notice of denial would give them ten days to fix the problem. Would the notice explain the problem? Nope!

Eubanks commented that the system couldn’t have worked better at kicking people off welfare if it had been designed to do exactly that.

Next was Los Angeles County’s “Coordinated Entry” system to evaluate homeless people for their vulnerability and match them with resources. Eubanks mentioned 58,000 LA County homeless people living in “encampments.” Only about a quarter get housing through the new system. A problem is that “higher functioning” homeless people get low vulnerability scores, so they’re de-prioritized. On the other hand, the kinds of things that give you a high score are often considered crimes, so people have to incriminate themselves to get a better chance at housing. And the info going into the system also goes to the police. But meantime, incarceration actually lowers one’s score — being in jail rates as “housing.”

Seems like one giant Catch-22. It’s really a way to ration — however irrationally — available housing resources that can accommodate only a fraction of the homeless.

The third case study was the “Family Screening Tool” used by Pennsylvania’s Allegheny County; here the scoring is to identify children at risk for abuse or neglect, based on information collected by social service agencies, incorporating factors that correlate with such risk. A family’s high score makes an investigation mandatory.

What actually results is a big feedback loop. Even if that investigation shows no problem, the fact that it occurred goes into a family’s score going forward. And the scoring really fails to distinguish poor parenting from parenting-while-poor. Non-poor and, especially, white families don’t even go into the database. And the system has real consequences — it’s all geared toward taking kids away from parents, in the guise of protecting them. Poor and non-white families are at constant risk for this.

And where do those kids go? To foster care. And the reality is that children are, generally, better off with biological parents, however less than ideal that situation may be, than in foster care, which tends to be far worse. The Nanny State on stilts. Here, it’s the Nanny from Hell.

Our entire system of public benefits and social safety nets is a crazy quilt of bureaucratic complexity that costs us way more — supposedly to make sure people are entitled to what they receive — than if we just handed a check to everyone who asks. Likewise, simply giving every homeless person an apartment would cost far less than we actually spend, not only on bureaucracy, but on the costs of people being on the streets, which include police, courts, and constant emergency interventions.

The system reflects our fundamental societal schizophrenia between, on the one hand, recognizing an obligation to help the needy and, on the other, seeing them as unworthy moochers (like that guy sitting next to me did).

This is a very rich country. We could amply afford to take care of every unfortunate person in the country if we would overcome that schizophrenia and decide to do it because it’s just humanely right. We give way more welfare to the well-off. Welfare for all the needy, without all the nonsense, would cost less than the waste in the defense budget. Less than we’ve thrown away in Trump’s tax cuts for the rich.