28 April 2010
A Few Random Thoughts about The New Arizona Law
12:22 PM
The furor over Arizona entails belief that it is a crime to be in the United States, but not in any single state, illegally, as well as that enforcement of immigration laws requires racial profiling when performed by state agents but not federal agents. Right. We all know how ethically up-standing the unfederal government is.
Limbaugh thinks what bothers the Left about Arizona is the left's need of illegal voters. Perhaps. But there is something else for the Left to worry about. For perhaps the first time since the 19th century we have a state taking upon itself to enforce the terms of the U.S. Constitution, in response to federal malfeasance.
If illegal immigrants don't have to obey federal immigration law, why should U.S. citizens obey a federal law requiring the purchase of health care insurance? Oh. Yeah. The unfederal government will actually enforce the latter. That's right. I guess the real question is: Will the unfed object to states passing laws making it a crime for state citizens to disobey the law requiring the purchase of health care insurance, or will the unfed be glad for the help?
Frankly, I think it would be great if we had immigration policies even half as sensible as Mexico's, with all of which I entirely agree and support, by the way.
Yes, I read the bill.
Limbaugh thinks what bothers the Left about Arizona is the left's need of illegal voters. Perhaps. But there is something else for the Left to worry about. For perhaps the first time since the 19th century we have a state taking upon itself to enforce the terms of the U.S. Constitution, in response to federal malfeasance.
If illegal immigrants don't have to obey federal immigration law, why should U.S. citizens obey a federal law requiring the purchase of health care insurance? Oh. Yeah. The unfederal government will actually enforce the latter. That's right. I guess the real question is: Will the unfed object to states passing laws making it a crime for state citizens to disobey the law requiring the purchase of health care insurance, or will the unfed be glad for the help?
Frankly, I think it would be great if we had immigration policies even half as sensible as Mexico's, with all of which I entirely agree and support, by the way.
Yes, I read the bill.
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23 April 2010
Well, I feel sheepish
12:26 PM
An update to this post:
Reader AdamJ writes:
I reply:
I'm pretty sure my source, to which I failed to link, and cannot now relocate, had it that way. Figures. I maintain a policy of once I put it up it's there and I have to live with the occasional embarrassment which comes from blogging in too much haste. This is, of course, one of the reasons why bloggers should always leave open the possibility of comments. If one can't always be right, one should at least be open to correction. I stand corrected, and chastened. If that is the way the source had it, I should have done a better job of double checking the precise relationship between Paulson and Goldman Sachs. I was attempting simply to translate my source. Clearly, I should have appraised and then translated.
On the other hand, it must just be that in "translating" I mis-wrote, thus rotating the roles played by Paulson and Goldman Sachs. Rather than writing Paulson paid Goldman, I wrote it the other way round.
Larry Kudlow provides a time line of the securities-selection process that was made by ACA management, the portfolio selector, from the actual SEC complaint:
Clearly, as AdamJ, writes, ACA management was the portfolio selector. Confusion is rooted in the fact that some (but only some) of the RMBS were selected by Paulson, and of the 123 he selected, ACA accepted 55. The one doing the accepting, is pretty clearly the portfolio selector.
I didn't double check my source's recitation of the facts because I knew that Paulson had a role in the selection. I trusted my source's understanding of the nature of that role. I've never relied on that source before. Won't do it again, at least not uncritically.
Reader AdamJ writes:
Paulson paid Goldman 15 million, not the other way around. Which is why Goldman was trying to help keep Paulson involved in portfolio selection. And the SEC doesn't claim that Goldman wasn't betting on Abacus to fail or to succeed. I suspect Goldman only lost that 90 million because they couldn't find a buyer for the 45-50 tranche in time before Abacus imploded- Goldman was making bets against the housing market at the time (they were the only bank which knew which way the wind was blowing)
It merely is saying that Goldman said ACA, an independent company with experience picking CDOs and omitted to mention that Paulson helped pick the bonds that went in the CDO. Obviously, an investor (particularly a sophisticated one) would want to know that someone helping to pick the bonds is shorting the CDO and therefore wants to pick the worst possible bonds. Paulson wasn't sued because Paulson didn't have any disclosure requirements.
I reply:
I'm pretty sure my source, to which I failed to link, and cannot now relocate, had it that way. Figures. I maintain a policy of once I put it up it's there and I have to live with the occasional embarrassment which comes from blogging in too much haste. This is, of course, one of the reasons why bloggers should always leave open the possibility of comments. If one can't always be right, one should at least be open to correction. I stand corrected, and chastened. If that is the way the source had it, I should have done a better job of double checking the precise relationship between Paulson and Goldman Sachs. I was attempting simply to translate my source. Clearly, I should have appraised and then translated.
On the other hand, it must just be that in "translating" I mis-wrote, thus rotating the roles played by Paulson and Goldman Sachs. Rather than writing Paulson paid Goldman, I wrote it the other way round.
Larry Kudlow provides a time line of the securities-selection process that was made by ACA management, the portfolio selector, from the actual SEC complaint:
ACA/PAULSON PORTFOLIO
January 9, 2007
Goldman sends email to ACA, titled "Paulson Portfolio," containing list of 123 RMBS selected by Paulson for the Abacus 2007-AC1 reference portfolio
January 22, 2007
ACA sends email to Fabrice Tourre & others at Goldman containing list of 86 RMBS, including 55 of the 123 selected by Paulson; 68 were rejected. This is very important. Goldman maintains that ACA was in fact the portfolio selector. ACA rejected 68 of Paulson’s recommendations. They accepted 55.
February 2, 2007
After meetings with Paulson & Tourre, ACA emails Paulson, Tourre & others at Goldman a list of 82 RMBS on which Paulson & ACA concurred, plus 21 others. So at this point, they are in agreement on 82, but they insert 21 others.
February 5, 2007
Paulson sends email to ACA & Tourre deleting 8 of the RMBS recommended by ACA and leaves the rest alone.
February 26, 2007
After further discussion, Paulson & ACA agree on a reference portfolio of 90 RMBS for Abacus 2007-AC1.
Clearly, as AdamJ, writes, ACA management was the portfolio selector. Confusion is rooted in the fact that some (but only some) of the RMBS were selected by Paulson, and of the 123 he selected, ACA accepted 55. The one doing the accepting, is pretty clearly the portfolio selector.
I didn't double check my source's recitation of the facts because I knew that Paulson had a role in the selection. I trusted my source's understanding of the nature of that role. I've never relied on that source before. Won't do it again, at least not uncritically.
22 April 2010
A Quick and Dirty Guide to the Goldman Sachs Case
6:45 AM
Deserta faciunt et pacem appellant
As is well known, last week the Securities and Exchange Commission charged Goldman Sachs with fraud. Since then both Republicans and Democrats have been using the case to promote their respective. For Democrats, Goldman Sachs demonstrates the need for more financial regulation. For Republicans the case raises questions about the involvement of some members of His Beatitude's Administration. Some wonder if His Grace will return nearly one million in Goldman Sachs campaign contributions.
What really happened? What, precisely, is the fraud which Goldman Sachs has allegedly perpetrated?Goldman Sachs sells securities, or investments. Some of the investments Goldman Sachs sells are for ordinary investors, people like you and me, who don't really have much knowledge or experience when it comes to investing. We might buy stock in a company for the same reason my little girl buys a particular pair of shoes (and usually not the pair I would have purchased for her): They're pretty.
It doesn't take a lot of investment knowledge to buy stock in Ford, or Microsoft. In the other hand, some investments really are for sophisticated investors. The fact is, some investments are so complicated and difficult to understand that the person who sells those investments has a legal obligation to determine whether you actually know what you're doing.The fact of this legal obligation is critical to understanding the case because the particular type of investment at issue here is called a collateralized debt obligation (CDO). In this case, the CDOs are investment instruments backed by mortgages. If you have no idea what it means to say that an instrument is backed by mortgages, then you probably have no such instruments in your portfolio, if you manage your portfolio yourself. But even so, if you understand a mortgage at all, you can begin to see the trouble. An instrument backed by a mortgage isn't backed by much if one or more of the mortgages is defaulted. Hence, as one might guess, mortgage-backed securities haven't been viewed as reliable investments the last couple of years. But Goldman Sachs is in the business of creating CDOs to sell to investors, among other instruments.
But creating a CDO is easier said than done. One must determine which mortgages to include. To do this, Goldman Sachs engaged the services of John Paulson of Paulson & Company, who managed to do something few others have done: While most have been losing money in the market, Paulson has been making money because he bet against real estate.
This fact about Paulson is critical. Goldman Sachs was selecting contents for an investment fund they called Abacus 2007-AC1. Paulson's firm was hired to help with this selection. But Paulson had decided that securities backed by mortgages were a bad investment, to say the least. Nevertheless, he helped Goldman Sachs select the mortgage bonds and instruments to include in Abacus. It is possible (isn't it?) that Paulson, having determined to bet against mortgage-backed securities might design a CDO for Goldman Sachs which will fail in the market?
Apparently he did precisely that. Abacus was a dismal failure. Now, try to figure out what, if anything is wrong with the picture. On one hand, Paulson was paid $15 million by Goldman Sachs to select the contents of Abacus. On the other hand, he made about one billion dollars in profits by selling Abacus short. Goldman Sachs, which allegedly perpetrated a fraud, bet on Abacus to succeed and lost about $90 billion in the deal.
The SEC lawsuit claims that before Goldman Sachs sold this instrument to investors it was obligated to tell investors every detail about the creation of the CDO, including the involvement of John Paulson. In that regard bear in mind the following. First, a CDO is a very sophisticated investment instrument; those who purchase them know just as much about them as the people at Goldman Sachs who created them in the first place. We're not talking Ma and Pa Kettle, here. Try Gordon Gekko. Second, when Goldman Sachs put together Abacus, John Paulson was as famous as Bud Fox when he met Gekko. He hadn't yet made his name by betting against mortgage-based securities. Disclosure of Paulson's involvement would have meant as much to investors as news that the sun rises in the east. Third, it seems clear, given Goldman Sachs's own stake, that they truly believed they had created a profitable CDO. How else to explain their own bet on Abacus and consequent loss of ninety billion dollars. I say again: NINETY BILLION DOLLARS. Paulson is the one who should be on trial.
The SEC is claiming, to the contrary, that Goldman Sachs was actually betting that Abacus would fail, planning to reap profits through a hedge fund. That would have been a neat trick, given their bet in favor of Abacus. They must have thinking that they'd make more through the hedge fund betting against Abacus than they would lose in their other bet in favor of Abacus. Yes, that must be it exactly.
It's too bad Goldman Sachs can't be prosecuted for stupidity, because that's what it was if they knowingly perpetrated a fraud and, at the same time, bet anything at all on their fraudulent product.
There is something almost eerie about this case, however; it is the manner in which the SEC has handled it. In these types of cases there is an opportunity to reach a settlement, such as, for example, paying fines. Strangely, the SEC refused, or simply failed, to return phone calls from Goldman Sachs in the days preceding the lawsuit. I don't think this has ever happened before. Frankly, the suit is rather unprecedented. But so, they tell us, is the present malaise. Unprecedented times call for unprecedented measures. I think that was Abraham Lincoln's excuse. But I digress.
Golly gee. I wonder what gives? Oh, yes. His Beatitude and his Court. Possessed of the wherewithal to control the nation's health, or put your grandma on a pain pill instead of allowing her to have that really unnecessary hip replacement surgery, he now desires to go after Wall Street. He's got his own health, wealth and prosperity gospel, and it now requires -- one struggles to find the appropriate adjective connoting large size; the un-federal government is so much larger and has so much more power that we just no longer have sufficient adjectives! Anyway -- new regulations on America's financial institutions.
When Sebastian Malleby and I are both taking the same tack on matters of political economy it is time to pay attention.
Curiouser and curiouser.
By the way, the latin proverb above is from Tacitus and translated, "They create a desolation and call it peace."
As is well known, last week the Securities and Exchange Commission charged Goldman Sachs with fraud. Since then both Republicans and Democrats have been using the case to promote their respective. For Democrats, Goldman Sachs demonstrates the need for more financial regulation. For Republicans the case raises questions about the involvement of some members of His Beatitude's Administration. Some wonder if His Grace will return nearly one million in Goldman Sachs campaign contributions.
What really happened? What, precisely, is the fraud which Goldman Sachs has allegedly perpetrated?Goldman Sachs sells securities, or investments. Some of the investments Goldman Sachs sells are for ordinary investors, people like you and me, who don't really have much knowledge or experience when it comes to investing. We might buy stock in a company for the same reason my little girl buys a particular pair of shoes (and usually not the pair I would have purchased for her): They're pretty.
It doesn't take a lot of investment knowledge to buy stock in Ford, or Microsoft. In the other hand, some investments really are for sophisticated investors. The fact is, some investments are so complicated and difficult to understand that the person who sells those investments has a legal obligation to determine whether you actually know what you're doing.The fact of this legal obligation is critical to understanding the case because the particular type of investment at issue here is called a collateralized debt obligation (CDO). In this case, the CDOs are investment instruments backed by mortgages. If you have no idea what it means to say that an instrument is backed by mortgages, then you probably have no such instruments in your portfolio, if you manage your portfolio yourself. But even so, if you understand a mortgage at all, you can begin to see the trouble. An instrument backed by a mortgage isn't backed by much if one or more of the mortgages is defaulted. Hence, as one might guess, mortgage-backed securities haven't been viewed as reliable investments the last couple of years. But Goldman Sachs is in the business of creating CDOs to sell to investors, among other instruments.
But creating a CDO is easier said than done. One must determine which mortgages to include. To do this, Goldman Sachs engaged the services of John Paulson of Paulson & Company, who managed to do something few others have done: While most have been losing money in the market, Paulson has been making money because he bet against real estate.
This fact about Paulson is critical. Goldman Sachs was selecting contents for an investment fund they called Abacus 2007-AC1. Paulson's firm was hired to help with this selection. But Paulson had decided that securities backed by mortgages were a bad investment, to say the least. Nevertheless, he helped Goldman Sachs select the mortgage bonds and instruments to include in Abacus. It is possible (isn't it?) that Paulson, having determined to bet against mortgage-backed securities might design a CDO for Goldman Sachs which will fail in the market?
Apparently he did precisely that. Abacus was a dismal failure. Now, try to figure out what, if anything is wrong with the picture. On one hand, Paulson was paid $15 million by Goldman Sachs to select the contents of Abacus. On the other hand, he made about one billion dollars in profits by selling Abacus short. Goldman Sachs, which allegedly perpetrated a fraud, bet on Abacus to succeed and lost about $90 billion in the deal.
The SEC lawsuit claims that before Goldman Sachs sold this instrument to investors it was obligated to tell investors every detail about the creation of the CDO, including the involvement of John Paulson. In that regard bear in mind the following. First, a CDO is a very sophisticated investment instrument; those who purchase them know just as much about them as the people at Goldman Sachs who created them in the first place. We're not talking Ma and Pa Kettle, here. Try Gordon Gekko. Second, when Goldman Sachs put together Abacus, John Paulson was as famous as Bud Fox when he met Gekko. He hadn't yet made his name by betting against mortgage-based securities. Disclosure of Paulson's involvement would have meant as much to investors as news that the sun rises in the east. Third, it seems clear, given Goldman Sachs's own stake, that they truly believed they had created a profitable CDO. How else to explain their own bet on Abacus and consequent loss of ninety billion dollars. I say again: NINETY BILLION DOLLARS. Paulson is the one who should be on trial.
The SEC is claiming, to the contrary, that Goldman Sachs was actually betting that Abacus would fail, planning to reap profits through a hedge fund. That would have been a neat trick, given their bet in favor of Abacus. They must have thinking that they'd make more through the hedge fund betting against Abacus than they would lose in their other bet in favor of Abacus. Yes, that must be it exactly.
It's too bad Goldman Sachs can't be prosecuted for stupidity, because that's what it was if they knowingly perpetrated a fraud and, at the same time, bet anything at all on their fraudulent product.
There is something almost eerie about this case, however; it is the manner in which the SEC has handled it. In these types of cases there is an opportunity to reach a settlement, such as, for example, paying fines. Strangely, the SEC refused, or simply failed, to return phone calls from Goldman Sachs in the days preceding the lawsuit. I don't think this has ever happened before. Frankly, the suit is rather unprecedented. But so, they tell us, is the present malaise. Unprecedented times call for unprecedented measures. I think that was Abraham Lincoln's excuse. But I digress.
Golly gee. I wonder what gives? Oh, yes. His Beatitude and his Court. Possessed of the wherewithal to control the nation's health, or put your grandma on a pain pill instead of allowing her to have that really unnecessary hip replacement surgery, he now desires to go after Wall Street. He's got his own health, wealth and prosperity gospel, and it now requires -- one struggles to find the appropriate adjective connoting large size; the un-federal government is so much larger and has so much more power that we just no longer have sufficient adjectives! Anyway -- new regulations on America's financial institutions.
When Sebastian Malleby and I are both taking the same tack on matters of political economy it is time to pay attention.
Curiouser and curiouser.
By the way, the latin proverb above is from Tacitus and translated, "They create a desolation and call it peace."
21 April 2010
E.J. Dionne confuses numbers and significance
10:05 AM
So here's E.J. Dionne to tell us who the TEA partiers are, and aren't. Quite simply: they don't believe what the rest of us good folk believe. Apparently, this makes their beliefs false, although Dionne doesn't quite say that. Citing a New York Times and CBS News poll, what he does say is, in relevant part, this:
Apparently, TEA partiers are easily dismissed because they tend to be -- tend to be, mind you -- "Republican, white, male, married and older than 45", as well as "more affluent and better educated than Americans as a whole". This set of facts justifies Dionne's characterization of the movement as "the populism of the privileged." What? Those who pay the bills complaining about having to do so? Is there no decency? Where do these people get off? Just pay your taxes and keep your mouth shut.
It's a difficult place to be for a TEA partier. They are more affluent and better educated than Americans as a whole, which means they are paying the taxes, or at least, by virtue of being more affluent and better educated, most of the taxes. But, precisely because -- and despite -- paying the bills, because they are relatively few, they are irrelevant. Of course, on the other hand, they do pay the bills. So this is not the populism of the privileged; it is the populism of the tax-payer. It is the populism of the American Revolution. Liberals have been correct to point out that the Boston Tea Party was about taxation without representation, whereas we have taxation with representation. In fact, however, the representation at issue was really representation for net tax payers, not net tax receivers. What we have right now, and Dionne substantiates the claim, is a situation in which tax receivers out-number tax-payers. Since majorities win, most of the representation in this country goes to those who receive tax monies. It is interesting to note, on that point, that neither the poll, nor Mr. Dionne, offer any details about the level of taxes paid by TEA partiers in comparison with Americans as a whole. That's very telling. Given that 47% of households pay no taxes and TEA partiers are such an insular minority, I think we know who is paying the taxes for those 47%.
Dionne also asserts a racial component. For TEA partiers race, not truth, is a concern. He writes: "Twenty-eight percent of all Americans -- and just 19 percent of those who are not Tea Party loyalists -- answered "too much." But among Tea Party supporters, the figure is 52 percent, almost three times the proportion of the rest of the country. A quarter of Tea Partiers say that the Obama administration's policies favor blacks over whites, compared with only 11 percent in the country as a whole."
And? And nothing. It's just wrong to believe that too much has been made of the problems of blacks. Perhaps. But is it true? Dionne is silent. This is, of course, because he "knows" that TEA partiers don't care if it's true; they're just racists. They don't believe this because it's true; they believe it because they don't like black folk.
Actually, I find it particularly easy to believe that too much has been made of the problems of blacks. When I compare the performance of blacks and, to a certain extent, hispanics, with that of, say, Asians, I simply cannot avoid thinking so. For all that is made of the problems of blacks, they simply are not doing as well as Asians. Why? Because blacks they think they're owed, indefinitely, one supposes. Asians are hungry, but blacks think they're owed. For my money, when someone with problems thinks he's owed then any attention he gets is too much. For E.J. Dionne, however, there is no excuse for this sort of thinking. Most Americans don't believe too much is made of the problems of blacks and, therefore, TEA partiers are of line, even racist, for thinking so -- even if it is true. If it is true that too much is made of the problems of blacks, then TEA parters are not racists just for thinking so. But truth doesn't matter to Dionne.
Perhaps the most entertaining part of Dionne's column was this part:
None of what I've written really refutes Dionne's argument, however. His argument is pragmatic. TEA partiers, whether simplistic anarchists or sophisticated minarchists, mean-spirited racists or thoughtful critics of race-related policies, represent a small minority. And this minority, for all its bluster, will be irrelevant to the next election and should be disregarded. Perhaps. On the other hand, those who were the most committed to the American Revolution accounted for only a third of the population. There is something to note, once again, about the sort of minority that TEA partiers represent: They are, according to Dionne, more affluent and better educated than the rest. That class is usually the one from whom the best leaders come. It takes initiative and commitment to become affluent (unless Dionne wishes to claim, and prove, that all this affluence was inherited). It takes initiative and commitment to become educated.
They may be a minority. A more relevant question would be: Are their beliefs correct? Even if not, let's say they are a minority. So what? It may be relevant to the next election, but the country wasn't lost in a day. It won't be regained in a day, either. As the latin proverb has it: "He who perseveres, conquers."
NOTE: I have never attended a TEA party.
[The poll's] findings suggest that the Tea Party is essentially the reappearance of an old anti-government far right that has always been with us and accounts for about one-fifth of the country. The Times reported that Tea Party supporters "tend to be Republican, white, male, married and older than 45." They are also more affluent and better educated than Americans as a whole. This is the populism of the privileged.It is entertaining to read and hear that people of the TEA party stripe are anti-government. E.J. Dionne and his ilk know this is a lie: anti-government types are called anarchists; and anarchists don't want limited government (as Dionne recognizes the TEA partiers as wanting); anarchists want no government. Immediately, we have cause to wonder about Dionne's honesty. Besides, there's no crime in being anti-government until Dionne proves otherwise, which he can't. Frankly, I don't think the man knows what a proof looks like.
And the poll suggested something that white Americans are reluctant to discuss: Part of the anger at President Obama among Tea Partiers does appear to be driven by racial concerns.
Saying this invites immediate denunciations from defenders of those who bring guns to rallies, threaten violence to "take our country back," and mouth old slogans about states' rights and the Confederacy. So let's be clear: Opposition to the president is driven by many factors that have nothing to do with race. But race is definitely part of what's going on.
The poll asked:"In recent years, do you think too much has been made of the problems facing black people, too little has been made, or is it about right?" Twenty-eight percent of all Americans -- and just 19 percent of those who are not Tea Party loyalists -- answered "too much." But among Tea Party supporters, the figure is 52 percent, almost three times the proportion of the rest of the country. A quarter of Tea Partiers say that the Obama administration's policies favor blacks over whites, compared with only 11 percent in the country as a whole.
So race is part of this picture, as is a tendency of Tea Party enthusiasts to side with the better-off against the poor. This puts them at odds with most Americans. The poll found that while only 38 percent of all Americans said that "providing government benefits to poor people encourages them to remain poor," 73 percent of Tea Party partisans believed this. Among all Americans, 50 percent agreed "the federal government should spend money to create jobs, even if it means increasing the budget deficit." Only 17 percent of Tea Party supporters took this view.
Asked about raising taxes on households making more than $250,000 a year to provide health care for the uninsured, 54 percent of Americans favored doing so vs. only 17 percent of Tea Party backers.
Apparently, TEA partiers are easily dismissed because they tend to be -- tend to be, mind you -- "Republican, white, male, married and older than 45", as well as "more affluent and better educated than Americans as a whole". This set of facts justifies Dionne's characterization of the movement as "the populism of the privileged." What? Those who pay the bills complaining about having to do so? Is there no decency? Where do these people get off? Just pay your taxes and keep your mouth shut.
It's a difficult place to be for a TEA partier. They are more affluent and better educated than Americans as a whole, which means they are paying the taxes, or at least, by virtue of being more affluent and better educated, most of the taxes. But, precisely because -- and despite -- paying the bills, because they are relatively few, they are irrelevant. Of course, on the other hand, they do pay the bills. So this is not the populism of the privileged; it is the populism of the tax-payer. It is the populism of the American Revolution. Liberals have been correct to point out that the Boston Tea Party was about taxation without representation, whereas we have taxation with representation. In fact, however, the representation at issue was really representation for net tax payers, not net tax receivers. What we have right now, and Dionne substantiates the claim, is a situation in which tax receivers out-number tax-payers. Since majorities win, most of the representation in this country goes to those who receive tax monies. It is interesting to note, on that point, that neither the poll, nor Mr. Dionne, offer any details about the level of taxes paid by TEA partiers in comparison with Americans as a whole. That's very telling. Given that 47% of households pay no taxes and TEA partiers are such an insular minority, I think we know who is paying the taxes for those 47%.
Dionne also asserts a racial component. For TEA partiers race, not truth, is a concern. He writes: "Twenty-eight percent of all Americans -- and just 19 percent of those who are not Tea Party loyalists -- answered "too much." But among Tea Party supporters, the figure is 52 percent, almost three times the proportion of the rest of the country. A quarter of Tea Partiers say that the Obama administration's policies favor blacks over whites, compared with only 11 percent in the country as a whole."
And? And nothing. It's just wrong to believe that too much has been made of the problems of blacks. Perhaps. But is it true? Dionne is silent. This is, of course, because he "knows" that TEA partiers don't care if it's true; they're just racists. They don't believe this because it's true; they believe it because they don't like black folk.
Actually, I find it particularly easy to believe that too much has been made of the problems of blacks. When I compare the performance of blacks and, to a certain extent, hispanics, with that of, say, Asians, I simply cannot avoid thinking so. For all that is made of the problems of blacks, they simply are not doing as well as Asians. Why? Because blacks they think they're owed, indefinitely, one supposes. Asians are hungry, but blacks think they're owed. For my money, when someone with problems thinks he's owed then any attention he gets is too much. For E.J. Dionne, however, there is no excuse for this sort of thinking. Most Americans don't believe too much is made of the problems of blacks and, therefore, TEA partiers are of line, even racist, for thinking so -- even if it is true. If it is true that too much is made of the problems of blacks, then TEA parters are not racists just for thinking so. But truth doesn't matter to Dionne.
Perhaps the most entertaining part of Dionne's column was this part:
The poll found that while only 38 percent of all Americans said that "providing government benefits to poor people encourages them to remain poor," 73 percent of Tea Party partisans believed this. Among all Americans, 50 percent agreed that "the federal government should spend money to create jobs, even if it means increasing the budget deficit." Only 17 percent of Tea Party supporters took this view.Think about this. What does it really tell us that 38 percent of all Americans believe providing government benefits to poor people encourages them to remain poor and that 73 percent of TEA partiers believe so? Here again we have a question regarding a matter of fact: Is it, or is it not the case, that providing government benefits to poor people encourages them to remain poor? And even if we don't not know certainly, are there reasons for believing it to be the case? I think so. The behavior of people presently receiving unemployment benefits suggest that it is the case.What does it really tell us that 50 percent of Americans agree that the federal government should spend money to create jobs, even if it means increasing the budget deficit while only 17 percent of Tea Party supporters do? For one thing, let's recall that, TEA partiers being more affluent and better educated, they are likely the ones whose money is going to be spent on this. Additionally, it may just be that, however counter-intuitive, government spending, while certainly capable of creating a myriad of jobs, may not create the best, longest-lasting jobs. After all, TEA partiers (better educated than most, remember) may be aware that recent scholarship seems to be showing that FDR's New Deal actually prolonged the Great Recession.
None of what I've written really refutes Dionne's argument, however. His argument is pragmatic. TEA partiers, whether simplistic anarchists or sophisticated minarchists, mean-spirited racists or thoughtful critics of race-related policies, represent a small minority. And this minority, for all its bluster, will be irrelevant to the next election and should be disregarded. Perhaps. On the other hand, those who were the most committed to the American Revolution accounted for only a third of the population. There is something to note, once again, about the sort of minority that TEA partiers represent: They are, according to Dionne, more affluent and better educated than the rest. That class is usually the one from whom the best leaders come. It takes initiative and commitment to become affluent (unless Dionne wishes to claim, and prove, that all this affluence was inherited). It takes initiative and commitment to become educated.
They may be a minority. A more relevant question would be: Are their beliefs correct? Even if not, let's say they are a minority. So what? It may be relevant to the next election, but the country wasn't lost in a day. It won't be regained in a day, either. As the latin proverb has it: "He who perseveres, conquers."
NOTE: I have never attended a TEA party.
15 April 2010
A Still-birth of Freedom (1)
3:07 PM
I for one don't share Paul Rahe's optimism about this being conservatism's finest hour. For one thing my convenient alliance with conservatism (both neo- and paleo-) has become more tenuous than ever; so I'm not really looking to be optimistic in the first place. Better informed is Mark Steyn. Secondly, I don't think conservatism has The Young People. (Hyacinth Girl and Five Feet of Fury feel the same way.) I think too many young just have not been given the mental goods to critique leftist doctrines. Quite the contrary, in fact. Many of them, including some who are Christians, think in marxist categories and don't even realize it. I recently had two dialogs with one of them. Here's the first of two emended records of those dialogs with A Young People, Ivy League educated. Except in my case, names have been changed to protect privacy. I've also done some editing for purposes of enhancing readability and entertainment.
It began with someone I'll call TIMON saying: It seems there is a much smaller version of health care legislation which could perhaps be something Republicans could support.The dialog ended abruptly as we had schedules to keep. But see what I mean? With thinking like that, (which I suspect is at epidemic proportions) who can be optimistic? This lady, an Ivy League grad, won't know what to eat if the government doesn't tell her! But, wait. There was another.
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06 April 2010
"Regime" must mean something different when the Left use it
12:33 PM
Rush Limbaugh irritates the Left with his references to the Regime, rather than the Administration:
Byron York sets the record straight.
Matthews is right about one thing: You go to war with regimes. I'll go that far with him on this one.
"I've never seen language like this in the American press, referring to an elected representative government, elected in a totally fair, democratic, American election -- we will have another one in November, we'll have another one for president in a couple years -- fair, free, and wonderful democracy we have in this country…. We know that word, 'regime.' It was used by George Bush, 'regime change.' You go to war with regimes. Regimes are tyrannies. They're juntas. They're military coups. The use of the word 'regime' in American political parlance is unacceptable, and someone should tell...[Limbaugh] to stop using it." ~ Chris Matthews.Chris Matthews is one to talk. His memory must be affected by the fact that he's probably still tingling all over when he thinks about The Leader of The Regime, who I like to call His Beatitude.
Byron York sets the record straight.
Matthews is right about one thing: You go to war with regimes. I'll go that far with him on this one.
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About Me
- James Frank Solís
- Former soldier (USA). Graduate-level educated. Married 26 years. Texas ex-patriate. Ruling elder in the Presbyterian Church in America.
Of course, they still won't support it, because they have a fundamentally different philosophy of governance. Whether or not the smaller size, which is clearly an attempt to court the moderate Democrat vote, is enough to see health care's dismal prospects brighten is a big unknown.
Or, were you being sarcastic?
STACIA: I'm relieved.
JFS: What is not fine by me, is people thinking they can effectively oppose marxism while looking for, and celebrating, things they can call "victory enough". Marxists, I can assure you, do not do that; their opponents certainly shouldn't. I was 15 years old when the so-called Reagan Revolution occurred. I've watched Republicans celebrate one "victory enough" after another--and lose more and more ground with each celebration. This isn't a debate in an Oxford senior commons room.
For the record: I don't hold the view which has it that talking civil war is a bad thing, in and of itself. If you are a fan of our secession from the British Empire, then you should be a fan of wars of secession if and when they are necessary. I know I am. However, I don't think it is necessary at present. And I always prefer to let statists fire the first shots.
And I agree that drastic measures will probably eventually be necessary; we do seem to have wandered rather far from our original government. On the other hand, I'd rather not see more people die over politics.
JFS: They wouldn't be dying over politics. They'd be dying over freedom.
STACIA: Maybe. So far, our political system seems to give the closest thing to "bloodless revolutions" (in the form of the switch from Republican to Democrat and back again) so any further change may involve something stronger (more war). Especially since we have gotten to the point where people in general seem to both hate and fear the opposite party; that makes it almost inevitable that our system can't last much longer. I just hope much longer is 50 years and not 5, because I fear the collapse more than I fear the opposing party.
As to what we pay congressmen for, I would be quite willing to see them unemployed: my state capital is much closer than that monstrosity on the Potomac. Most of the business that affects my daily life should rightly be carried on closer to home.
JFS: Ask the Nazis.
JFS: Perhaps it will become clearer to you if you turn your attention from what they DO compromise upon to what they do NOT, ever, compromise upon. For example, they give up this or that detail in health care. But they do not surrender the basic proposition: That government should, and shall, be ever more responsible for providing ever more charity. These compromises are compromises upon specific applications of general (and marxist) principles, never upon the general principle. The general principle is "classlessness". The motivation behind health care reform is not to do something about health care costs. I know this because there is a fundamental question which no one, not even Republicans, ask, or answer: Why do these costs continue to rise, when the general tendency for all other prices, over time, is to fall?
The argument for health care has been: No one should do without health care simply because they cannot afford it. The underlying principle is "classlessness": there cannot be a class of individuals who can get the care they want, and another class who cannot. Compromise is on specific applications of the principle of classlessness, never on the principle itself. Note, that Republicans have gotten themselves into the corner of having accepted the proposition that no one should go without health care, whether he can afford it himself or not. It's about principles and their applications. Marxists never, ever compromise upon the principle. Never. Republicans have done, over and over.
STACIA: I wouldn't say I'm a Marxist but it sure does seem to me like there should be some things that everyone should have access to, and health care is actually one of them. If people who can't afford health care should suffer and die then why did anyone bother to send aid to Haiti, for example?
But I do see what you mean about not compromising on the essentials. It just seems like good politics to me, though. Would Republicans be compromising on their base beliefs if they were in power? Is that really unique to Marxism, or just to any well defined belief system?
Furthermore, inasmuch as any aid was sent to Haiti, I'm all for it, as long as it was private. Saying the government shouldn't do it doesn't mean it shouldn't be done at all. Accepting that there will be classes, including classes of individuals who can and others who cannot afford health care, is not the same as saying those who cannot should suffer and die. The issue is how, and by whom, suffering is properly alleviated.
Do as you please with your money. Believing that government shouldn't do it, is not the same as saying it shouldn't be done at all. Likewise, saying it should be done is not the same as saying government must do it. So, it's not that people who can't afford health care should suffer and die. It's that others shouldn't be robbed so that you can do with the stolen money what you think others should do with it.
With respect to compromise, it is truly only logically possible between people who share the same general principles, and even then only upon the application of those principles. It cannot logically be done between people who do not share the same general principles, or basic beliefs. For example, belief in God is a properly basic belief. Compromise between atheists and theists is not possible. Compromise between Christians and Jews on the person, natures and work of Jesus of Nazareth is not possible. Compromise between Christians on the one hand and Jews and Muslims on the other, on the matter of the Trinity is not possible. It's logic.
On the matter of Republicans compromising on their basic beliefs, the fact of the matter is that, with few exceptions, most Republicans really do accept the same philosophical materialism that Democrats accept. But since Democrats are the most consistently materialist in the application of that philosophy, they will ultimate win all that they want. It's only a matter of time, unless the materialist philosophy is rejected. (Alexandr Solzhenitsyn explained this in his 1978 Harvard address, "A World Split Apart", if I recall correctly.)
STACIA: Something I don't understand is what do you mean exactly when you talk about privatizing health care? I know what it means to have the government take over completely. But except for getting rid of guaranteed health care for the very old and young I don't know how much more private it can get. Is the argument that if the government just didn't meddle at all then everyone would have affordable health care?
Also you say that if I want to help people I should do it myself instead of trying to get the government to do it. But I can barely pay my own health care bills since the private insurance companies have decided that they don't have to actually pay to treat all health problems, just the ones they want to. And I as an individual have no bargaining power to get them to lower prices or cover people who they decide are too great a risk.
I don't want the government to take over everything. On the other hand, it sure does seem like we've been busy proving that privatizing everything with no outside controls does NOT work. Wall street happily fritters away their pretty numbers however they want, and insurance companies happily profit from people without apparently providing any actual health services whatsoever. And because we can only afford employer funded health insurance (in most cases), insurance companies can also refuse to pay for preventative health care knowing that the odds are against them having to pay for the bigger bill later on, because the insured will probably have been forced to move to a other company before then.
First, the major problem with paying for health care is that "insurance" is a poor model. Insurance itself is, in fact (to offer part of the answer to the question I've asked), part of the cause of the price increase. There is nothing to fix about health insurance in order to correct the rising prices. Insurance is one of the things driving up the prices.
Privatization will, however paradoxical to you, begin to push prices down (along with doing away with "insurance" as a way of paying the bills). I prefer privatization firstly because it means freedom, not a solution to all my problems. Of course privatization looks bad; it is made to look that way. Every problem or pretended problem is a prima facie case against it. By your logic, since there are problems with all private endeavors, we should make everything public. But then, there are problems with the public sector, also. It is odd that those problems are not arguments for privatization in the way that problems with the private sector constitute arguments against privatization.
As for your inability to help others because you can barely pay your own bills, this really is a bad reason for the policies you support. The idea that your inability to discharge your duty to the poor justifies the use of force in having others discharge that duty for you really concerns me. What do you and your fellow travelers do for an encore? Mug a rich guy coming out of fancy restaurant to give to a homeless guy you just bumped into but didn't have any money to give? It's preposterous.
STACIA: Well, that was rather a tangent on an issue that's close to my heart. I think the point you make about people being unable to compromise on any given topic unless there is a certain base commonality is obviously true in case of religion. But in politics it paints a rather hopeless picture. How could any political system work, ever, as long as every citizen doesn't share common beliefs? Were the European countries right to kick people out based on religion? Are we going to have to segregate the states based on both religion and politics and make the federal government into the "american union"? (More similar to pre civil war years, and not a bad idea, if people hadn't moved everywhere almost regardless of the state laws because they didn't matter that much.)
JFS: All properly basic beliefs are religious in nature. The distinction you make between "politics" and "religion", allowing for compromise in the former but not in the latter is a false one. Marxist basic beliefs, if they are properly basic, are no less religious than a Christian's basic beliefs. The problem with the system is that it tries to do too much. That was the problem in Europe: the more the system is tasked, the more agreement there must be on basic beliefs, requiring that dissidents be driven out. The solution is to have less done by government, requiring less agreement because people who do agree on basic beliefs can act privately in concert with one another.
STACIA: Now, that is an interesting position. But I guess I still don't understand what you mean by privatization. I'm really not trying to be argumentative. I agree that insurance is a very bad model for health care, especially since with every "thing" that we insure, we can get a new one: car, house, even stuff inside the house. Whereas obviously no one is offering to give you your health back because they can't make any promises. But every time I hear privatization, I understand it to mean getting the government out and letting the market work. Is this wrong? If not, how does this inevitably lead to health insurance going the way of the dinosaur?
As to my differentiation between religion and politics, I wasn't trying to say that Marxism isn't a religion. I guess what I was thinking is that religions supply the principles but politics is about applications. And the application of different principles can be similar on occasion, unless of course if one or more religions is particular. (If we had to legislate who would get into heaven Christians would clearly throw a cog in the works.) But ideally, people follow their principles and elect officials that have, if not the same principles exactly, then at least the same ideas for applying their principles. Hence I can look at health care, as a Christian, and think that my religion says I'm supposed to take care of the downtrodden, and think if maybe health care reform is needed, possibly with the government regulating a few things at least, maybe with a competing government option to keep the insurers "honest". And that might look similar to what Marxists want to do, but does that make me a Marxist? (or maybe just horribly mistaken about the best way to follow my principles. Also an option.)
JFS: It makes you mistaken about the best way to follow your principles because it entails your feeling groovy about using force to compel others to discharge what is really your duty to the poor.
STACIA: Well, I'll have to think some about that.
JFS: You do that. Meanwhile I identified four main themes in what you said even before all that. I'll try to respond to reply to each.
I mean precisely what you say when I use the term 'privatization': getting the government out and letting the market work. Letting the market work means that the only people who really need to be involved in any exchange are buyers of good and services and sellers of goods and services. We are taught to fear this because supposedly letting buyers and sellers negotiate means that sellers will always exploit buyers. And whenever we suggest that the government's hands in the market drives prices up, we get laughed at. But it costs money, over and above production and marketing, to abide by regulations. It ought to be intuitive that more amd more regulation means more and more price increases as organizations must hire more and more people just to remain apprized of regulations, and spend more and more money on things unrelated to producing and selling their goods and services. And then there are the fines for failure (intentional or not) to meet regulatory standards. But never mind all that, which is just over-view. In terms of health care, I can list four specifics which clarify what I mean by privatization:
1. Eliminate all licensing requirements for medical schools, hospitals, pharmacies, and medical doctors and other health care personnel. Licensing is a way for those already in a profession to limit entrance by others into the profession. Entry into the health professions is costly. Robbing practicioners of their "gate-keeping" privilege would almost instantly increase the number of practitioners and, thereby, competition among practicioners. Increasing the supply of anything, including the number of people practicing a profession, reduces the value of it, which results in falling prices, as more practicioners must "chase" fewer dollars. Furthermore, a greater variety of health care services would appear on the market, since buyers would be free to decide for themselves what "health care" means. For some, it may mean visiting a voodoo witch doctor. For others it may continue to mean seeing a traditionally trained physician (who knows he must compete in a market blown wide open because he has been deprived of his gate-keeping power). There would be no such thing as the "unlawful" practice of medicine.
2. Eliminate all government restrictions on the production and sale of pharmaceutical products and medical devices. This means no more Food and Drug Administration, which presently hinders innovation and increases costs. Toyota demonstrates that while the bottom line may occasionally result in a loss of quality, ultimately no company realizes long-term benefits from harming its customers. The same goes for pharmaceutical companies, who spend billions in research and development and then may wait years before they can begin to try to make their R&D money back. This problem is further compounded by the fact that the patent could expire before the FDA approves the drug in the first place! As C.S. Lewis observed: First we castrate the gelding then order it to be fruitful. (Frankly, I think we should do away with patents. Intellectual property is problematic and amounts
to a government-supported monopoly. But I digress.)
3. Deregulate the health insurance industry. Private enterprise can offer insurance against events over whose outcome the insured possesses no control. One cannot insure oneself against suicide or bankruptcy, for example, because it is in one's own hands to bring these events about. (At the risk of seeming self-promotion, I posted to my blog sometime ago why insurance is a poor method of paying bills, here.)
4. Eliminate all subsidies to the sick or unhealthy. Subsidies create more of whatever is being subsidized. Subsidies for the ill and diseased breed illness and disease, and promote carelessness, indigence, and dependency. If we eliminate them, we would strengthen the will to live healthy lives and to work for a living.
Moving to your second theme, it is premature, at this point, to talk of a government option keeping insurance companies honest. Presently, they are not exactly permitted to keep each other honest. Many states have laws which prevent out-of-state insurers from selling insurance within their borders. To stifle private competition, and to then talk of giving competition by a government option is a sick joke. You have the spectacle of insurers, who cannot even compete with each other in every possible market, having to compete with an entity with unlimited resources -- not to mention the power to tax and regulate its competitors. To talk about the failure of market forces when such forces are not permitted to work is just silly.
To your third theme, you may compromise with marxists at your leisure, and it doesn't make you a marxist. But if you don't mind my saying so, it does make you a bit naive. The marxist isn't playing the same game you are. You are attempting to discharge your Christian duty to the poor, trying to solve a particular problem: health care. Your game is a practical one. He is not trying to solve this or that problem. He is pursuing the "right" side of history. His game is theoretical. Marxism has an entirely different conception of freedom itself; and it is irreconcilable with the notion of freedom embodied in the Declaration of Independence and the Constitution -- irreconcilable.
Finally, I think we should question the notion that we can discharge our duty to the poor by means of government programs. I do not find that God has authorized us to employ the government to take peoples' money for our charitable purposes.
STACIA: Those four things do seem like they would lower prices, but many times at the expense of safety.
JFS: Than accept the fact that part of the high cost you complain of is caused by the pursuit of your vision of safety. And deal with it.
STACIA: Perhaps. But completely eliminating licensing for doctors would make it incredibly hard to make sure you've found a good one. Unless you're talking about making it optional.
JFS: You would find a good doctor the same way you find anything else: ask a friend, "Who do you see?" Also, not licensing is not the same as not certifying. But certification is a private matter. Mechanics are certified, not licensed (well, not in all jurisdictions); and they are certified by private, professional organizations. The same should happen with physicians. Then it would be a matter of the actual performance of these certified professionals. In the case of malpractice, the certifying organization would, and should, also be a party to a suit. When was the last time a state was sued because a physician it licensed was guilty of malpractice? Unlike The State, a private certification organization wouldn't be able to deny permission to be sued.
STACIA: Well I still don't see how this is going to put insurance companies out of business
JFS: Insurance companies don't need to be put out of business. They need real competition. But in terms of health care it alleviates the need for insurance as a way to pay bills. With lower prices, the probability of which you've already acknowledged, there is very little for health insurance to do except pay expenses related to catastrophic illness and does it more efficiently by enlarging the risk pool -- the way insurance works for all the other things we insure.
STACIA: If the FDA is taken out of the picture, who pays for the studies that determine whether a medication is actually helping or hurting a person? And what is to stop it becoming like the illegal drug industry where I have no idea what is in the medication I buy? (I'm sure you want to make all drugs legal and I'm not against you there, I'm just saying that I don't think legalizing all drugs will make them definitely more safe.)
JFS:The pharmaceuticals themselves, or possibly their insurance companies, will pay for studies that determine whether a medication is actually helping or hurting a person. It's a simple matter of managing liability. Pharmaceuticals are no different than anyone else. They must cover themselves against loss to due product failures. Insurance companies assess risk and write policies on the basis of their risk assessment. In order to assess risk, they will have to require testing of the products.
Illegal drugs are unsafe precisely because they are illegal: you have no legal recourse if illegal drugs do you any harm. (For one thing, who is going to test an illegal drug?) In order to get your day in court, you have first to confess to using an illegal substance. This is not the case with legal drugs. By presenting a drug to the buying public, a company implicitly warrants its product, hence the need for liability insurance. This leaves it open to legal action in the case of harm. This is why every now and then companies get sued, or issue recalls. There is no profit in killing your customers. You want to prevent harm. Fine. But that is part of the reason for the costs. You can't have it both ways, favoring policies which drive up costs, and prices, and at the same time complaining that costs and prices are high.
JFS: Are you kidding me? No one would know what to eat?
STACIA: No, I'm serious.
JFS: What the hell do you think people did before they formed governments to tell them what to eat?
STACIA: They died.
JFS: I have bad news: Even with the government to tell you what to eat, you're going to die. Accept it.
STACIA: But I'll live longer than if the government didn't tell me what to eat.
JFS: May you live forever. Anyway, you labor under the notion that, apart from government, companies would see a profit in killing their customers. But, again, the best motivator for labeling is not government, but loss prevention, the need -- the market-driven need -- to limit liability. By virtue of insuring food manufacturers, insurance companies have a vested interest in requiring their clients to label their products. But even if not, companies would still have an interest in labeling for the same reason: limitation of liability. If it is known that people with allergies to peanuts can die, and a company offers no warning that its product contains peanuts, it stands to lose a great deal in court, where a jury, applying the "reasonable man" standard would no doubt find for the plaintiff, deciding that a reasonable man, exercising due diligence would warn customers of potentially fatal products. (On the other hand, a jury might find for the defendant, deciding that someone with a deadly allergy should take responsibility for his own life and find out for himself what is in the product. But I doubt that.) You seem to believe that apart from government requirements, or "goodness", companies would see, and realize, great long-term profit in killing their customers with impunity. Ironically, it is government which can kill, and rob, its customers with impunity.
STACIA: I agree that God did not mandate us to use the government to solve these problems, and I wish I saw another way to make things better. I am not convinced that taking away subsidies will magically help people get jobs and be productive (plenty of very smart, useful people have been out of work for a long time during this recession) and it certainly won't help them live healthier when the healthy food is more expensive than the cheap food and the poorest people also have the least time to cook or exercise.
Has any country ever de-regulated health care like this? Or never regulated it all in the first place? Because as you can probably tell the whole idea scares me. Maybe it would scare me less if it didn't look like what we're going to get anyway if the government completely collapses somehow.
If something has to be subsidized in order for people to be employed, then there must not be enough demand for the object of the subsidy. Some very smart, useful people may be unemployed because they had themselves trained and educated to do work for which there is no longer sufficient demand. And again, you favor policies which increase the cost, and the price, of food, then you complain about the cost, and price, of food.
If we're all standing around waiting for some country to be the first to deregulate health care, then I guess it won't get done. Too bad Isabella and Ferdinand didn't ask, rhetorically, "Has any other country ever financed a round-the-world exploratory fleet?" Who knows how much better off native americans would be. More importantly, here is an historical fact of life: Every civilization collapses, so stop worrying and living in fear. Begin today to wean yourself from a government which will inevitably collapse -- whether in your time, or your great-granchildrens' time. When it does so, you, or your great-granchildren, being dependent upon it, will be unable to cope. Why would you want to hitch the wagon of your life to that which is doomed?
STACIA: I was especially interested in your examples. There may be no long-term profit in killing your customers, but there's even less in admitting it. For example, Toyota actually had an internal meeting in which savings from not recalling cars were praised. And then the government got involved. I don't remember the Jack-in-the-Box incident very well, but I suspect it was a government agency that tracked down where all those sick people were coming from. And how often do companies admit that something is wrong with their food before the FDA forces a recall?
You say it's good for business to tell people when allergens are in food. If so, why did the government have to mandate allergen labelling on food? Why do I have to call almost every company (or find someone who has) to find out if their product has barley or rye in it (which ingredients make at least 1% of the population very very sick)?
And if the pharmaceutical companies just want to make us all better, and if allergen labeling makes so much business sense, why is there not a single pharmaceutical company that has allergen labelling on their products? Wheat is one of the top 8 allergens and they are not required to list if it was used as a binder. So they don't.
I'm not all for the government option. In a lot of cases what I really want is the government watching out for us, making sure that in their search for the bottom line, companies don't hurt or kill us (or overcharge us because the wealthy can afford it and the poor don't matter anyway, toward their bottom line).
Is there some coherent middle point between "businesses will always do the right thing" and "the government should just (try to) do everything important"?
You may trust the government too much; I'm sure I think you do: you are talking about trusting the use of force. But you are incorrect to think that I trust The Market too much. There is nothing for me to trust: Unlike The Government, The Market doesn't really exist. The Market has no central, controlling intelligence; it is simply the spontaneously-ordered, sum total of activities performed by free people, Buyers and Sellers of goods and services. I do not trust a sum total of activities. What I trust, when it comes to The Market, is that the other players are also desirous of satisfying their wants, at the lowest possible cost to themselves. I respect this, because I'm doing the same; and so are you.
On the other hand, The Government does exist; therefore, you have something to trust.
Toyota was going to have problems whether the government got involved, or not. Your argument seems to be that had the government not got involved Toyota would have continued making profits killing its customers. They would not have done. The fact is exactly as I said: There is no real, long term profit in killing your customers. And it also remains true, as I said, Toyota is discovering that. You haven't refuted my assertion. At best, you've shown only that Toyota, which used to know better, no longer does. Had the government not got involved, insurance companies would have done. As claims pile up, insurance companies begin investigating. Their investigations would have led to the conclusion that Toyota was liable for damages. This happens everyday, without help from The Government.
It may have been a government agency that tracked the deaths back to Jack-In-The-Box. But again, an insurance company could have done even better. Loss prevention may not sound very high-minded, but it is quite the motivator, a motivator government agencies don't have. Funny you should have mentioned the FDA previously. At the time of the Jack-In-The-Box E. coli disaster, the FDA required hamburgers be cooked to an internal temperature of 140 degrees F, not hot enough to kill E. coli, but still the temperature at which Jack-In-The-Box cooked its hamburgers. A government agency may have found Jack-In-The-Box, but it was the FDA which told Jack-In-The-Box how hot to cook burgers. Jack-In-The-Box almost went bankrupt. The FDA is still in business. (You'll recall I said something about only governments being able to kill their customers with impunity.)
The fact that something is good doesn't mean people do it. It is good not to smoke, yet people smoke. And this, despite, a government-required warning on cigarette packs. You're claiming counterfactual knowledge: If the government had not mandated such labels, they would never have come about. Saying labels are good, and that businesses can recognize greater, long-term satisfaction of wants (especially if they start being sued for damages) is not the same as saying they will do so in accordance with your or my time preferences. Your rule of thumb seems to be that if they don't do it by the time you would like them to do they never will do and it's time to employ force in getting what you want.
I never said pharmaceutical companies just want to make us all better. They want what we all want: to satisfy wants, to increase utility, to make profits. What I said was that it is in their long-term interest to do such and such. And it is, just from a loss prevention standpoint. Their recognition of that is another matter.
You may want the government watching out for us, trying to make sure that companies don't hurt and kill us. But let's be clear that what you want is a police state. You want a government not which will punish wrong-doers, but which will prevent wrong-doing in the first place. But the government cannot keep us from being harmed; and it only causes more trouble by trying to do. It can really only respond after harm has occurred. You have already tacitly acknowledged the role The Government plays in increasing costs, and therefore prices. Yet, you continue to want Prevention rather than Justice.
Your notion that "over-charging" is done by companies precisely so that the poor cannot buy them proceeds in ignorance of how selling price is determined by Sellers. Briefly, in order to set an appropriate price, a Seller has to able to predict the prices he himself will pay in the future for the goods he himself must purchase in order to produce in the future. Price is never about Today; it's always about Tomorrow. The selling price is based on estimates of future costs per unit. (Some boutique type operations may set prices based on a perception of what their intended clientele are willing to pay. But that is a different matter.) There is a market clearing price for all goods and services. If health care could cost less, it would, not because I trust The Market, but because it's a law of economics.
Since I don't believe "business will always do the right thing" or "the government should...do everything important" I don't need to find some coherent middle point between the two. "Important" is a matter of subjective judgment. We don't all value the same things, or to the same extent; so the government will first dictate what is "important" by forcing one person's, or group's, subjective notions of "important" upon the rest of us. Let the government take action after a harm has been alleged. That should keep it busy enough.