Tuesday, June 28, 2011

Letter to editor, June 28

I'm lazy, so I'm just going to reproduce it:

Day after day, utterly irrelevant discussions occur on this Community Voices page. Examples of these include: What does the Bible really mean? (Who cares?) Is the Bible true? Is evolution true? Are the Democrats morally superior to the Republicans? (It's about even). Did some Congressman send some dirty texts to someone?
None of these discussions have the slightest relevance to America's future. Maybe North County Times readers ---- and the rest of the country as well ---- should focus more on, say, the high unemployment rate, or the national debt, or the changes in our health care system that will result from the new health care law. Or dealing with the new terrorist leader, Ayman al-Zawahari, or what to do about the millions of unauthorized immigrants in America. Or ---- well, I think the point is made.

Monday, June 27, 2011

I don't understand this argument

I saw this paragraph from a letter in the local paper today; it's a common argument against national health insurance: "Common sense tells us 30 million people cannot be added to health care without more doctors, nurses and hospitals, so he should be careful what he wishes for."

Note I said "common," not logical, reasonable, or sensible. A few questions need to be raised:

1. Didn't conservatives argue that the health care law was unnecessary because the uninsured were uninsured by choice? So why would these slackers suddenly start seeing doctors now?

2. Aren't those 30 million uninsured really covered anyway, being as they have access to the emergency room? I remember George Bush saying: We have national health insurance--you just go to the emergency room. So we're not really adding anyone to the insurance rolls.

3. To take the reductio ad absurdem of this argument: why not increase of the number of uninsured? If we increased the uninsured total to 100 million, we could really avoid rationing. More health care resources for the rest of us!

4. Nothing more:I think the point is made.

Sunday, June 26, 2011

Law of unintended consequences strikes again

The U.S. Senate in June refused to repeal a rule capping debit card fees, primarily due to the efforts of Richard Durbin (D-IL). There were numerous, though regrettably not enough, opponents worried about the consequences of this action. An article from the Los Angeles Times discussed the skepticism of an opponent of the cap, liberal Democrat Jon Tester (Montana):

Tester proposed delaying the regulations to study the effect on smaller financial institutions and credit unions, particularly those in Montana, where he is up for reelection next year. Smaller institutions fear they will be unable to recoup the costs of handling transactions or that their cards will be shunned by retailers.

Tester was right. As any economist could have predicted, the law of unintended consequences (I will refer to it as the LOUC) will soon cause debit cards to become much more expensive, as this Los Angeles Times article correctly points out here. I'll quote parts of two paragraphs:

Starting next month, merchants will pay just 12 cents for debit processing, unless bank lobbyists persuade the Federal Reserve to tack on a surcharge for fraud prevention.

The bottom line is that banks stand to lose more than $10 billion a year in merchant fees and more than $6 billion in overdraft fees. They'll be looking to make it up somewhere — and it's likely to be from the mainstream debit card users, not just the sloppy ones.

What exactly is the law of unintended consequences? The excellent website Econolog explains it well in this article. This historical anecdote was my favorite example:

In 1692 the English philosopher John Locke, a forerunner of modern economists, urged the defeat of a parliamentary bill designed to cut the maximum permissible rate of interest from 6 percent to 4 percent. Locke argued that instead of benefiting borrowers, as intended, it would hurt them. (Emphasis added). People would find ways to circumvent the law, with the costs of circumvention borne by borrowers. To the extent the law was obeyed, Locke concluded, the chief results would be less available credit and a redistribution of income away from “widows, orphans and all those who have their estates in money.”

To sum it up: Good intentions in legislation often lead to bad results. Price caps, as much as anything, almost always cause more problems than they solve. I wish more legislators would understand how the LOUC works. Are you listening, Richard Durbin?

Monday, June 20, 2011

Succinct analysis

Larry King was on Reliable Sources, Howard Kurtz's CNN show, and he made some harsh but accurate criticisms of Fox and MSNBC:

KURTZ: You say that Bill O'Reilly, Sean Hannity at Fox don't have to dangerous.

KING: Well, their guests are -- they're props for their -- Fox is a forum. It's a forum for the Republican Party. MSNBC is a forum for the Democratic Party.

That's what they are. And denying that is silly. I think Roger Ailes is kind of a genius.

KURTZ: You're not saying that some journalists at those networks don't try to be fair, but certainly in the nighttime shows.

KING: They're not journalists. They're hosts of shows.

KURTZ: They get ratings, as you know --

KING: Yes.

KURTZ: -- having competed against them.

KING: That's what they do. But it's such a small box in the world.

King is 100% on the mark here. Any commentary I could make here would be superfluous.