By Mike So, a week or so ago one of my favorite living economists, Paul Krugman, posted a piece on the Trans-Pacific Partnership. He wasn’t for it, exactly, but he thought it just wasn’t that important. I disagreed, to put it mildly.
But yesterday, one of my other favorite living economists, Joseph Stiglitz, came out swinging against the TPP in a New York Times opinion piece.
Some of his points:
- Based on the leaks we’ve seen, the TPP doesn’t look good; it’s a symptom of our political dysfunction that it’s even being considered.
- Tariffs are already low; agreements like the TPP focus on reducing non-tariff barriers to trade, which are hard-won labor, environmental, or consumer protections. In his words, “‘Trade agreements’ new boosters euphemistically claim that they are simply after regulatory harmonization, a clean-sounding phrase that implies an innocent plan to promote efficiency. One could, of course, get regulatory harmonization by strengthening regulations to the highest standards everywhere. But when corporations call for harmonization, what they really mean is a race to the bottom.”
- One of the worst aspects is that it allows corporations to sue governments in international tribunals.
- There’s not even good evidence that developing countries benefit.
- The economists who support it are working from wrong assumptions.
Which are much the same points I made in my comic on the subject. It’s kind of nice when someone of Stiglitz’s stature agrees with you.
By Mike Mark Frauenfelder of BoingBoing runs a podcast called Gweek, where people talk about their favorite media, devices, and suchlike. He was kind enough to include me on one with the author Scott Stigler; we recorded it yesterday and it’s already up!
Listen to us talk about zombie jugheads here: http://boingboing.net/2014/03/04/gweek-podcast-136-zombie-jugh.html
By Mike The Washington Post has a nifty interactive infographic that shows who sits on the committees that advise the administration on trade negotiations. And although nobody can accuse me of being a pollyanna about the influence of business on trade agreements, even I was a bit stunned by just how corporate-heavy the committees are.
It’s worth going through the whole infographic, because at first things don’t look so bad. There are a lot of industry and trade organizations, but a fair sprinkling of academics, NGOs, and labor representatives too; given that all of our policy decisions are heavily weighted toward corporate interests, the overall distribution looks like a snapshot of economic power in our society. That’s not great, but it would be weird to expect business to have less voice in trade deals than they do elsewhere.
But that third page, where we see who goes on what committee? That’s more than a bit horrifying:
The labor advisors are almost entirely confined to one committee (“Trade negotiations and policy, labor”), which is entirely composed of labor advisors talking to themselves. No doubt this committee makes resolutions; no doubt these resolutions are ignored.
The academic advisors are almost as ghettoized, in the “trade and environment” committee. (That committee does have two representatives from trade associations, one from the solar industry.)
Meanwhile, every committee that deals with specifics is entirely or almost entirely made up of representatives of businesses and trade groups. Autos and capital goods? Aerospace equipment? Steel? No representatives from labor. Intellectual property rights? No representatives from academia.
In my piece about the TPP I said that trade agreements are tools for businesses to get what they want without going through the normal democratic process. This doesn’t exactly make me change my opinion.
By Mike I posted a while back about my experience with Obamacare. To recap:
- I was informed that my existing insurance plan (for which I was paying $7100 per year) would no longer operate;
- I was offered other plans that looked to be better value for money.
I ended that post with:
So yes, Obamacare is a freaking Rube Goldberg machine, and single-payer would be simpler, more just, and cheaper. But at least in New York, at least for people like me, *it has nearly halved premiums.*
That ain’t nothing.
But at that point I hadn’t actually enrolled in a plan. Now I have. Here’s what happened.
The plan I finally enrolled in, which was offered on the New York health exchange website, costs less than $3700 per year. That’s almost exactly half of the premium I was paying. For me, Obamacare hasn’t nearly halved premiums; it has halved them.
For that, I get a plan with a high deductible and, once that high deductible is met, a high copay. The plan just plain doesn’t pay as much as my last plan did. So if I have, say, $8,000 in expenses in a year, I might wind up paying $5,500 of that, instead of maybe $1,600 with my old plan.
That sounds pretty bad. But there are two things mitigating that.
First off, preventive care–which is all I generally need anyway–is free (or maybe three visits are free. I’m not 100% clear here).
Much more important: Like all plans offered in all states through these exchanges, there’s an out-of-pocket limit; this year it’s $6350 for an individual.
That’s right–I can’t pay more than $6350, plus premiums, in a year (for covered charges; if a charge isn’t covered at all, I’m on the hook for it, but all plans need to have broad coverage, by law).
So yes, if I have $8,000 in expenses, I’ll have to pay more with my current plan. But if I have $80,000 in expenses, I’ll pay $6350, rather than maybe $16,000. If I have $800,000 in expenses, I’ll pay $6350 instead of $160,000.
For me, that’s much better than my old plan. I wasn’t paying $7100 per year in order to keep my medical costs down in ordinary years–I was paying it in case something really really bad happened that would otherwise ruin me. This plan actually protects me better (oh, and like all Obamacare plans, there’s no annual or lifetime limit on benefits either).
And the extra I’ll have to pay in years when my medical expenses are substantial but not ruinous? That can come out of the $3500 per year I’m saving in premiums.
Now: There are some caveats here.
One is that I live in New York, and New York is a special case. Essentially, New York made it illegal for insurers to exclude sick people (or to charge them so much that they were just pre-paying their medical expenses). BUT, this meant that they had to raise premiums on everyone else in order to cover those sick people, which meant that some young healthy people decided to drop their expensive insurance, which worsened the risk pool, leading to higher premiums, so more healthy people dropped insurance, and so on. This is called the “adverse selection death spiral,” and New York was in the middle of one when Obamacare came along. By getting more people back into the risk pool, Obamacare seems to have broken that spiral, at least for now.
In other words, in New York Obamacare replaced poorly-thought-out regulation with better regulation. States that didn’t have poorly-thought-out regulation to begin with will have different experiences. Although those states had other problems that Obamacare solves, like plans that excluded sick people or arbitrarily dropped them.
The other caveat is that my new plan has a narrow network, and my doctor isn’t on it. But that’s fine–I was never all that fond of my doctor. Still, that’s exactly what Obama categorically said wouldn’t happen, so score one for the critics there.
Of course, that sort of thing happened before Obamacare as well; I really liked my *previous* doctor, but I had to drop him when I originally enrolled in the plan I just switched from, and that was in the 1990s.
So: For me at least, Obamacare has meant more of what I want from insurance, at half the price. No wonder conservatives are having trouble finding people who have actually been hurt by the law.
By Mike I was gratified, and surprised, by T-Mobile’s announcement a year or so ago that they were planning to offer the sort of plan a consumer would actually want: Cheap, you’re not forced to stay for two years, you don’t keep paying for the same phone forever, you don’t pay fees for going over your data limit . . . . I thought maybe I was dreaming a little, but in fact others thought it was pretty great too.
And now we’re in a full-on price war; AT&T is cutting the cost per line for a smartphone from $40 to $15.
This is how markets are supposed to work: companies compete to find ways to provide more of what consumers want, at a better price.
And the market is only finally working for one reason: Mean old government.
Only a couple of years ago, AT&T was trying to buy T-Mobile. If that deal had gone through, there would be no T-Mobile to start the price war. We’d have the same three companies, offering us the same crappy plans, forever. That’s not a market–that’s a Telephone Authority that happens to be privately owned.
And the deal didn’t go through because the Justice Department decided that it was a violation of antitrust laws.
Why do I bring this up now? Because there’s another big telecom merger in the works: Comcast and Time Warner Cable. This is another terrible idea–so terrible that the best defense I’ve heard is that the companies are already not competing (they leave each other monopolies in different regions), so it hardly matters if they merge. Why try to preserve a market that doesn’t exist?
But at the time of the proposed cell merger, cell service wasn’t a functioning market either—all four carriers happily offered plans that bore very little resemblance to what we wanted, and we bought them because there was no option.
And it was worth preventing that merger–that’s what allowed a functioning market to finally appear (to the degree that it has).
So it’s not necessarily a choice between the merger and the crappy status quo. if we keep Time Warner and Comcast separate, they may actually start competing. Or an upstart may appear to give better service at better prices (which would hardly be difficult; Comcast and Time Warner’s monopolies have made them phenomenally lazy and insolent); any upstart will have an easier time if the companies are separate.
[EDIT: In keeping with my commitment to enlightenment via cartoons, here’s one Jim Benton commenting on his experience with his cable company.]
Yes, right now, in many areas of the country people are so beaten down that the very idea of a cable company offering decent prices and good service seems like whacked-out dreaming. But a couple of years ago, the idea of an affordable cell phone plan that gave us what we actually wanted seemed like the same thing.
By Mike So, Dan and I have been working on a piece explaining the Trans-Pacific Partnership for a while–it’s a tangled subject–and it’s finally done!
Check it out here.
By Mike So, Senator Tom Coburn (R-OK) has decided to stop bashing Healthcare.gov. “It will eventually work and work well,” he said.
But Coburn warned that the law would still have problems, thanks to the “centralized management” of the federal government, which is “inefficient, most of the time ineffective, oftentimes complicated by fraud or incompetence.”
All of this is of course true. Government is a very inefficient way to get anything done. But we don’t buy our health insurance from old Hank down on the corner, who stays up late every night making sure that he’s squeezed all the waste from his health-insurance business. We buy it from giant corporations. Which are *also* centralized, also inefficient, also complicated by fraud or incompetence. And worse, they’re not even trying to help us and failing–their business plan is to take as much from us as they can, and pay out as little as they can. Regulation–even clumsy, inefficient regulation–can fix that.
(Yes, in theory competition should keep private industry honest because if one insurer charges too much we can go somewhere else, but health insurance is a “naturally” concentrated industry. If you’re not big you can’t manage risk properly or negotiate with providers. And the industry, like many industries, is in fact so concentrated that competition doesn’t operate like it “should”.) In other words, the choice isn’t between giant, inefficient government and dynamic private industry. It’s between giant, inefficient government and giant, inefficient private industry.
I’m not the first to note that giant corporations tend to resemble government departments; here’s John Stuart Mill, in Principles of Political Economy, all the way back in freaking 1848:
Government management is, indeed, proverbially jobbing, careless, and ineffective, but so likewise has generally been joint-stock management.
Okay, maybe I can’t expect Tom Coburn to be familiar with John Stuart Mill. And Coburn’s bio states that he’s never had a corporate job, so he may never have had a chance to see, firsthand, how slow and stupid big corporations can be.
But at least he could read the comic pages. Dilbert doesn’t work in the government.
By Mike So there’s a new analysis of the Easter Island story.
The old one: Polynesians showed up on this small, isolated island, used up all the trees, and the economy collapsed while people futilely built giant heads to make the collapse stop. They were reduced to a wretched remnant by the time Europeans showed up.
The new one: Polynesians showed up on this small, isolated island and the rats they brought with them killed the trees. The islanders lived on crops and rats and did okay until Europeans showed up.
As NPR points out, this is simultaneously less scary (we can survive ecological collapse) and more so (we can survive ecological collapse, so we’re that much more likely to let it happen, and then we simply forget what life used to be like before we ate rat for dinner all the time).
What if the planet’s ecosystem, as J.B. MacKinnon puts it, “is reduced to a ruin, yet its people endure, worshipping their gods and coveting status objects while surviving on some futuristic equivalent of the Easter Islanders’ rat meat and rock gardens?”
That’s a scary thought.
But there’s a scarier one: How much has this happened already?
By Mike Open Culture is an awesome website that I’ve been frequenting ever since I found out about it. It’s devoted to bringing together all of the interesting, free things on the internet that you’d never find otherwise. So, younger readers, it’s like a cat video site, but it’s not all videos, and the videos are of things like Marina Abramovic briefly reuniting with an old lover after two decades.
And Dan Colman has drawn his readers’ attention to Economix! Even better, there’s a link to a free preview edition that gives the Adam Smith section. If you want to see what the book is about, check it out!
By Mike Salon has an article by the awesome Alex Pareene about the decline of the Heritage Foundation, which has gone from a semi-sane, practical conservative think tank (the one that invented Obamacare) to a right-wing nutjob one (the one that puts billboards on Times Square warning against the horrors of Obamacare).
Apparently, this shift has coincided with the arrival of some MBA-weilding Young Turks who basically think they have all the answers and don’t listen to people who are actually, you know, scholars. The real scholars are leaving, or at least quotably complaining, as the new leadership imposes business methods. In practice, “business methods” mean taking what’s most valuable right now (the Heritage email list) and exploiting it to the full.
And if the email list was only valuable because of Heritage’s reputation, and will lose its value if that reputation goes under, that’s more than a quarter into the future, so who cares?
Now: what Pareene rightly points out is that this is exactly what the Heritage Foundation demands we do to every other institution–universities, government departments, schools, whatever. Using “business methods” is supposed to unleash the magic of the market.
Here’s Pareene:
It’s just interesting how so many of them object to being at the mercy of some business school assholes with no respect for credentials or experience, though. I mean, take it from this inspiring Heritage Foundation ode to the wonderful work of private equity firms, which “make something busted luster again,” mostly by firing everyone: “Whatever the problems, if under the flaws remains something of real value, then with the right tools, that value can be brought to the surface again.” Your think tank just had to be destroyed in order to find what was of real value, which turned out to be, I guess, your email list.
Schadenfreuderiffic!
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