Wednesday, April 16, 2008

I have to 'Laff'




The New York Times is a generally well-written newspaper. They have a (self-admitted) liberal bias, but if you read the reporting with this in mind, it is an excellent and readable news source. Unfortunately, the quality plummets when you turn to the editorial pages (the health reporting is also horrific, but that is a subject for another day).

Paul Krugman is a regular editorial columnist: a Princeton professor of economics with a Yale undergraduate degree and a PhD from M.I.T. He often comments on health care issues, so I read his column. Then I take the paper and wipe my ass with it.

I certainly don’t make any claims to have an answer to grand health care policy problems, but I did take one course in economics in college and got a B-, so I figure Prof. Krugman should be able to teach me something. Wrong again.

Here is a gem from a recent article of his called “Voodoo Health Economics” (if you don’t get the political reference, watch “Ferris Bueller’s Day Off” again):

It’s about time someone … made the case that Mr. McCain’s approach to health care is based on voodoo economics — not the supply-side voodoo that claims that cutting taxes increases revenues (though Mr. McCain says that, too), but the equally foolish claim, refuted by all available evidence, that the magic of the marketplace can produce cheap health care for everyone.”

Um … OK genius. I think it was page 54 of my “Macro-economics for Dummies” text that introduced the Laffer Curve. For you econo-morons, look at the above picture: now think … hmmm, if I tax everyone at 100%, my tax revenues will be … ZERO! Yeah, because no one will work for free, idiot! Not only that, but statisticians have shown definitively that higher taxes DO NOT increase tax revenues (see http://politicalcalculations.blogspot.com/).

One idiotic statement I can take, but when he scornfully dismisses the “magic of the marketplace”, I start pulling out my hair. Adam Smith is going to haunt your tweed- wearing, arrogant, bearded, ivory-tower, smug, pseudo-intellectual ass after he reads your retarded article. (begin sarcasm) I can’t imagine how a capitalist model could produce an efficient economic system! The US has flailed in ignorance for these past two hundred and thirty two years! Thank you for your insight Professor! (end sarcasm)

I’m glad I went to East Tumecula Community College and not Princeton so I didn’t have to listen to this type of bozo for 6 years. Prof. Krugman should stop patting himself on the back for being so fucking clever and go re-take Econ 101. Maybe the “Bloom Picayune” would hire him.

50 comments:

  1. E: 6 years?
    After i finish high school and go to college, I hope college will take me 4 years.

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  2. Strangely enough, the macroecon textbook I used was written by Paul Krugman. He may have some questionable opinions, but his grasp on macroeconomics seems quite firm.

    Mind you, the Laffer curve also has empirical examples that show it's not 100% foolproof. A number of states, I think the Soviet Union among them, have taxed at 100% and still received revenue.

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  3. I've found that if I don't use fancy sarcasm brackets, that I might get jumped.

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  4. "I hope college will take me 4 years."

    Maybe if you major in philosophy, or don't have a life, and your parents totally fund you. There are a very choice few who can do it in 4 years these days, but I'd say that the planets aligned just for them.

    anon:

    Please tell me you aren't using the Soviet Union as proof positive. I don't think that communism was exactly a successful strategy for them.

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  5. Richter: It's an Animal House reference...watch it.

    Anon: The Laffer curve is not "foolproof" but is certainly intuitive, and if you think a communist economy is equivalent to a capitalist one, then I suggest you re-read Dr. Krugman's text you are so fond of. Also, fuck the Laffer curve: statistical analysis of the US economy has PROVEN that higher taxes DO NOT equal more gov't revenue! The fact that Krugman calls this "foolish", proves to me he is either A. Stupid, B. Illiterate or C. Unable to get his liberal head out of his ass when talking about health care and basic economics...

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  6. I was never the workaholic type but managed to finish college in 3 years. I was motivated by the annual tuition increases and wanting to get out of the trailer park. Plus, even Differential Equations was a little easier in the summer. Of course, medical school took longer than I wanted, but that wasn't my fault

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  7. Economist bloggers seem unanimous that Krugman was actually a perfectly competent (and indeed, excellent) economist... until he went batshit over President Bush.

    However, even more, I believe Krugman's position on tax cuts is not that the Laffer curve doesn't exist, but that we're on the bottom half of it already, such that further cuts will reduce revenue.

    An empirical (and debatable) rather than theoretical point, then, made with modern-Krugman's typical partisan hyperbole.

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  8. I have to say, Amy, the planets were hardly aligned for me, even though I finished college by 21. I only managed this because my Dad and brother disappeared in a small plane and weren't found for 2 years. I had Dad's Social Security money for tuition. Lives are different, and no one rule applies to everybody. Having enough money isn't everything.

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  9. Sorry, distracted by emotion. I hate that. Point taken: Hardly anbody gets through college in 4 w/o help, which I did have, financially.

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  10. Sorry to hear of your dad and brother Devorrah. That's a horrible thing to have to go through. I'm sorry I dredged up that emotion.

    I admire anyone who finishes college in any amount of time. I wish I could have done it in 4 years. If I had gone to school closer to home at LSU, it might have been a bit easier for me.

    The culture shock was a huge adjustment. I was really immature. Some of my classes had 1000 people in them, which made it hard. I'm not an ideal student, but I hope to finish when my kids are older.

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  11. A pediatrician and writer by the name of Kellerman wrote an article for the Wall Street Journal earlier this week (it'll be free online for seven days) titled, I think, the Insurance Mafia. He makes the point that the answer to the health care crisis is for FEWER people to be insured! He says that with the middle-man -- the insurance companies -- increasingly sticking their noses in to dictate what care doctors, etc, should/may provide and how much the doctors will be compensated, they are an increasing risk to the lives and health of those who pay insurance premiums and are shorting doctors of just compensation, encouraging use of expensive tests, etc, in order to increase their income. Same for hospitals. I think I got the gist of it right. But hop over to the WSJ online and check out his article. It's incredible food for thought. He thinks costs would drop without the insurance mafia raking it in from both sides while interfering with medical decisions.

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  12. Along those lines, B. Hussein Obama, in his effort for government redistribution of wealth, was interviewed about the capital gains tax reductions under Clinton and Bush, and how the revenue INCREASED after the tax was reduced. He said that may be true, but we still need to increase to tax to even the playing field, or stick it to the man. So he wants to decrease revenues just for a social agenda. GREAT.

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  13. I am not an economist (I can do the economics of my pay packet vs my outgoings, but not much else), and I claim to know nothing about the American health system (Brit living on the other side of the pond here...), but this statement struck me:

    "the equally foolish claim, refuted by all available evidence, that the magic of the marketplace can produce cheap health care for everyone."

    Ummmm....

    The NHS, available in the UK for the last 60 years, provides, through taxes (National Insurance, plus some general taxation), free health care for everyone, and cheap prescription medication. Some treatments are not available, particularly when they are new to market, and it is not a perfect system, but I feel that it might be good evidence of how cheap healthcare can be made available to everyone ;-)

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  14. Color me crAYZEE, but it seems a good number of Americans are dying to pay more taxes. They are called Democrats and/or Liberals.

    I still scratch my head at this every time someone tells me I "should" pay more taxes for XYZ. I'm a single mom who hasn't gotten a dime of child support x 3 years. The 22% of my income I pay for property and income taxes (after deductions) is ridiculous as it is. Anyone who asks me to pay more taxes for just about anything will be met with contempt and I will immediately cease to listen to anything they have to say and soon thereafter, tell them to go F themselves and their tax. That's how I explain supply-side economics.

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  15. Jo,
    So why y'all Brits teeth so bad? Its easy to have cheap healthcare when all you get for an arthritic hip is aspirin and you put a tax on your colonists tea.

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  16. Frank: You're a Jewish Indian? How did that happen?

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  17. Well, since the NY Times is hemorrhaging money faster than even the federal government, maybe they could take your suggestion and develop a line of "special" TP with all of Mr. Krugman's columns!

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  18. "Frank: You're a Jewish Indian? How did that happen?"

    Either I missed something, or you're teasing. Yes, I am that literal. Either way, I'm pretty sure there aren't many Jewish Indians in Alabama trailer parks.

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  19. Frank - my teeth personally look bad because some idiot dumped a whole load of Fluoride in the water (http://en.wikipedia.org/wiki/Dental_fluorosis - mine are somewhere between the mild and the severe) when I was a kid. However, I'm not willing to stick a whole load of bleach in my mouth in order to get California style teeth ;-)
    And my grandad had his hip replaced on the NHS within three months of being diagnosed as needing it. My gran is getting all the pain medication she needs as her spine crumbles (osteoporosis - she has pretty much lost four vertebrae) for free.
    But, hey, any system where you don't have to pay to receive treatment that will save your life, or choose between life-prolonging medicine and paying for a burial plot (http://boobsinjuriesanddrpepper.blogspot.com/2008/01/will-write-for-food.html)
    has to be worth being proud of :-)

    And I believe, but am finding difficulties finding a website to link to for you, that tea is VAT exempt (you pay for it in a restaurant/cafe, but not in the shops), along with other non-luxury food and drinks.

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  20. I'm not willing to stick a whole load of bleach in my mouth in order to get California style teeth
    Hey, hey HEY! What did us Left Coasties ever do to you? And careful...Ahnold Schwartzencommie may decide to tax our beautiful teeth to pay for illegal alien's health care.

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  21. Etotheipi - GREAT post. Funny, my liberal, California, Hollywood-left in-laws, who are worth millions because of the property-value rise in the SF Bay area, believe I (as a well-to-do physician) should pay a 50% income tax rate! They believe this is necessary to support social programs across our great country. I beleive they would balk at a 50% rise in their property taxes or a 50% rise in capital-gains or a 50% rise in any tax that cuts into their multi-million dollar net worth from property values.

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  22. Amy, Jewish by marriage, Native American by birth. Native American as in "Native of America" not "American Indian", although I'd love to be one, what with the peyote and everything.

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  23. Jo, I was just yanking your chain about the teeth..3 months is pretty good for a free hip replacement, BUT do illegal immigrants get free care like they do in the U.S.? The tea tax I was referring to was the one in 1765, where the colonists dressed up like Indians and dumped english tea in the bay.

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  24. Etotheipi: Don't shoot! I come in peace. I am from the San Francisco Bay Area, and everyone is liberal there. No one EVER talks about economics, and I think you all are correct that liberals either lack an education in economics or just don't care. Seriously, you should include a link or two about basic economics for readers who need a refresher or were just born on the wrong side of the tracks in terms of economic education. I know I remember little about my macro class, though I DID get a B+.

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  25. The economics of the market place works if you are at an equal bargaining position with the other party.

    In medicine patients are not in an equal bargaining position because they lack the knowledge necessary to make an informed choice.

    Medical options are more difficult to assess.

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  26. This comment has been removed by the author.

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  27. I agree with anonymous.
    For example, if you need surgery, you pretty much need a surgeon to do it in a hospital. There's no other real good option. To compare, if you want to become a surgeon, that's a choice in the first place, then there are lots of medical schools, residency programs, and different types of surgery. Lots of options one way, few the other. (Unless you want to try CAM or just improvise somehow, but you'll get made fun of for sure, and even then it's only fun and games until someone puts out an eye.)

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  28. "In medicine patients are not in an equal bargaining position because they lack the knowledge necessary to make an informed choice."

    I don't see how this really pertains to the economic discussion. I love it when the libs try to tell little ignorant me what is best for me.

    Every individual can take the information from their physician and then go home and mull it over. I'm damn good with google.

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  29. go amy go!

    i will agree with anon. in one respect though... there is precious little information out there for patients OR DOCTORS about costs of procedures, labs, and radiological studies. patients often ask me what my bill will be and i answer, honestly, "i have no eartly idea". when i try to find out 'actual cost' of stuff i do from the biling office i am met with a stony silence. the reason, i believe, is that different patients get different charges for the same stuff based on their ability to pay. this is not what you are thinking by the way, the fully insured pay the most, the self pay patients pay the least. dirty little secret.

    cheers.

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  30. Amy: I agree with anonymous, again. Googling your pain-in-the-fill-in-the-blank is NOT the same as going to medical school. There is a knowledge gradient between doctors and patients.

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  31. Richter it is the same in so far as it is applicable to your current condition. I may not have the large body of knowledge at my disposal that a physician who has completed medical school has, but I can absolutely inform myself enough about my particular situation to make informed choices.

    We don't need the government spoon feeding us information. The doctor diagnoses you to the best of their ability. You then take that knowledge, research it, if you don't like it, get a second opinion. Then you make your informed choice.

    Don't ever expect the government to do your job for you. You'll end up like a Hurricane Katrina victim.

    I still don't see how this applies to the economics post, but whatever, I like to argue.

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  32. Amy: I don't know if it's really the same, even just as it pertains to yourself. I don't see how personal internet research can compare to medical school.
    I, obviously, also like to argue, and I also like to play with ideas, and so I'll come out with some pretty weird stuff. But, that's what it is. Just me rambling. That's not the same as medical school, or the role of government, or whatever.

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  33. Cat:
    I heard that Obama gem too. He actually said that even if an increase in CG tax led to decreased gov't revenue, he is STILL for it, because of, and I shit you not, "fairness". This pretty much summarizes liberal philosophy in a sentence. Fucking pathetic.

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  34. I sorta understand where Obamas at. Its like how I used to give bicarb at codes/near codes to help treat the patients acidosis. One day an ICU attending pointed out that the bicarb is immediately converted to CO2 and water, making the acidosis worse, if anything. Of course you could argue acidosis moves the Hb/O2 curve to the right, enhancing O2 delivery to the tissues...but the only real reason I did it, was everyone else did it. When I stopped giving bicarb, and explained my reasoning, complete with NEJM article and "The ICU book" citations in my pocket, you would have thought I had suggested leaches or something.

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  35. Let me explain 'The economics of the market place works if you are at an equal bargaining position with the other party.' this further.

    Magic of the marketplace means that there is competetion and that one has many choices the cost will go down and the consumer gains.

    Take for example buying a car. You can by and large make an informed decision by doing your own research in your own time to get what you want. In addition, because there are so many players, the cost of cars is not artificially inflated. Any inflation is due to attempts to control the market by the government for what ever reason. If you look at countries like India in the 90's you paid a lot for technology that was 50 years old. And there were only 2 models to choose from.

    In the case of medicine, patients dont know nearly enough to make an informed choice. Even if you can make sense of the jargon and the implications, you still may not be able to see the whole picture. People don't spend 6 years in medical school followed by more years in specialities only to be equal to someone armed with a computer and google.

    Thus when you sit in front of a doctor you are not at an equal bargaining position. When you want to assess treatment options, you are not at an equal bargaining position. It is not an informed choice. There is no market place. That's why in this instance economic theory of free markets do not apply in medical cases.

    It may apply in cosmetic surgery or some types of elective procedures but not in most cases.

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  36. i thought i remembered krugman! check this out. what a douche.

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  37. Thanks anon. I agree with you, but you are obviously smarter and better at explaining things than I am. (Also, probably older, and better educated.)
    "People don't spend 6 years in medical school followed by more years in specialities only to be equal to someone armed with a computer and google." Amen, Brother! i agree, emphatically. Medicine is not the same as a free marketplace.

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  38. People are dumbasses if they don't participate in their own treatment and educate themselves about their own condition.

    Doctors go to medical school to digest a vast body of medical knowledge. As a patient, 99% of what a doctor learns is not necessary or applicable to your certain condition. You can be absolutely informed under your own power combined with the diagnosis and knowledge given you by your doctor to be on equal footing when it comes to your own particular condition.

    The government is not the great equalizer to make things fair. If you think the government is going to do this for you, you are very naiive. Personal responsiblity and personal effort make things equal.

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  39. amy,
    clone yourself immediately.

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  40. Amy,
    I agree. My Mom yesterday was whining that "nobody told her" that she should have taken measures to reduce her report. I hate that mentality that somebody else is always responsible, either financially, legally or in terms of health care. This is why I'm not practicing law and why my Mom bugs me (though I love her, of course).
    By the way, 911doc has instructed us both to clone ourselves, so this could be taken as permission to form our own clone army. Should we join with the forces of evil or the Jedis?

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  41. Oops--I mean "reportable income", to avoid penalties.

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  42. I think that my two year old would insist that we join with the forces of evil. He *loves* Darth Vadar. Not that he's ever seen the movies. But he has his dad's 35 year old pillowcase that he sleeps on, on the darth side of course. And when we went to legoland he stared up at the Darth Vadar lego statue in awe, immediately ran under his cape, and peeped out at us as if he belonged there. His obsession with the color black and dark and scary things makes me nervous some times, and then I think that it's probably just a boy thing.

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  43. Wait wait! This means that we could become part of the evil vast right wing conspiracy right?

    Where do I sign up baby?

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  44. Amy,
    Better that your son loves black than pink.

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  45. Amy & Devorahh:
    how about a happy medium, girls?
    On the one hand, YES, personal research and googling your specific pain and taking care of yourself, YES. But on the other hand, NO, does all that equal medical school and residency and experience? NO. They are 2 different things.

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  46. I just want to comment on your use of the Laffer curve. Although I am not an economist, I think that it should be fairly easy for everybody to understand that the Laffer curve is a simplification:

    Just because the two endpoints (0% taxation and 100%) have well-defined tax revenues, it is not obvious that the function should look like a nice, concave function in between.

    A so-called "Neo-laffer" curve has been suggested, which is produced by plotting actual tax-revenues, in different countries, against taxation percentage. What's interesting here is that this curve looks *nothing* like the idealized Laffer curve.

    To summarize:
    Even though the Laffer curve intuitively says something about tax revenue as a function of taxation percentage, it is a fallacy to assume that it can actually be applied to the real world as it is.

    Wikipedia has a fairly good article:
    http://en.wikipedia.org/wiki/Laffer_curve

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  47. zxmaster,

    i don't think etotheipi or anyone here is making a point so much about the curve and whether it is irrefutable or even tremendously accurate. the point is that for those who choose to become physicians, or lawyers, or anything that requires up front sacrifice of time, effort, and money, that it is absolute idiocy to add the burden of carrying the rest of the country by making their tax rates confiscatory.

    as a physician who just retired my medical school debt at age 39 i do not get any deductions for my children or any other deductions for that matter. after paying 60,000 in taxes two years ago we owed another 18,000 to the IRS.

    the way this will play out is that the economic incentive to become, say, a cardiac surgeon, is now removed based on confiscatory tax rates AND the hellish path of training. okay, atlas shrugged, try finding a good cardiac surgeon outside an academic center now. we don't have one here.

    on top of the tax rate that most physicians face, we are now double-taxed by EMTALA and forced to treat everyone regardless of their ability to pay for our services. i, as an emergency physician, collect 30 cents on the dollar for my services. i see this as an additional 70% tax on my income. my effective tax rate therefore approachhes 80-90 percent.

    estimates show that emergency physicians give away, per physician, 150,000 of free care a year. we can not deduct this, nor are we immune from liability for this free care.

    so, if a 50 year old smoker/alcoholic comes in to see me for vomiting and i miss the fact that he has unstable angina, this theoretical (but very real) homeless alcoholic can then sue me for what i gave him gratis.

    the point then is that burdening society's high producers beyond a point will simply make them vanish as i am attempting to do now.

    it's an extremely short sighted and unfair way to collect revenue for the federal govt. especially when you consider that, according to IRS statistics, the top %50 of wage earners pay something like %95 percent of all federal income taxes.

    bottom line, there should be no free ride. if i'm getting a free ride and am comfortable then why would i possibly want to pay any taxes at all. if i'm not getting a free ride and am being punished for doing a worthwhile job that helps people that takes a toll beyond almost any job i can think of outside the military, then why would i want to continue?

    cheers.

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