Of Wal-Mart, Health Care, & American History

Sometimes I get so burned out from reading talking about nothing but slavery and the poor treatment of Native Americans and women in the American History seminar I teach (I have to stick to the syllabus) that finally reach my limit and lash out.

Mind you, America is not perfect. The aforementioned Big Three sins were real. But they aren't all there is to American History. And it doesn't help that we are teaching practically nothing more than those three plus the British hobby horse (class warfare) to British freshers who hardly even know who George Washington was.

Just in case the supervising professor on my course (or anyone else from my university, for that matter) read this post let me say up front: I don't blame them; this is the state of academia.

Anyway, where was I? Oh yes, sometimes I reach my limit and go on an I-love-America-liberty-markets-free-trading-are-awesome rant.

Like yesterday. We reviewed a bunch of reading that characterized the increased interdependence, division of labor and specialization of the American economy in post-Reconstruction America as horrible because it made the rich richer and the poor poorer and so on and so forth. One article we read trumpeted "economic independence" as an ideal that was somehow lost or never was or some other such nonsense.

That is, in the New South, capitalists from the North built factories to process raw cotton and tobacco and mine and coal and extract and refine iron (later steel) because it was closer to the source (reducing transportation costs) and laborers in the South were much less likely to unionize, thus resulting in lower labor costs.

And all of this was bad, bad, bad.

Missing is the fact that all of these developments brought jobs to the South (where there had been, prior to the Civil War, a lack of industry) and a higher standard of living. The fact that there were now stores near every railroad depot (another feature of post-Reconstruction America) selling goods people hadn't even imagined before was not a good thing, it was bad because people went into debt to the bad Northern capitalists who produced these goods and duped the stupid poor Southerners into buying them.

The post-Reconstruction period in America is widely considered by economists to be a Golden Age of commerce. Standards of living increased significantly. But the historical narrative is one of worker exploitation, etc. etc.

So I took a moment and tried to teach something about the power of competition and how it both reduces prices and improves quality.

Now the Wal-Mart & Health Care part of the blog post title: Stephen Spruiell made the point last Friday at The Corner that the mere presence of Wal-Mart in the health care industry would improve quality and drive down costs--even for those who never went to Wal-Mart for their open-heart surgery. He's right. This, my friends, is the power of markets in health care.

Because other people would have to compete with Wal-Mart in supplying health services to individuals, the quality would go up (just as there is Nordstrom) and the price would go down (think of the many different price-comparison websites on the internet).

Unlike Europe, we ought not care about the difference in income between the richest and the poorest so long as the poorest can become richer and the richest aren't ensconced, by some government diktat, as the ruling class. Indeed, though the spread between richest and poorest may increase, America remains the country where the most people are able to move between the five infamous quintiles on the income scale. By and large, the poorest do not remain the poorest and the richest die like everyone else.

In Europe, regulation, law, and other preferential treatments have resulted in fairly static class organization. The middle class remain the middle class and the upper class remain in the upper class and this continues on, ad infinitum, generation after generation. The modern European welfare state has created, as I point out to my friends who will listen (or at least act as though they are listening) a permanent underclass. In France, for instance, this underclass is populated mostly by Muslim immigrants who, despite the ever-increasing benefits being thrown their way by the French liberal elite, continue to burn cars.

They burn cars not because they want another 10 Euros a week to pay their mobile phone bill, but because the barriers to getting a job and generally breaking into civilized French society (for instance) are for all intents and purposes, impenetrable.

The same is basically true, to a greater or lesser extent, in every other modern welfare Western European state.

This is essentially what liberal utopia (aka social democracy) looks like. The Great Society largely reversed several generations of gains by African Americans (from the Emancipation Proclamation through the Civil Rights movement). Thomas Sowell has shown how African Americans income, education, standard of living, etc., increased right up until liberal good intentions destroyed the African American family and made them America's permanent under class.

African Americans now vote, practically en masse, for liberal Democrats who, in turn, promise them an expansion of welfare programs which do nothing more than make them, as a people, more dependent on the state and the "good will" of liberal elites.

How to wrap this up? Eric Foner, of all people, wrote about Frederick Douglass's concerns regarding liberal paternalism in his article, "Rights and Black Life in War and Reconstruction."

Frederick Douglass himself had concluded in 1865 that the persistent question "What shall we do with the Negro?" had only one answer: "Do nothing.... Give him a chance to stand on his own legs! Let him alone!" Douglass realized that the other face of benevolence is often paternalism and that in a society resting, if only rhetorically, on the principle of equality, "special efforts" on the freedmen's behalf might "serve to keep up the very prejudices, which it is so desirable to banish."

America need not make the same mistake as our friends in Europe. Liberty and responsibility are inextricably tied together and our government laws and policies--whether health care or welfare or whatever--ought to reflect that relationship.

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Iraq: The Unapologetic Tony Blair

And with good reason. The logic he and President Bush used to invade Iraq and take down Saddam was sound and based on the best available information.

In the wake of his testimony before yet another UK inquisition, the WSJ cribbed a few of his best quotes and reminded us all of what we knew, what we didn't know, and why Iraq was and remains important.

[...]

Mr. Blair offered a ringing defense of the decision to invade Iraq, and a very different set of lessons for the present. "This isn't about a lie, or a conspiracy, or a deceit, or a deception. It is a decision," Mr. Blair told a packed room that included relatives of soldiers killed in Iraq. "And the decision I had to take was, given [Saddam's] history, given his use of chemical weapons, given the over one million people whose deaths he had caused, given 10 years of breaking U.N. resolutions, could we take the risk of this man reconstituting his weapons program?"

That's a point worth remembering over all the Monday-morning recriminations about "dodgy dossiers" and missing WMD. We have never for a moment believed that the British or U.S. governments deliberately misled their publics over what they thought they knew about Saddam's weapons. Every Western country, including those opposed to the war, believed Saddam had WMD.

But the important point was never so much about what Saddam did or did not possess so much as it was about what he intended. And as Mr. Blair pointed out Friday, "What we now know is that he [Saddam] retained the intent and the intellectual know-how to restart a nuclear and a chemical weapons program when the inspectors were out and the sanctions changed, which they were going to do. . . .

"Today we would be facing a situation where Iraq was competing with Iran, competing both on nuclear weapons capability and competing more importantly perhaps than anything else . . . in respect of support of terrorist groups. . . . If I am asked whether I believe we are safer, more secure, that Iraq is better, that our own security is better, with Saddam and his two sons out of office and out of power, I believe indeed we are."

Mr. Blair was no less clear-eyed about the threat posed today by Iran and its nuclear program, against which he counseled that the international community had to take a "very hard, tough line." Iranian interference was a large reason why the Iraq war "very nearly" failed. Iran remains a sponsor of terrorism and a cause of instability from Afghanistan to Lebanon. The lesson from the Iraq war isn't to avoid action for fear of unanticipated consequences, which are inevitable in any war. It is to take action to prevent the most foreseeable of disasters, namely the combination, in a single regime, of fanaticism, links to terrorism and nuclear weapons.

"The decision I took—and frankly would take again—was, if there was any possibility that he [Saddam] could develop weapons of mass destruction, we would stop him," Mr. Blair told the commission. Listening to him, we are reminded why he ranks with Margaret Thatcher as a pre-eminent statesman of postwar British politics, an achievement unlikely to be matched by the Lilliputians who seek to embarrass him.

Polite British academic company (including my supervisors, etc.) requires that I keep my admiration of Blair (at least on this point) to myself. The shroud of semi-anonymity (at least enough that I can plausibly deny and they can plausibly ignore) allows my full confession of guilt here: I reluctantly endorsed the decision to invade all the way back when (when all the Democrats voted for it and the public heavily supported it) and stand by that decision now.

Things could and would be a heck of a lot worse.

(h/t Scott L.)

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The Power Of Markets In Healthcare: I Have Seen A Vision Of The Future And This Is It

This is my nomination for best article of the year.

Division of labor and specialization.

Geeta Anand of the WSJ pens an article about Devi Shetty, a heart surgeon who is single-handedly revolutionizing heart healthcare in India and, hopefully the world--Devi Shetty, the "Henry Ford of Heart Surgery."

The approach has transformed health care in India through a simple premise that works in other industries: economies of scale. By driving huge volumes, even of procedures as sophisticated, delicate and dangerous as heart surgery, Dr. Shetty has managed to drive down the cost of health care in his nation of one billion.

His model offers insights for countries worldwide that are struggling with soaring medical costs, including the U.S. as it debates major health-care overhaul.

"Japanese companies reinvented the process of making cars. That's what we're doing in health care," Dr. Shetty says. "What health care needs is process innovation, not product innovation."

At his flagship, 1,000-bed Narayana Hrudayalaya Hospital, surgeons operate at a capacity virtually unheard of in the U.S., where the average hospital has 160 beds, according to the American Hospital Association.

Narayana's 42 cardiac surgeons performed 3,174 cardiac bypass surgeries in 2008, more than double the 1,367 the Cleveland Clinic, a U.S. leader, did in the same year. His surgeons operated on 2,777 pediatric patients, more than double the 1,026 surgeries performed at Children's Hospital Boston.

[...]

But Jack Lewin, chief executive of the American College of Cardiology, who visited Dr. Shetty's hospital earlier this year as a guest lecturer, says Dr. Shetty has done just the opposite -- used high volumes to improve quality. For one thing, some studies show quality rises at hospitals that perform more surgeries for the simple reason that doctors are getting more experience. And at Narayana, says Dr. Lewin, the large number of patients allows individual doctors to focus on one or two specific types of cardiac surgeries.

In smaller U.S. and Indian hospitals, he says, there aren't enough patients for one surgeon to focus exclusively on one type of heart procedure.

Narayana surgeon Colin John, for example, has performed nearly 4,000 complex pediatric procedures known as Tetralogy of Fallot in his 30-year career. The procedure repairs four different heart abnormalities at once. Many surgeons in other countries would never reach that number of any type of cardiac surgery in their lifetimes.

Dr. Shetty's success rates appear to be as good as those of many hospitals abroad. Narayana Hrudayalaya reports a 1.4% mortality rate within 30 days of coronary artery bypass graft surgery, one of the most common procedures, compared with an average of 1.9% in the U.S. in 2008, according to data gathered by the Chicago-based Society of Thoracic Surgeons.

It isn't possible truly to compare the mortality rates, says Dr. Shetty, because he doesn't adjust his mortality rate to reflect patients' ages and other illnesses, in what is known as a risk-adjusted mortality rate. India's National Accreditation Board for Hospitals & Healthcare Providers asks hospitals to provide their mortality rates for surgery, without risk adjustment.

Dr. Lewin believes Dr. Shetty's success rates would look even better if he adjusted for risk, because his patients often lack access to even basic health care and suffer from more advanced cardiac disease when they finally come in for surgery.

In addition to keeping costs low so the people of his country can afford life-saving heart surgery, Dr. Shetty also turns a profit--about 7.7% after taxes and more than the 6.9% average in the United States.

This is the sort of thing I'm talking about when I refer to market reform of healthcare. Neither I, nor anyone else has to come up with all the answers, indeed, we couldn't possibly do so. That is for a market, full of enterprising, profit-seeking individuals to figure out.

The role of government is not to provide healthcare for everyone through some sort of trojan horse-like public option that morphs into British- or Canadian-style socialized medicine. It is to get the hell out of the way of a free market that would lower costs and improve quality.

If you have tips, questions, comments or suggestions, email me at lybberty@gmail.com.

Programming Note: Internet Availability

Thank you to all those of you who continue to email me with comments and tips and whatnot. I really appreciate it. I apologize for not taking the time to get back to all of you or even having the opportunity to post a fraction of the many good links and youtube videos and quotes you all send me.

With no internet at my flat, I'm only able to access the wonderful web once-a-day and when I do, I'm inundated with 70-80 emails, at least. I try and schedule posts for the times when I won't have access to Al Gore's baby, which leaves me a little less timely than I tried to be in the past.

Bear with me. It will get better.

Keep sending stuff--comments, links, vids, etc.--and be patient as I sort through all the various housecleaning details.

Thanks.


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When Pseudoscience Becomes Religion

Paul Johnson, British popular historian, is one of my father's and my favorite writers. He brings a historical perspective to every column he writes for Forbes--be it about Global Warming (like the subject of this post), or the Presidential election.

Consider, The Nonsense of Global Warming:

August was one of the nastiest months I can remember: torrential rain; a hailstorm or two; cold, bitter winds; and mists. But we are accustomed to such weather in England. Lord Byron used to say that an English summer begins on July 31 and ends on Aug. 1. He called 1816 "the year without a summer." He spent it gazing across Lake Geneva, watching the storms, with 18-year-old Mary Shelley. The lightening flickering across the lake inspired her Frankenstein, the tale of the man-made monster galvanized into life by electricity.This summer's atrocious weather tempted me to tease a Green whom I know. "Well, what about your weather theory now?" (One of the characteristics of Greens is that they know no history.) He replied: "Yes, this weather is unprecedented. England has never had such an August before. It's global warming, of course." That's the Greens' stock response to anything weather-related. Too much sun? "Global warming." Too little sun? "Global warming." Drought? "Global warming." Floods? "Global warming." Freezing cold? "Global warming."

I wish the great philosopher Sir Karl Popper were alive to denounce the unscientific nature of global warming. He was a student when Albert Einstein's General Theory of Relativity was first published and then successfully tested. Einstein said that for his theory to be valid it would have to pass three tests. "If," Einstein wrote to British scientist Sir Arthur Eddington, "it were proved that this effect does not exist in nature, then the whole theory would have to be abandoned."

To Popper, this was a true scientific approach. "What impressed me most," he wrote, "was Einstein's own clear statement that he would regard his theory as untenable if it should fail in certain tests." In contrast, Popper pointed out, there were pseudo-scientists, such as Karl Marx and Sigmund Freud. Marx claimed to be constructing a theory of scientific materialism based on scientific history and economic science. "Science" and "scientific" were words Marx used constantly. Far from formulating his theory with a high degree of scientific content and encouraging empirical testing and refutation, Marx made it vague and general. When evidence turned up that appeared to refute his theory, the theory was modified to accommodate the new evidence. It's no wonder that when communist regimes applied Marxism it proved a costly failure.

Freud's theories were also nonspecific, and he, too, was willing to adjust them to take in new science. We now know that many of Freud's central ideas have no basis in biology. They were formulated before Mendel's Laws were widely known and accepted and before the chromosomal theory of inheritance, the recognition of inborn metabolic errors, the existence of hormones and the mechanism of nervous impulse were known. As the scientist Sir Peter Medawar put it, Freud's psychoanalysis is akin to mesmerism and phrenology; it contains isolated nuggets of truth, but the general theory as a whole is false.

The idea that human beings have changed and are changing the basic climate system of the Earth through their industrial activities and burning of fossil fuels--the essence of the Greens' theory of global warming--has about as much basis in science as Marxism and Freudianism. Global warming, like Marxism, is a political theory of actions, demanding compliance with its rules.

Those who buy in to global warming wish to drastically curb human economic and industrial activities, regardless of the consequences for people, especially the poor. If the theory's conclusions are accepted and agreed upon, the destructive results will be felt most severely in those states that adhere to the rule of law and will observe restrictions most faithfully. The global warming activists' target is the U.S. If America is driven to accept crippling restraints on its economy it will rapidly become unable to shoulder its burdens as the world's sole superpower and ultimate defender of human freedoms. We shall all suffer, however, as progress falters and then ceases and living standards decline.

Out of Balance

When I'm driving to my country home in Somerset, I pass two examples of the damage Greens can cause when their views are accepted and applied. Thanks to heavy government subsidies, many farmers switched from growing food to biofuel crops--perhaps the most expensive form of energy ever devised. The result has been a world shortage of food, with near starvation in some places, and a rise in the cost of food for everyone. We're now getting wise to this ridiculous experiment; shares in biofuels have fallen, and farmers are switching back to their proper work. But the cost has been enormous.

[...]

Marxism, Freudianism, global warming. These are proof--of which history offers so many examples--that people can be suckers on a grand scale. To their fanatical followers they are a substitute for religion. Global warming, in particular, is a creed, a faith, a dogma that has little to do with science. If people are in need of religion, why don't they just turn to the genuine article?

(Emphasis added)

(h/t Scott L.)


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Programming Note: Travel Advisory

Again. This will be the longest leg of my interminable move. Today I leave for London. I don't know what my internet connection will be like when I arrive, so bear with me. I'll update where and when possible. For those of you accustomed to near instantaneous email & text response from me, well, it will take me a few days to see about getting my BlackBerry up to British speed.


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Brit Humor

Finally, after watching this, I understand the complex movement and machination of the markets.

(from Ace)


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Free Speech Is Good Speech

Thanks to Jeff G. over at Protein Wisdom, catch the latest out of the British Academy: A list of banned words. All I can say is, at least this didn't come from some history department. It was created, predictably, by a bunch of sociologists--the degree of college football football players from sea to shining sea.

Publishers and universities are outlawing dozens of seemingly innocuous words in case they cause offence.

Banned phrases on the list, which was originally drawn up by sociologists, include Old Masters, which has been used for centuries to refer to great painters - almost all of whom were in fact male.

It is claimed that the term discriminates against women and should be replaced by "classic artists".

The list of banned words was written by the British Sociological Association, whose members include dozens of professors, lecturers and researchers.

The list of allegedly racist words includes immigrants, developing nations and black, while so-called "disablist" terms include patient, the elderly and special needs.

It comes after one council outlawed the allegedly sexist phrase "man on the street", and another banned staff from saying "brainstorm" in case it offended people with epilepsy.

(no offense to readers who studied sociology)


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We Love Freedom!

On Friday we met with the current Cabinet Secretary and head of all British Civil Servants (544,000 according to his count) Gus O'Donnell. After a brief, high school civics class-like presentation on 'what goes on at the Cabinet and Whitehall,' Mr. O'Donnell opened the floor to a few questions.

In case you've missed the theme, we appreciate and are intensely interested in how basic economic principles inform public policy. You can imagine our delight, therefore, when we learned that Mr. O'Donnell has a background in economics. With that in mind, we posed the following question: we asked, "how he employed his background in economics and understanding of incentives as the head of a notoriously inefficient bureaucracy?"

Reading the question in print, we understand how he might have taken that as a bit of an institutional dig. But it wasn't intended as such.

He proceeded to give a somewhat tedious and patronizing explanation--almost lecturing--on the differences between undergraduate and graduate economics (as though the laws of supply and demand stop after ones bachelors degree!).

Of course, he never really explained how they were different, simply insisting that they were so in order to establish his superiority. What he was really arguing came out when he applied his bureaucratic jargon to a practical example: the National Health Service.

Being the only American accent in the room, he probably understood that we were thinking specifically of Britain's socialized medicine when we asked our question about economic incentives. He explained that with no prices--after all, health care is free--there was no way to employ market forces to bring about any degree of efficiency whatsoever. The overriding principle, and my peers around the table nodded their heads, was equity.

Espousal of egalitarian principles is what all good socialists do. Never mind that everyone gets crummy health care, or that thousands die because cancer isn't diagnosed in time for treatment, or that thousands more wait in queues (brit-speak for lines) for basic procedures. None of this matters, so long as everyone's health care sucks equally.

And suck, it does. Think Walter Reed writ large.

Consider that since we've been in this country, we've had personal experience with two friends who needed medical treatment. Both reflected poorly on socialized medicine.

One friend knocked out all her front teeth and cut up her mouth very badly. Because of the inefficient bureaucracy that is the NHS, she had to wait three weeks before they could begin treatment and repair. Did you catch that? She was forced to wait, teeth presumably in a cup of milk, hidden away because she didn't want to go out in public, for 3 weeks before she could start on a series of procedures that would take longer than a month to complete. "That," as the Brits might say sarcastically, "is just brilliant." What makes this sucky sequence of events even suckier is that this friend doesn't even know any better. That's just how it is. Suckiness has permeated British expectations for their medical care.

Example number two is a friend who took a nasty spill off of his bicycle. His knock on the head was bad enough that a passing driver had time to stop the car, get out, and pick him up off the ground. In this friend's case, he wasn't able to see a doctor that day. The next day, when he turned up for his appointment, he discovered that they had scheduled him during a time when doctors were only seeing "emergency" patients. Finally, three days later, he saw a doctor who was able to properly clean up and bandage his various cuts and scrapes. As for any tests to determine damage to his brain as a result of his head injury and apparent concussion? Well, that would require waiting at least two weeks to see a specialist, and our friend just couldn't be bothered. How many Brits don't get the care they need because the line or wait is too long?

So far, the NHS is 0 for 2. And that's just our count. We hope we don't get injured or sick and have to rely on the NHS for medical care. We don't want to become another cautionary tale.

Sure, it's free--if you consider nearly 50% income taxes free (and with costs spiraling out of control, the tax burden is only going to grow)--but it sucks.


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