Correlation 2
March 28, 2010, 1:36 pm
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If a person uses the term “risk pooling” in discussions of health care regulation there is a 90% he doesn’t know anything about risk, and in general just doesn’t know what the hell he is talking about. There is a 9% chance he’s just a liar. The chances of a person using the term properly in such discussions is very small (the remaining ~1%).

For example, it’s very likely he is using the term “risk pooling” to denote “cost-spreading from high-cost people to low-cost people”, in other words, garnishing the wealth of low-cost people so that the high-cost people don’t have to pay as much for the thing they’re consuming. It’s like you’re at a restaurant with four friends, the check comes and it’s $500 per person, that’s too much for you, so you start campaigning for the sheriff to pull in random people off the street and insist they all chip in for your check too till you get your own cost down to a palatable level for you. Because (you insist) that would be “risk pooling” and (somehow) good for everybody.

This, I hasten to add, is not what “risk pooling” is supposed to mean. People who think this is what “risk pooling” is are either morons pretending to know concepts well above their actual knowledge level or (if not morons) liars. In reality, it’s just socialism: collective ownership/disposition of wealth. But “risk pooling” makes it sound more actuarial and scientific which is why such people use the phrase.

Top Bottom Middle Smart
March 27, 2010, 1:59 pm
Filed under: Uncategorized
  • Seth Roberts on top and bottom versus middle.

    I predict that someday someone in the American government (top) will realize that a way to greatly improve health care is to empower patients (bottom) against doctors (middle).

    To avoid confusion, let me point out that in this terminology the middle class are the ‘bottom’. The problem we face right now is that our government sides with the ‘middle’ (doctors, bureaucrats) against the ‘bottom’.

    To be fair, most leftists probably think they are siding with the ‘bottom’ when they support things like government-regulated health care. But it’s also fair to point out that the fact that the end result is to empower and enrich leftists on the ‘top’ is not mere coincidence. You will notice that there are no leftist ideas that crucially involve disempowering powerful leftists in government and bureaucracy and devolving power to regular people.

  • Old (~2 weeks is old in blogging terms) but still great, the generic movie trailer via Jim Emerson:
  • Geekiest thing I’ve seen in a while, these are the voyages of the microscopic Enterprise.
  • You need to read this post from (again) Seth Roberts. If I’m reading correctly, he (a blogger) basically cured a 5 year old girl of coughing fits that were ruining her childhood. By blogging.
  • Russ Roberts has the most optimistic or at least, least pessimistic take on the health care bill that I find credible. It starts by pointing out (if not in so many words) that the setup we currently have is basically already socialized:

    It is a nominally “private” system but the hand of government is the dog, not even the tail that wags the dog. Given the role of medicare reimbursment, and the tax-advantaging of generous private plans, there is very little room left for the invisible hand. The simple way to say it is that too little health care is currently paid for out of pocket. The patient is not the customer.

  • David Mamet tells his TV-show writers how to write drama, in a memo. As I started reading the memo, it struck me that Mamet sounded just like my boss (a small, windy blowhard trying too hard to ‘talk tough’). By the end (“LOVE, DAVE MAMET”) he had won me over though. Even though it’s not at all obvious that Mamet follows his own advice.
  • M. Simon cites an example of science being a crime: innocent people went to jail on the say-so of ‘science’. At root here seems to be a belief that nothing said by ‘scientists’ can possibly be wrong or questioned, indeed that people who are ‘scientists’ are not subject to the same biases and errors as other humans. Parallels to certain other topics in current debate are obvious.
  • Arnold Kling is going a little nuts lately, and I kinda like it. Where do you land on the (skilled, unskilled) x (not college educated, college educated) spectrum? Kling’s new theory is that the current ruling class is dominated by the (unskilled, college educated).

    My theory is that the ruling class gets its strongest support from people in the lower-right quadrant. They identify strongly with the ruling class. Placing an artificially high value on educational credentials is in the interest of the ruling class and everyone else in the lower-right quadrant. If it were not for the protection provided by credentialism and government employment, my guess is that many of those in the lower-right quadrant would have incomes no higher than those of people who are not college educated.


    To try to retain support among the highly-educated who are skilled, the ruling class tries to blur the distinction between the upper-right quadrant and the lower-right quadrant.

    This is actually not far off from the first Seth Roberts link above (‘top and bottom versus middle’), because Kling’s critique is precisely the same as Roberts’s: that the ‘top’ (governnment/ruling clas’s) is on the side of the ‘middle’ (unskilled wealth extractors/credential inflators) versus the ‘bottom’ (skilled/non-rent-seeking middle class).

    Not to toot my own horn here but as far as I can see this is all basically the same as my Smart People theory. Kling, Roberts and I all share, if little else, a distaste for the ‘Smart People’ and their claims to power. I guess it’s no wonder that they are probably 1-2 on my list of favorite bloggers (not counting myself).

March 27, 2010, 11:26 am
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I’ve found that if a grown, otherwise English-speaking person displays an inability to pronounce “Social Security” (like, if they basically call it “solscurity”, and aren’t intentionally being sarcastic in doing so), the chances that I’ll disagree with what they’re saying – whatever it is – skyrocket to 99%.

March 25, 2010, 10:42 am
Filed under: Uncategorized

Seems pretty clear that one major effect (whether intent or not) of this “healthcare” “reform” will be to eliminate health insurance companies from the market. It takes a true economic retard to sincerely believe in most of the claimed good effects of the bill. And it doesn’t take an economic genius to discern that companies cannot long survive (unaided) if they are forced by the government to sign money-losing contracts with anyone who asks them to.

Now as far as I’m concerned, the jury’s still out on exactly how insurance companies will be eliminated from the market. Will they just go bankrupt and fold? Some of them perhaps. More likely though I think is that they will just become de facto if not literal arms of the government (thus, the “market” as such will just disappear as everyone ends up under the government umbrella).

The trajectory is pretty clear: a couple years down the road, when insurance companies have been abiding by these “reform” diktats, and losing money, and ratcheting up premiums as much as they can, but it’s not enough, and people paying the higher premiums complain (to politicians), and politicians grandstand, and hearings are held, and pressure is put back on the insurance companies….sooner or later the insurance companies will go to the government hat in hand. Government (“to preserve our historic health reform and patients’ health rights”) gives them a “bailout”, which is another term for buying them out. Of course now government can tell them what to do directly. Now every insurance company is Fannie Mae. Part of the government. Hence: not a private market actor. One way or another this all leads to one destination only: the federal government controlling health care distribution – single-payer, completely socialized medicine. What we used to term “insurance companies” end up just being the quasi-government agencies which the government uses to administer/oversee/ration its socialist health system.

So the obvious question is what can be done by people opposed to all this. Step 1, I think, involves rediscovering the concept of “insurance”, and resurrecting it – but with a new name. As my most devoted reader(s) know, the thing we have today that we call “insurance” is not insurance. Like the term “liberal”, the word “insurance” has by now been so misused and abused that it is unrecognizable as its former self. But insurance, real insurance, is still a valuable risk-management tool. It’s still something people would need and want, which has natural buyers and sellers. So, like any such thing, I would look to companies – entrepeneurs, private actors – to deliver it.

The service ‘if you give me a fixed payment stream now, I’ll give you payouts if certain extreme events happen’ is a valid one. Companies should be free to offer it. People should be free to buy it. Obviously those involved can’t call it “insurance” (although that’s exactly what it would be) but this can be gotten around. As everyone who’s read a two-minute Time Magazine-level summary of The Financial Crisis(tm/2007) knows by now, banks and other financial institutions buy and sell insurance on bonds and company debt all the time, they just don’t call it insurance (which would bring the contracts under the purview of state insurance commissioners): they call them credit-default swaps (CDS).

What the health care market needs now is just for some daring, innovative company to come out with health-downturn swaps (HDS). Buyer (a person) pays a fixed running coupon (the premium) and in return receives ‘protection payments’ if such-and-such health downturn events (HDE’s) occur. Since HDS-selling companies would not be ‘Insurance Companies’ ™ they would not be subject to any of the provisions of the current “healthcare” “reform” (i.e. requirements to cover birth control, to ignore ‘pre-existing conditions’ (i.e. bad health), etc.) They could (gasp) actually charge market rates; just as a CDS seller charges more to insure against an Ambac or MBIA default than against an IBM or a Berkshire Hathaway default, HDS sellers would charge more to sell an HDS contract to a 400-pound person smoker with diabetes and cancer than to a 22-year-old nonsmoker. Obviously this would require some legal acrobatics, as well as some objective way (that couldn’t easily be gamed by either side) to determine when/whether HDE’s have actually occurred, but as this was all accomplished for the CDS market, I don’t see why it would be impossible.

The benefit of a buyer of an HDS would be: the cash payout he’d receive in the event of a HDE (disease, injury, etc). He would presumably want and need that cash payout, of course, in order to compensate various professionals for treating/remedying his health issue, outside of/independent from the federal “healthcare” system. Now, obviously this is just the service we call “health care” (or “healthcare” if you’re Smart). But as all “healthcare” under the sun now seems to come under the purview of the watchful eye of the Federal Government, I think we’d have to rename and set up a parallel system for that too.

But that would be step 2…let’s not get ahead of ourselves.

Vocabularistic Note
March 23, 2010, 11:00 am
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The Democratic Party, and the left in general, have henceforth abandoned all claim to the term ‘liberal’. (Any connection they had to it was already tenuous at best, but the “healthcare” law has severed all ties for good.)

For avoidance of doubt: the root of ‘liberal’ is liberty. It is not ‘liberal’ to support, and enact, sweeping regulations dictating who must purchase which service when, who must sell which service when, under what conditions the service may (and shall) be sold (and rationed), with a zillion ‘clever’ penalties/taxes for disobedience, etc etc. That all is the opposite of ‘liberal’. Why we have for so long attached the word ‘liberal’ to folks whose apparent motivating force is to attain ever-increasing control over other peoples’ livelihoods, pocketbooks, living standards, social arrangements, and (now) their health thus very lives – for as many people as possible – is a puzzle for linguistic historians to sort out. But it’s long past time time we simply stopped.

We have reached the point where in our current political system the only things the left is remotely ‘liberal’ about have to do with sex, i.e. situations involving peoples’ genitals coming into contact. Oh yes, I’ll agree, the left is very liberal on matters involving peoples’ genitals coming into contact. They are true-blue principled believers in that sort of liberty. They care very deeply about genital liberty, I’ll grant. That’s very, very important to them and prominent in their lives and thinking. (Where they and others can put their genitalia.)

It’s just every single other sort of liberty imaginable that the left doesn’t care for.

In the English language, ‘liberal’ is not the right term for such people at all. It is an antonym for what they are, which is: authoritarian.

The New Newspeak Term for ‘Tax Increase’
March 22, 2010, 1:58 am
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As the esteemed Congresswoman from California put it, they had to pass this “healthcare reform” (sic) bill in order for us to find out what’s in it. So, I reckon we shall.

The first salient fact about the “healthcare reform” bill that I think I’m learning is that it’s basically just a tax increase, initially. (Some health type stuff seems to be envisioned down the road, but who knows….) Why a tax increase is called “healthcare reform” and is pitched with sob-story arguments is beyond me, but I suppose that’s just because I’m not Smart.

Smart Healthcare

Hey, Smart People:

You totally support the health care bill. And you have no f**king idea what’s in it. That’s how smart you are. You are so f**king smart aren’t you?


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