Wednesday, December 31, 2008

Economically Possible? No. Politically Possible? Yes

Q: Is it economically possible to simultaneously demand low electricity prices but no new generating plants, while using ever increasing amounts of electricity.

Q: Is it economically possible to simultaneously have "open space" laws forbidding building while increasing "affordable housing"?

Q: Is it economically possible to add the costs of government bureaucracies to the costs of medications and medical treatment have the the total cost of medical care go down?

Q: Is it economically possible to have lower costs for medical care, or anything else, without sacrificing quality?

Although the answer to all of these questions is "No," because these tradeoffs are economically impossible to achieve simultaneously, Thomas Sowell explains in his latest column "The Art of the Impossible" why they are all politically possible:

"You want the impossible? You got it. Politicians don't get elected by saying "No" to voters. People can get the possible on their own. Politicians have to be able to offer the voters something that they cannot get on their own. The impossible fills that bill perfectly."

As Thomas Sowell reminds us: "The first lesson of economics is that we live in a universe of scarcity, and we face tradeoffs. The first lesson of politics is to ignore the first lesson of economics."

13 Comments:

At 12/31/2008 1:25 PM, Anonymous Anonymous said...

"Is it economically possible to add the costs of government bureaucracies to the costs of medications and medical treatment have the the total cost of medical care go down?"

Wait a minute. The current bureaucracy on health care is already something like 28%. By simply codifying these things so we have uniform insurance requirements we could save a lot. We might even be able to run one system for less than 50 state systems times X companies.

You assume that government is running a new system, but it might be that all we need is uniform national regulations that prevent cherrypicking. let the market compete on a level playing field, and let the consumers consume on a level playing field.

Also, you assume that we actually have health care, which we don't; even many of us who think we do.

I and my employers pai health insurance for 35 years, without a claim. The first time I got sick I was seriously ill and disabled, losing my job and my health insurance.

Where, exactly, is the health "insurance" in that system?

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"Is it economically possible to have lower costs for medical care, or anything else, without sacrificing quality? "

Oh come on, of course it is. Cellphones used to be inconvenient, large, and expensive.

Efficiencies of scale still count.

So do SYSTEM efficiencies. Frequently when quality is an issue it is the SYSTEM that is fault, and not any one facet.

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On the first two questions, I agree, can't be done. But, this is an intellectual bait and switch: if you post the last two questions first, their flaws and divergence from the first two are more obvious. The way this is done,it looks like trying to set up a chain of automatic agreement.

Hydra

 
At 12/31/2008 2:13 PM, Anonymous Anonymous said...

"We would like to sputter in shock and disbelief. General Motors Acceptance Corp. (GMAC) lost $5B in the 9 months ending September 2008 (on an operating basis). It has $100B in subprime and nonconforming mortgages through its ResCap subsidiary, and the government just lent them $5B at an 8% interest rate."

In addition, General Motors (GM) just announced a 0% financing option to car buyers.

So it turns out that we are now subsidizing a globally uncompetitive carmaker that does not understand what qualifies as a subprime FICO score and is offering 0% loans financed by a government (taxpayer) investment that costs 8%.

We guess they are hoping to make it up on volume.”

Astonishing.

 
At 12/31/2008 2:58 PM, Blogger misterjosh said...

"Q: Is it economically possible to have lower costs for medical care, or anything else, without sacrificing quality?"

Professor, you yourself have refuted this one, Walgreens/Target clinics, etc. As I understand it, health care costs have skyrocketed in the last 10 years. Is Sowell saying that all of those costs have gone into raising the quality of health care? This issue makes me doubt the quality of the the rest of Sowell's article. I won't be reading it.

 
At 12/31/2008 3:20 PM, Anonymous Anonymous said...

You Chicago-type free marketeers are so great when you talk like Austrians. You only become terrible when you talk about money, and all of a sudden you abandon every free market idea and start proclaiming the benefits of central planning, and how the Fed can solve all our problems by printing money.

I just wish you guys would resolve this patent contradiction in your thinking.

 
At 12/31/2008 4:31 PM, Anonymous Mika said...

Nothing "astonishing" about it. You allege they aren't "competitive", but criticize when they employ a tried and true, successful, and probably ncessary marketing-tool (0% interest rates) to move their product! We should applaud them for being shrewd merchants, so they may actually be able repay us the bridge loans!

Toyota and other foreign companies - in fact, the entire worldwide auto industry - all now have tanking sales as well. If they had offered 0% prior to GM doing so, pundits would say GM should be smarter like them.

 
At 12/31/2008 4:33 PM, Blogger K T Cat said...

You can have all of these things so long as there are productive businesses around to tax.

 
At 12/31/2008 5:24 PM, Blogger wcw said...

Ah, Townhall -- the site for right-wing Republicans who can't quite bring themselves to read the Free Republic. Like middle-class English, these are the people who won't sit on a warm bus seat.

Still, to the points, let me rewrite them:
- can you get lower prices at increased volumes without new plants? Meet your new best friends, "productivity" and "imports."
- can you regulate construction while making housing more affordable? Meet your other friends, "density" and "the mortgage-interest deduction."
- can socialized medicine actually reduce costs while improving health outcomes? Meet your new Super Best Friend, "the rest of the developed world."
- can lower cost mean higher quality? Meet your best friend of all, "Moore's law."

A third grader could outthink this person. Give him a few weeks, and my one-year-old might be able to.

 
At 12/31/2008 6:39 PM, Anonymous poor boomer said...

Speaking of living in a universe of scarcity...

I have been predicting a future in which the working poor will be untenably squeezed by costs:

1) They will have to live far from their jobs in order to live in affordable housing,

2) But their increasingly-lengthy commutes will become unaffordable due to rising energy costs.

In this universe, A's energy guzzling means that B cannot afford to commute to work.

What is capitalism's solution for that?

 
At 12/31/2008 10:37 PM, Blogger Boris said...

Anytime the health care debate comes up, the proponents of universal health care address insurance as if insurance is the same thing as health care. Insurance coverage is no guarantor of services (actual health care), it actually delays treatment, payment and introduces inefficiencies.

So as long as a payment re-routing bureaucracy is in place, whether it's the insurance companies or the government we will have inefficient health care that some can't afford.

 
At 1/02/2009 4:13 AM, Anonymous Anonymous said...

Poor boomer, why don't you add tears to your post? Capitalism's solution is to shift money to the discovery of cheaper alternatives and the expansion of production. The government's solution is to force down costs, ban innovation until the good is depleted, then declare a crisis. SO, again, why is it that you have this silly accusatory tone in your question?

 
At 1/02/2009 4:21 AM, Anonymous Inquisitor said...

"- can you get lower prices at increased volumes without new plants? Meet your new best friends, "productivity" and "imports.""

Imports assume a productive economic system at the other end. Why cripple domestic production to rely on imports? This is a stupid answer. Productivity increases require increasing capitalization. Again, do you think this nonsense is clever?

"- can you regulate construction while making housing more affordable? Meet your other friends, "density" and "the mortgage-interest deduction.""

And the housing boom!

"- can socialized medicine actually reduce costs while improving health outcomes? Meet your new Super Best Friend, "the rest of the developed world.""

Not an argument, but a display of "liberal" (read: left-fascist) ignorance. Do you even know what you're talking about? I guess not. Forcing costs down by spreading them over an entire population and providing a good "free" at the point of consumption does NOT lower costs. It gives the illusion of it. And what "improved" healthcare outcomes could you possibly be referring to? Huge waiting lists? Get a clue.

"- can lower cost mean higher quality? Meet your best friend of all, "Moore's law.""

That isn't an argument.

 
At 1/04/2009 2:36 PM, Anonymous poor boomer said...

Inquisitor says:

" can you regulate construction while making housing more affordable? Meet your other friends, "density" and "the mortgage-interest deduction."

Good point, but alas, far too many conservatives join in support of regulating construction, type, location, and supply of housing, and ESPECIALLY the supply of the most affordable housing types (e.g. apartments and trailers).

But then, many consaaervatives have never cared one bit about supply-side housing affordability; it's more important to keep the dangerous poor out of their communities.

 
At 1/04/2009 2:39 PM, Anonymous poor boomer said...

Anonymous said:

". SO, again, why is it that you have this silly accusatory tone in your question?"

Because poor people already face a crisis and I'm angry and not waiting for government to declare one.

 

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