Tuesday, June 14, 2011

Collective goods versus goods

By declaring medical care to be essentially a "collective good," Paul Krugman and others are saying that the state should take over the creation and distribution of the good and treat it as something that should be limited, but the limited distribution to be decided by the state. In other words, Krugman does give a back-door nod to the Law of Scarcity, but at the same time claims that medical care is a "special case" that should be guided by government regulators.

In reading the comments on yesterday's post, I am struck by the outright hostility by some to ANY kind of entrepreneurship in medical care. In other areas of the economy, entrepreneurs have managed to bring resources from lower-valued to higher-valued uses, but somehow, medical care is different. Not only do entrepreneurs artificially push up real costs, according to at least a couple of the people making comments, but their very presence in medical care is outright evil.

If medical innovations actually raise real costs, then I suspect that what these commenters are saying is that we need to go back to medical care that existed perhaps when I was a child, when we worried about polio, measles, whooping cough, malaria, rheumatic fever, mumps, and lots of other diseases. We should not have MRI's, arthroscopic surgery, (God forbid lasik surgery, given that people pay out-of-pocket for that), CAT-Scans and a host of other things that simply were not available when I was hospitalized in the 1950s.

Instead, we should have state-provided and state-driven care that is determined by panels of "experts" who apparently are more wise than anyone else. I'm sure that will create a wonderful state of care, and it will be cheaper. (Krugman happily called them "death panels" and recommended them highly -- using that term -- but now wants us to believe that only critics of KrugmanCare are using the term.)

In other words, if I read the commenters and Krugman correctly, we need more people to die sooner, or be crippled by disease and inadequate (but cheap) surgery techniques. And if anyone wishes to engage in medical entrepreneurship, well, that person should go to prison for life.

60 comments:

Bala said...

Sad, yet true :(

Anonymous said...

Geez Anderson, your ignorance continues to amaze me. Just consider the following -

1) no one is advocating for the elimination of private medical care. If you want to pay for something out of your pocket you can.
2) Innovation in medical technology does not necessarily originate in the market place but the university. MRIs were developed by the University of Aberdeen. Jonas Salk was not a private entrepreneur. Education, funded by the state, has been a central factor in medical innovation.
3) The "scary bureaucrat" argument is just as empty as the soulless capitalist argument. There are actually experts, nothing is ever set in stone forever, and political process (i.e. democracy matters).

William L. Anderson said...

Please. If government pays for all medical care and regulates everything it does, then there is no "private" medical care.

Furthermore, the advocates of "single payer" want it to be illegal for anyone to pay any kind of fee for medical care. (That perpetuates inequality.)

So, there is no private innovation in medical care? It all is state-controlled already? I had no idea.

And, yes, look at the experience of people in other countries that have to have all procedures approved by medical boards. Anytime one separates people from the consequences of their decisions, you see the "faceless bureaucrat" at work.

American Patriot said...

Prof. Anderson:

responding to such nonsense (by Ananymous) is a waste of time.

He and his ilk cannot see reality that surround them (from Canada, to U.K., to you name it)
They still parrot the same B.S. president and his allies parotted about this not being a take over.
Anyone with an ounce of common sense would know that is not so.

Already over 35% of employers have indicated in polls that they plan on dropping their private coverage once O'Care goes fully in to effect. As private insurance pool shrinks, they will never be able to survive in the long run. Obama knows this (thus his comments that he is really a single payer advocate but you have to get there indirectly)

All this about government driving innovation is beyond laughable. Of the ten most significant medical innovations, only one originated in Europe (Sweden). Where is all the innovation coming from the state run euro systems?

No, debating these progressives is like debating a 5 year old.
They can't even man up and admit they are for socialized medicine (or socialism for that matter)

Anonymous said...

Wait, you worried about malaria?! Where did you grow up Mr. Anderson?

Mike M said...

Government's purpose is to preserve liberty, not define and administer it.

AP Lerner said...

"anyone wishes to engage in medical entrepreneurship"

Your ideology still prevents you from getting it, Mr. Anderson. There is no such thing as 'medical entrepreneurship'. Medical advances take years, even decades to realize. Nobody in there right mind funds a risky venture for decades with a completely unknown return on investment. Your ignorance towards capital markets and capital allocation is clear as day with this comment.

Most reasonable folks recognize that the very government you despise (and rely on for a paycheck for) funds the more important and relevant medical devices, drugs, etc. Sure the private sector can come up with good erection drugs, but who cares?

Your ideology also prevents you from seeing the obvious market failures in the delivery care. I know this is a hard pill for someone with generous medical benefits to swallow, but most reasonable folks don’t believe in medical services being auctioned off to the highest bidder like a toaster oven, especially when all you have to do is look north or look east and find better care being delivered more efficiently and effectively.

Of course, your intellectual simple mindedness will immediately take you to the conclusion of 'gee, if government control for medicine works so well, then maybe they should intervene with toasters as well'. And at this point I become very sad for the students of Frostburg

"Krugman does give a back-door nod to the Law of Scarcity"

First, I find it comical how you capitalize law of scarcity like it is an amendment in the Constitution or something. Second, he gave more than a back door nod. You may not agree with Krugman's method of allocating the scarce resource, but to claim he ignores scarcity is a flat out lie.

"Government's purpose is to preserve liberty, not define and administer it."

And I am thankful my government preserves the liberty of those born in this world to weak to defend for themselves. But I know, morals are irrelvant in your model, so carry on.

Anonymous said...

There you did it again! Your point of view is so aboslutist you fail to see anything that looks like a mixed economy.

No one said there is no private medical innovation, only that much of what you claim to have been private medical innovation (or imply) was in fact the result of public investment into research and educational facilities.

If you think single-payer systems obliterate private practices, you need to do a lot more research about such systems around the globe. But then again, I never said single-payer, and the AHA maintains a private system.

And no. People in other countries do not have to have every procedure approved by some medical board. The facts on satisfaction with single-payer delivery, wait times, health results, costs, etc etc of nearly every mixed or single payer system are clearly evident. That you choose to ignore this evidence for some a priori false rationalization that government intervention equals tyranny and inefficiency across all sectors blinds you to that. I mean Krugman has recently linked to extensive research collected by Ezra Klein on this (http://theincidentaleconomist.com/wordpress/in-defense-of-canada/).

So puh-leaze get yourself straight. Are you going to claim again that there are only 3 MRIs in Toronto again?

Anonymous said...

@AP Lerner - Well there is one area of "Medicine" where there has been private innovation - consumer drugs! Yeah!!!

Anonymous said...

American Patriot,

Yup, the guberment come to take yer guns away. Gubernment take my freedom. Idiot. You don't even understand the meaning of liberty or freedom except in its most naive, simplistic, and ultimately dangerous form.

BTW -

Artificial Heart - first developed and tested at Harper University Hospital at Wayne University.

MRI - developed at the University of Aberdeen

Penicillin - discovered by Fleming at St. Mary's Hospital Medical School

X-Ray Machine - developed by Professor Roentgen in 1895.

Ultrasound - developed at the Naval Medical Research Institute.

Dialysis - invented by Willem Kolff (along with the artificial kidney) @ Brigham and Women's Hospital and University of Utah (where he later helped make the artificial heart).

Nanomedicine - funded mostly from the NIH.

EKG - developed at the St. Bartholomew Hospital

Hmmm. Guberment help medicine.

Bob Roddis said...

Wow. The German government developed some excellent rockets and the jet airplane. Our government developed the H-Bomb.

I was born at Hutzel Hospital, associated with and around the block from Harper Hospital and I got my second law degree from Wayne State. I guess you told us.

Methinks said...

Nobody in there right mind funds a risky venture for decades with a completely unknown return on investment.

Are you crazy? Of course people take these kinds of risks with their own money every single day. These risks are the heart of entrepreneurship and speculation. The risks may be high, but they are not incalculable.

It is you, not the professor, who is ignorant of capital markets.

Most reasonable folks recognize that the very government you despise (and rely on for a paycheck for) funds the more important and relevant medical devices, drugs, etc.

It does not follow that because government meddles in the most banal decisions of our daily lives (let alone important things like medicine) that we benefit from this meddling.

...but most reasonable folks don’t believe in medical services being auctioned off to the highest bidder like a toaster oven

I confess, I have not ever been to a toaster oven auction. But, what you suggest is infinitely worse. Someone must pay for the medical care provided. If it is not the recipient, then you must force someone else to pay for this man's medical care.

Using one man for the purposes of another is nothing more than slavery. So, your remedy to achieve the ends you desire (to free yourself of the obligation of paying for your own consumption) is to enslave another person. Excellent, Simpleton. Just great.

ekeyra said...

AP

"I am thankful my government preserves the liberty of those born in this world to weak to defend for themselves. "

You mean like in Iraq, afghanistan, vietnam, cambodia, pakistan, blah blah blah you get the picture. You are either being extremely dishonest or you are truly ignorant to the state of affairs concerning your government.

Mike M said...

Wow AP you have possession of insight that would rival a deity. You are able to discern my morals for a blog statement. You are amazing.

Disagree with Krugman's method of allocating of allocating a scarce resource? What right minded person wouldn't disagree. It's an affront to liberty. It is offensive. Then again you have no clue of liberty. How can you when you advocate the imposition of the will of one over another.

AP both you and LK are in the same leaky boat devoid of a proper philosophical foundation that is based on individual liberty and free markets. I don't care how smart you are or think you are. Your intelligence is completely worthless when it rests upon a false premise, never checked, sealed in an echo chamber.

You would benefit from a self imposed time out and revisit your assumptions. But of course you wouldn't because you love the sound in your hallow echo chamber.

TonyFernandez said...

Public goods have to be provided by the government, that is why they are public goods. If they weren't public goods, then they wouldn't be provided by the government.

Tautologies are fun.

Methinks said...

Tony, I'm not as young and quick as I used to be, so I'm assuming you're kidding, yes?

You do know that a public good is a good from which one cannot be excluded and is also non-rival. So, for instance, fireworks and the air you breath are public goods. Some public goods are provided by government (usually poorly), but that the government provides a good does not mean it is necessarily a public good.

Anonymous said...

O Mike M, talking about false premises.

First, neither you, ekeyra, or roddis have addressed the facts. When they don't jive with your philosophical assumptions (that government intervention=tyranny that markets=freedom) you choose to ignore them. For people who live in the real world the reality is that government investment facilitates medical innovation, that single-payer and universal coverage mixed systems reduce costs, have better health results, and higher levels of satisfaction with health care. Square that.

And with regard to your "philosophical" foundations, your definition of individual freedom is utterly naive, simplistic, and ultimately dangerous. Liberty is always bounded, and shortsightedness with regard to the impact of multiple and unbounded individual decisions cares little about the longer term, and inevitably much harsher violation of liberty that is sure to come.

American Patriot said...

I never cease to be amazed by progressive intellectual midgets (I know, it is an insult to midgets) trying to define liberty to fit their collectivist ideals.

Man, if any of you were in my H.S. in Switzerland 34 years ago, you'd flunk out for lacking intel. integrity and inability to think critically. But you are lucky that the school system today, in the U.S., is effectively a factory for indoctrinating likes of you in cultural marxism.

You think government helps medicine? I agre with your point as far as state run medical schools are concerned. They do valuable research. That is a far cry from federal government meddling in.
(BTW the best medical research schools are private like Harvard, Johns Hopkins, Yale)
Of course you did not mention government's role in delaying drugs and their part in the average new drug costing well over a billion to develop.

Mike M said...

Square what? You've made statements. Nothing more. Congratulations you can now do what 6+ billion other people on this planet can do.

I'll tell you what is dangerous. People that feel it is their right to impose their wisdom on others and define the parameters of their life. Sound familiar?

What right do you have to define the terms of my healthcare? Who you you or your fellow statists think you are? You think if 51% of you vote to impose your will on my life it's ok? Democracy unrestrained by a constitution securing the rights of the individual is nothing but mob rule in another form.

You understand nothing and your boring

ekeyra said...

I always love the line of reasoning that states we should have less liberty because having more liberty will lead to less liberty. Even if that were true, wouldnt it be nice to enjoy it for the moment before the crackdown anyway, instead of assuming the crackdown is inevitable?

Also government intervention does not equal tyrrany, it equals distortion. Which is what we are discussing. You claim the free market drives up medical costs and government spending brings them down, yet you admit we are not in a free market enviroment. So where does your data of the behavior of medical costs in a free market come from?

The facts are:

1 Medical liscencing is a cartel, artificially limiting the avaible numbers of medical professionals and driving up costs.

2 FDA approval can take a decade or more to pass. Regardless of the questionable mark of quality that bestows on the products that pass it, most manufacturers are not able to market their products without it. Also intellectual property rights, in the form of pharmaceutical patents, enforced by government, also drives up costs of medications tremendously.

3 If people are not directly confronted with the cost of their healthcare, ie. if they arent paying for it, they are not likely to assess what is best for them and take the approach of "give me everything on the menu". You dont think THAT drives up costs?

JK said...

AP Lerner said: "but most reasonable folks don’t believe in medical services being auctioned off to the highest bidder like a toaster oven."

What consumer bids on toaster ovens? None of them. Are there hoards of deprived consumers going without toaster ovens because they were all consumed by a select few of the highest bidders? No. Why?

In a market driven economy anybody can go into a retail store and buy any kind of toaster over they want at the price that suits them. Markets create a variety of options and drive efficiencies that lower prices and/or increase value over time. Are you denying this is true, or are you claiming the economic principles that apply to toaster ovens do not apply to health care. Is it your claim that centrally planned economies to a better job of allocating resources and driving efficiencies that lower prices and/or increase value over time than market economies? Can you point to any specific historical examples?

Before you start extolling the virtues of health care systems "to the north and east", you need to make sure you are comparing the same basket of goods. You are not. Health care in Canada rationed by extremely long wait times for procedures compared to the U.S., or by the unavailability of certain procedures at all. Costs are controlled by providing less health care over a given period of time, either through increasing wait times or by denying procedures outright. The basket of goods is not the same.

For example, Danny Williams, the former premier of Newfoundland, choose to come to the U.S. for heart valve surgery. Why did he make that decision if the Canadian health care system is so superior? He reportedly said, "My heart, my choice." Why did he choose the U.S.? He claimed the surgery was not available to him in Newfoundland, and that he wanted to have it performed by someone who does it "three or four times a day, five or six days a week." Why did he have to go to the U.S. to find a doctor who operates that frequently? Why didn't he go to Toronto or Montreal?

Will said...

Professor Anderson, this is one of the least intellectually honest posts I have read in a long time. Your description simply does not match any advocated health system, nor does it match the health system of any country in the world. Its absolutely ludicrous.

Between this post and the post from June 6th (in which you still haven't corrected your falsehoods!), I'm worrying about the overall quality of scholarship you hold your posts to.

Will said...

"You think government helps medicine? I agre with your point as far as state run medical schools are concerned. They do valuable research. That is a far cry from federal government meddling in. "

Yes, governments help medicine. On top of providing the low-cost loans needed for the training of medical professionals, they provide the money to study effectiveness of new treatments, they provide money for the basic research that leads to new techniques and treatments.

The overwhelming majority of people I've treated would have died far younger without government intervention.

"BTW the best medical research schools are private like Harvard, Johns Hopkins, Yale"

Neither Harvard nor Johns Hopkins, nor Yale could survive without government grants. No research institution could. The funds for their research comes from government, not private money.

"Of course you did not mention government's role in delaying drugs and their part in the average new drug costing well over a billion to develop."

The basic discoveries needed for 100% of the drugs developed by pharmaceutical companies was done in research universities. IF ALL THE RESEARCH REQUIRED FOR A DRUG, from gene discovery to actual targeted drug were done by the pharma companies, the cost to develop new drugs would be in the hundreds of billions.

Further, without patent protection, there would be no way to make any money from any drugs.

The cost to get drugs licensed is an absolutely negligible fraction of the cost- the majority of that money is spend on the research. Clinical trials are expensive, research is several orders of magnitude more expensive.

Its crazy to me how many people who have never worked in healthcare or research think that they have special insight because they've read Mises. The real world doesn't fit some apriori axioms.

TonyFernandez said...

Methinks, I was just arguing as those in favor of government provision of public goods argue. There is nothing that the private sector can't provide that the public sector currently provides. Nothing.

LK said...

Not only do entrepreneurs artificially push up real costs, according to at least a couple of the people making comments, but their very presence in medical care is outright evil.
If medical innovations actually raise real costs, then I suspect that what these commenters are saying is that we need to go back to medical care that existed perhaps when I was a child, when we worried about polio, measles, whooping cough, malaria, rheumatic fever, mumps, and lots of other diseases. We should not have MRI's, arthroscopic surgery …


A prize example of the straw man fallacy. Where is Krugman denying that medical innovations raise real costs in the long term?
And your implied idea that these medical advances are the result for the private sector is also ignorance:

“early in its development, research into magnetic resonance imaging (MRI) was led by academic scientists based in the United Kingdom. Some of them were physicists interested in imaging phenomena, whereas others were medical researchers interested in clinical diagnostics. The British government supported both kinds of research, which have resulted in one of the most important recent advances in medical technology”


Capitalizing on investments in science and technology.

EMI entered the MRI market in 1976 with grant support from the British government. British government support also later benefited Picker International and M&D Technology, respectively, when they decided to enter the MRI market. Three firms (Bruker, Philips, Siemens) received grants from the West German government but did so only after having initiated MRI program development with company resources ... All of the small, single-product firms emerged as a result of university-based R&D

Technology in American health care, p. 73.

And as for polio:

“Under the 1955 Polio Vaccine Act, Congress provided the funding to make sure every child in the country received the vaccine. Congress also required the federal government's chief health officer, the Surgeon General, to set standards for the testing and distribution of the vaccine to millions of children without regard to their families’ ability to pay .... Since the 1950s when the federal government began distributing vaccines, the incidence of most childhood diseases has fallen by 95 percent or more. The number of polio cases dropped from 15,000 a year in the 1950s to zero today, while German measles has virtually disappeared from the Western hemisphere.
Paul Charles Light, Government's greatest achievements, p. 82.

LK said...

Correction:

Where is Krugman saying that medical innovations raise real costs in the long term?

LK said...

"In other words, if I read the commenters and Krugman correctly, we need more people to die sooner, or be crippled by disease and inadequate (but cheap) surgery techniques. And if anyone wishes to engage in medical entrepreneurship, well, that person should go to prison for life."

The private sector is free engage in medical entrepreneurship in the mixed economy, but the reality is that government funding and R&D is a major reason for medical innovation:

“As hard as it is to believe, only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). The great majority of "new" drugs are not new at all but merely variations of older drugs already on the market. These are called "me-too" drugs. The idea is to grab a share of an established, lucrative market by producing something very similar to a top-selling drug. For instance, we now have six statins (Mevacor, Lipitor, Zocor, Pravachol, Lescol, and the newest, Crestor) on the market to lower cholesterol, all variants of the first …. To be sure, it is free to decide which drugs to develop (me-too drugs instead of innovative ones, for instance), and it is free to price them as high as the traffic will bear, but it is utterly dependent on government-granted monopolies—in the form of patents and Food and Drug Administration (FDA)–approved exclusive marketing rights. If it is not particularly innovative in discovering new drugs, it is highly innovative—and aggressive—in dreaming up ways to extend its monopoly rights. Drug industry expenditures for research and development, while large, were consistently far less than profits. For the top ten companies, they amounted to only 11 percent of sales in 1990, rising slightly to 14 percent in 2000. The biggest single item in the budget is neither R&D nor even profits but something usually called "marketing and administration"—a name that varies slightly from company to company. In 1990, a staggering 36 percent of sales revenues went into this category…

Angell, M. 2004, “The Truth About the Drug Companies,” The New York Review of Books 51.12 (July 15)
http://www.nybooks.com/articles/17244

And R&D funding for science and engineering is largely done by the government in US universities and colleges, even in the private ones:

“Private institutions spent $16.6 billion on R&D in FY 2008, with 72% funded by the federal government.”

Ronda Britt, “Federal Government is Largest Source of University R&D Funding in S&E,”
National Science Foundation, September 2009, p. 5.
http://www.nsf.gov/statistics/infbrief/nsf09318/nsf09318.pdf

Anonymous said...

American Patriot

You have still not addressed the facts about government provided and mixed health care systems.


You just invented new ones - even private universities like Johns Hopkins, Harvard etc. receive large amounts of federal assistance and funding from the NIH. Nearly all state-university research institutes are also funded by the NIH.

I also like how you conveniently shift the level of analysis. You start with a premise that government provided health care and medical innovation is untenable, ineffective, or morally repugnant. Then you shift to say that its ok if happens at the state level. So what is it? Is this really an economic problem or a constitutional problem about federal authority?

And about the government's role in elevating drug prices. Hey, it wasn't libs or dems who passed the Prescription Drug Act that actually limited competition.

Anonymous said...

Mike M, you continue to fear monger and not address the facts. No one here has addressed the facts about medical care costs, innovation, customer and doctor satisfaction in the US compared to the rest of the industrialized world. It conveniently shifts to either an argument about federal vs. state authority or some silly argument about the government telling me what to do.

Well, I'm sorry that someone tells you what to do, but by your own definition of freedom there should be no traffic lights. Or seat belts. Or any law for that matter.

Regardless, no one is saying you cannot get your own healthcare. The debate is about what the government should provide. GO ahead and get that hair transplant if you want!

Mike M said...

What fear monger? Do you just make stuff up or do you scare that easy?
What facts? And by the way if you are going to draw comparisons between the US and other countries make sure to adjust for cultural and demographic differences to provide proper context. Or do you approach these matters like every other simpleton statist?
Speaking of simpleton, traffic lights do not equal regulating my health care. It appears you are unable to discriminate in types of laws. BTW seat belt laws, while legitimate issue for the States, should not be mandatory. The government is not your parent (well maybe yours) and has no role in preventing people from being stupid.
"silly argument about government telling me what to do"?
I'm sorry you hold liberty in such low regard. You know nothing of the historical relationship of government and people.
Leave the rest of us alone.

AP Lerner said...

"Are you crazy? Of course people take these kinds of risks with their own money every single day."

Uh, private capital does not fund cancer research at Johns Hopkins, government grants due. I'm not talking about entrepreneurs like Mark Zuckerburg. I'm talking about long term projects that take 20 to 30 years to generate any kind of return that private capital would never touch. Unlike Mr. Anderson, you do have the ability to differentiate the two, right?

"You mean like in Iraq, afghanistan, vietnam, cambodia, pakistan, blah blah blah"

What the hell does this have to do with an American born child with a disease? I guess in your world, we should let the free market determine its fate: death. Are you a student of Mr. Anderson? Stop mixing apples with oranges.

Bob Roddis said...

These statist commenters resolutely and affirmatively refuse to understand the core Austrian concept of economic calculation which is the primary reason the government cannot be economically knowledgeable about its actions.

It's silly to "argue" with such people.

Mike M said...

AP, Not all private capital players are clones. There are some that deploy capital for long term plays.
There would be more if we changed the tax and regulatory environment to help redefine long term as something greater than one fiscal qquarter.

American Patriot said...

Will:

I think there is miscommunication here. My statement re: government driving innovation was poorly stated.

I am not denying the fact that federal research grants do not play an important role in the R&D process. They certainly do. I said as much in my first quote from the original post you replied to. My premise concerns the delivery of the services (insurance).

As far as innovation is concerned, it is government grants that play a major role - not their bureaucracy. That is what I mean. Under a single payer delivery system, government bureaucracy takes over the whole process.

---

Anonymous:

Read my comment above. I do not have a major problem with 10-15 billion in government grants to research entities. Infact, that is among the best spent federal funds if you ask me (along with defense) But that is where it should stop. When they get involved in the delivery of healthcare, they have screwed up from Canada to the U.K.

I agree on the most part with your sentiments regarding Medicare Part D fiasco.

Finally, you avoid the single payer issue. Are you, like the Prez who is caught in two seperate instances proclaiming his ultimate goal to be a single payer system, denying it? Or do you think that is the way to go? If so, what success can you point to? Canada? UK? France?

The only hybrid system that works is the one in Switzerland and that is because it has a major private market involvement in a country with less population than NYC.

Government delivery of services poses both economic and constitutional problems.

LK said...

"Or do you think that is the way to go? If so, what success can you point to? Canada? UK? France?"

LOL.. France was ranked number 1 in the World Health Organization health-care ranking:

http://www.businessweek.com/magazine/content/07_28/b4042070.htm

http://www.civitas.org.uk/pubs/bb2France.php

Anyone with a shred of honesty would point to their mixed system (that has a great degree of government involvement and universal access) as a remarkble success story.

LK said...

"The only hybrid system that works is the one in Switzerland and that is because"

The only that works, my *#** eye.

Try Sweden, Norway, Denmark, Holland, Germany, Belguim, France, Austria, the UK, Israel, Japan, Luxembourg, South Korea, Taiwan, Australia, New Zealand... oh wait, virtually ALL the industrialized Western world, except the US.

Will said...

American Patriot- the health care reform law is NOT a single payer- its essentially a market based reform.

Also, France is one of the obvious successes you can point to in medical care.

ekeyra said...

AP,

"What the hell does this have to do with an American born child with a disease?"

Ah I apologize. I didnt realize we were only talking about american children having a right to state funded medical care. Your right, who gives a shit if we drop bombs on children in those other countries, only american children deserve to live.

LK said...

According to the idiotic logic above, all the citizens of these contries are living under some "socialist" hell without proper health care, but for some reason the serious, well-sampled opinion polls show the majority of the people in these countries are happy with universal/public systems, and don't vote to abolish them.

AP Lerner said...

"There would be more if we changed the tax and regulatory environment to help redefine long term as something greater than one fiscal qquarter"

Huh? Uh, the current tax system rewards long term capital investments and gains over short, so what are you talking about? It also rewards/shields failed capital investment which encourages more risky investment, which is a good thing. Seriously, do people just make stuff at their convenience on this blog? Mr. Anderson, your influence appears to be growing.

And could you please give me an example of a long term capital investment (over 10 years) fully funded and supported by the private sector?

Mike M said...

AP said: “Huh? Uh, the current tax system rewards long term capital investments and gains over short, so what are you talking about?”
Yes the capital gains rate is lower than the income tax rate. However your lack of experience in these matters or critical thinking fails to recognize that capital gains are not indexed for inflation which can have a significant compounding negative impact on long term investment. Do the math.
There are plenty of companies funding internal R&D in either new or upgraded products that have a 10+ year time horizon in medical, pharma, technology and industrial sectors.
Seriously do you just make comments without thinking for the conveyance for this blog? I see the statists influence appears to be growing.

Mike M said...

LK unless your countries cited are adjusted for culture and demographic differences affecting healthcare it means nothing. BTW I’m sure we should accept reports from NGOs like the World Health Organization as objective gospel. Oh that’s right Governments and NGOs are always altruistic in your view.

AP Lerner said...

"American Patriot- the health care reform law is NOT a single payer- its essentially a market based reform."

Actually it's neither. It's worse than single payer, and worse than market reform. It's corporate welfare at it's worse. The problem is Mr. Anderson and other critiques are too blinded by their ideologies to recognize this. They are too lazy and simple minded to offer up a thoughtful critique since its intellectually easier to just lie and scream government control. All of this is very convenient since it plays to their simple minded, incoherent ideology that government is evil, despite the fact the government pays Mr. Andersons salary. I feel truly sorry for the students of Frostburg. Please transfer, or change majors.

Anonymous said...

Mike M- what field do you work in? there aren't really that many companies funding research with longer time scales than 5 years. Pharma and one or two semi-conductor companies, and thats about it. There are no more Bell Labs in this country.

There is a reason that scientists have trouble finding work in this country and physicists/mathematicians end up in finance- we don't really do basic research anymore. Have you ever worked in research? If not, perhaps you should look up numbers before making blanket statements.

AP Lerner said...

@ Mike M - so just to clarify, short term capital gains are not taxed at a lower rate than long term rates? I mean, the prior post very clearly said "redefine long term as something greater than one fiscal qquarter" which implies a fiscal quarter of gains are taxed less. Or maybe your definition of fiscal quarter is not 3 months? Please explain.

"capital gains are not indexed for inflation "

This is true and further proves my point why the private sector does not fund long term projects for 10+ years. Inflation introduces yet another variable that can not be modeled for the long term which influences the terminal value of the project. Thanks!

"There are plenty of companies funding internal R&D in either new or upgraded products that have a 10+ year time horizon "

Please name a new, 10+ year project being funded by the private sector from the ground up?

burkll13 said...

AP- a actually agree with you about it being corporate welfare, but i must have missed where somebody said it was Single-payer? i know AM Pa said that was the ultimate goal, but thats not the same thing. personally, the failings are so blatantly obvious that i believe it was meant to fail to make a SP system more politically viable sometime down the road. i think either you are too blinded by your hatred of austrians that you have a hard time comprehending their writings, or you are so intellectually dishonest you just have to warp the argument instead of talking on some honest plain.

and as for your assertion that long term medical investment wouldnt happen in a free market, thats absolute garbage, and just goes to show how much disdain you have for the idea of liberty.

Mike Cheel said...

@AP "All of this is very convenient since it plays to their simple minded, incoherent ideology that government is evil, despite the fact the government pays Mr. Andersons salary."

Please show where Professor Anderson has stated that government is evil.

ekeyra said...

AP,

I see your not so interested in the discussion of government when it pertains to which children we should save with government funded healthcare and which children we should kill with government funded munitions. Tricky subject I know, but its simple. If they live inside this imaginary line we save them, if they dont we drop bombs on them. There, I saved you a ton of that "thinking" stuff.

Mike M said...

Anonymous, I’m in the Risk Management & Investment Management field, which as a consequence, exposes me to an eclectic mix of clients. There are a number of projects with longer term horizons being funded outside the pharma and tech areas. However nowhere near enough which should concern us all. That said, substitution of government research to compensate is not the answer.
A major part of the reason physicists/mathematicians end up in finance is because that is where the money is, although that is changing. I don’t need to work in research to understand the problem. You want more basic research, incentivize or at least stop punishing it from a tax and regulatory standpoint.

AP My point was about Wall Street’s ridiculous obsession with quarterly numbers. I already stated the obvious that long term cap gains are treated differently than short term.
Respects the inflation element, it does not prove your point. Seriously get over yourself. Some private sector elements do fund 10+ yr projects but fewer of them because the hurdle rate is higher because of the inflation/tax element. You are incorrect in your absolute statement. I’m sure you would like it so to create additional reasons for the government to be involved in our lives.
For obvious reasons I will not name ones I am aware of but if you use some common sense and critical thinking about the industries mentioned, it becomes obvious. If not then sorry I can’t help you.

AP Lerner said...

"My point was about Wall Street’s ridiculous obsession with quarterly numbers"

Who said anything about Wall St? I routinely allocate capital without the help of Wall St. But I guess I'm just more a 'thinker'

"I’m sure you would like it so to create additional reasons for the government to be involved in our lives"

Here we go again....try staying on topic.

"For obvious reasons I will not name ones I am aware"

Got it. I am in full agreement now, and I will just take you're word for it. Jump off your horse.

"I’m in the Risk Management & Investment Management field"

Could you please tell us for who so I know to avoid the services of this firm? Better yet, so I can short your stock if you are a public company.

Mike M said...

AP I’m confident your massive allocation of capital will be the difference in changing the human condition.
The simple concept of confidentially obviously escapes you as does the basic common sense and critical thinking.
I’ll put my personal portfolio performance up against yours any day. Mine is grounded in proper economic thinking. Yours I’m sure is in statist thinking.
AP you’re boring and contribute nothing. Get back to work. I’m sure there is someone waiting in line to renew their driver’s license.

Tel said...

Craig Venter is a modern medical example of how a private research team achieved the same task as a massive multinational public research effort, and Venter's private team did it faster, and cheaper by several fold.

When the publicly funded researchers saw how badly they were being beaten, they used political pressure, and social pressure to make Venter share his results.

Although this opens up the complex discussion over whether scientific discovery should be patented (personally I believe that scientific discovery should be excluded from patent, and only very specific production processes should be patentable, as was the original design), aside from the patent issue, there is no doubt that the small, private research team were vastly more effective than the cumbersome public research apparatus.

The reason should be obvious: public research attracts people who primarily are skilled at getting grant money and looking busy, they do not get paid for outcomes, only to strive towards outcomes. Private researchers are paid for achieving something, so it attracts the sort of people who are determined to achieve.

Tel said...

I'll just add that by far the majority of successful government funded research (including medical research) has been closely linked to the military, and often linked to warfare as well. For example, penicillin production was driven by military applications in WWII.

War is a great driver of research because it provides incentive. In peacetime, we use reward to provide incentive and reward means that some people get something that others don't get.

Tel said...

You want more basic research, incentivize or at least stop punishing it from a tax and regulatory standpoint.

I agree, in the modern Western democracies, the planning horizon for long term projects is sovereign risk. Given that government changes approximately every 8 years, arbitrary changes of the rules are going to occur (on average) about 4 years into a project. These rule changes may be anything ranging from trivial to disastrous, and there is no way to know what's coming.

That said, you can go a long way with a steady stream of small incremental improvements. For example, intel has made a continuous research and development effort (longer than 30 years) aimed at improvements to their 8086 design. Breaking the research down into many incremental steps significantly lowers the risk and provides intermediate funding for more research.

Anonymous said...

Mike M- what major companies currently have research labs that are actively pursuing non-applied research? I can think of IBM, and (if you REALLY stretch) one or two pharma companies, and thats pretty much it. Intel does great applied research,and lots of other semi-conductor places do to, but the timeline on their projects is five-ten years, not ten+, and certainly not the twenty to thirty of basic research.

Again, there are no more Bell labs.

"A major part of the reason physicists/mathematicians end up in finance is because that is where the money is, although that is changing. I don’t need to work in research to understand the problem."

Simply not true. I know dozens of phds in finance, and every single one of them would prefer to be working in science or mathematics. The problem is that there simply aren't that many science jobs. The reason there aren't many science jobs- no one is interested in basic research anymore its extremely expensive and the gains are too far in the future to benefit the immediate bottom line.

I think only people who work in research really know truly difficult it is, and how difficult and expensive actual results can be. No one will spend billions on unfocused basic research- Bell labs used to, but its all applied now.

Mike M said...

Now you have changed your discussion to specifically non-applied research. That is a different matter. The discussion had been about R&D in general

You didn't understand my point about that's where the money is. You said:
"The problem is that there simply aren't that many science jobs. The reason there aren't many science jobs- no one is interested in basic research anymore its extremely expensive and the gains are too far in the future to benefit the immediate bottom line."
That's correct. Because there is NO MONEY deployed there. It's a macro no money problem. You made my point if you think about it. We are saying the same thing differently.

Sorry I don't buy the argument you have to be in a field to understand it. I'm not in the research field so I don't know the specifically difficulty an individual experiences but I can understand the problem and issues. Different things.

Calgacus said...

Prof A - that's your theory. The experience of the rest of the world is that governments provide superior health care at lower cost, more efficiently than the private sector. Private health care quality in the USA is shameful, as is our lower life expectancy. (In spite of the fact that the US lifestyle is, contrary to much BS, healthier than many other countries - we smoke much less.)

The experience of the USA is that since Bayh-Dole etc, the more the private sector has gotten into medical research, the slower the pace of research has been. Medical innovation has slowed down. Read Marcia Angell. The psychotic US healthcare nonsystem is lethal to everyone.

Mike m said...

Governments never provide superior service at lower cost in anything. Never. Not possible. There is always sone type of added cost buried in the system

Will said...

Mike M- the government eradicated polio, a service unavailable at any cost in the private sector.

Further, in things that scale with number of participants (risk pool/insurance, research networks), a government will be superior to smaller institutions simply do to scale.

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