Governement spending: EVERY DOLLAR SPENDER PAYS

Government spends an enormous amount of money on health care. On any given year, you can usually expect the federal budget for Medicare and Medicaid to be in the hundreds of billions. Now, of course, there is the possiblity of a $1 Trillion Health Care bill being signed into law. As with most government spending, the issue of massive federal debt and budget deficit raises responses like: 'future generations will pay', and 'taxpayers pay for it'. It is difficult for me to understand why this myth is so widely perpetuated. Indeed, we only hear slight mention of the truth: PEOPLE WHO SPEND DOLLARS ARE THE ONES WHO PAY. The fewer dollars you have the more you pay - I'll get to all of this in a moment.


Adam Smith has been quoted as saying "no government ever repays its debt". I think that most people have trouble believing this. Instead, I think that people actually believe that future generations will somehow pay for government's spending now. To really believe that, however, is to cling to some strange sort of hope that there will eventually be an excess of wealth in the future sufficient to repay all of the massive amounts of current federal debt. But you have to ask yourself, how could there ever be such a 'revolutionary' amount of wealth in the future? I can think of two possible sources: 1) some sort of amazing new technology which creates wealth through efficiency that trumps past technologies such as the "production line", the cotton gin, or the internet; and 2) conquering and plundering the wealth of another nation. I certainly don't think the second way is the "way to go". I don't think anyone can know whether the first will happen or not but I would say it doesn't seem like something we can really count on.


So this is why I don't think it's true that government spending now will be paid for directly by future generations - they will likely never have the wealth to repay this debt. And taxpayers don't really pay for it directly because taxes do not bear any correlation to payment of the debt - this is why taxes increase yet the debt gets even bigger at an even faster rate.


Instead, it is paid for by anyone who uses the U.S. dollar.


The easiest way to understand this is to start off with a definition of monetary inflation. I'm defining it here as an increase in the supply of money. You can find other definitions of inflation but people get confused with this economic concept and botch the definition.

Another key concept is the law of supply and demand. A basic tenet of economics is that as supply increases, demand decreases. This applies to dollars as well. That is, as the supply of dollars increases, the demand decreases. This is what has been happening (and will continue to happen - I get to that in just a second).

The problem here is that as demand for the dollar decreases, it means people want it less. So, in order to purchase something, in general, one must provide more dollars to satiate the seller - because, the seller doesn't want the dollar as much anymore. There is an inflated supply. There are more dollars in circulation, they are "not as impressive" anymore, so it takes more of them to perform a "trade" or purchase.

People who tend to buy luxury goods will not be nearly as adversely affected as those who only buy, or at least try to buy, necessities. So, although I say all dollar spenders pay for government debt, THE POOREST PAY THE MOST as their dollars hold less and less and less sway in purchases.

The link between increasing government debt and monetary inflation is that the Federal Reserve Bank (the government bank a.k.a "The Fed") engages in something that is commonly referred to as "printing money". Essentially what the Fed does is "lend money" (money it doesn't have) to the U.S. Treasury (under the strange notion that, when it gets the money, the Treasury will pay back the Fed - so, in other words, the government lends money to itself and then later pays itself back). Because the Fed never actually had the money to begin with, it gets "printed". The more debt, the more money they print, the more money in circulation, the more EVERY DOLLAR SPENDER PAYS.

This will continue to happen because government debt and spending is already so tremendous and therefore growing with unbelievable interest payment, that the Fed will have to continue to print increasingly greater amounts of money. The end result is a decline in what people can afford now, in years to come, and genereations to come.

Soda Tax: Why on Earth Should We Assume People Won't Make Worse Choices?

"Soft-Drink Tax Could Pare Waistlines, Cover Health-Care Costs "

It sounds great doesn't it. . .'Help people by taxing things that are probably bad for them and then those people will make healthier choices'. But wait a second.

We're talking about people who are consuming things that we think are bad for them: soda, tobacco, etc. So obviously, whether they were aware of it or not, these people were consuming things that were bad for them. If there is any change in the value of what they consume as a result of a tax on that product, why on earth should we assume that they will then choose to consume something that is better for them? Haven't they already shown themselves to be consumers of things that are bad for them? Aren't they more likely to continue consuming things that are bad for them?

If there is a new soda tax, why on earth should we assume that people won't just spend more of the money they could use for healthful things (a turkey sandwhich for example) on soda instead? Why on earth should we assume that they won't cut back on soda and switch to something worse (food high in cholesterol, for example).

Many of us enjoy soda. If we go to the vending machines and don't have enough change for a 20 ounce bottle of Dr. Pepper, how often do we then look for something better for our waistlines? I don't. It doesn't even cross my mind!

I find the best lower priced substitute I can in the snack machine: stuff that doesn't even really "hit the spot", probably gets stuck in my teeth, and is arguably just as bad or worse (snickers, M&Ms, etc.) Of course, there are times when I don't have any of those options and may have to just wait until lunch or dinner. And to be quite honest, that just sets me up for a big splurge anyway.

What's helpful to remember is, just because something *sounds* like a good idea at first, it doesn't mean it necessarily is. If we think these things through using common sense, we can identify potential problems with them. If it is still a debateable idea, believe it or not, we can actually test ideas out to see if they'll work. For example, what do you think actors in the private sector do when they want to get you to buy a product? They do lots of testing until they have a good degree of certainty that the idea will "take off". And believe it or not, they actually end up "netting" lots of money!

But then, when is the last time a politician ever went to the trouble of really testing something out? They usually don't. They just seem to pitch whatever *sounds* like a good idea.

Health Care Economics

A great deal of the current health care debate is centered on the economics of health care. The costs to both government and individuals for health care in the future is thought by many to present a crisis or near-crisis situation. Many feel that the situation should be addressed through applied economics. This approach often views health care as a sort of unique service or good. That is, many feel that health care is different from, say, automobile care because human beings are so very different from cars and it is both inaccurate and unethical to treat a visit to the doctor as though it is governed by the same economic principles as health care. After all, don’t people value themselves infinitely more than a car and take care of themselves in completely different ways from how they would care for their car?

My short answer to this is that the same exact laws of economics apply to health care as any other good or service. The same laws of supply and demand apply. The same concepts of elasticity of demand apply. The same concepts of substitutions apply. All of the many intricate concepts apply.

I think people get “caught up” and confuse health care as not falling under these rules for two key reasons: 1) there is such a high demand for health care – it really seems to dwarf the demand for anything else (I’ll explain in a moment that it doesn’t actually when one simply thinks of things like water, food, shelter, relationships, etc.); and 2) there are indeed some terribly tragic anecdotes and empirical evidence concerning lack of access to health car. I will address both of these.

1) Demand – Even if the demand for health care dwarfs the demand for any other good or service it still follows the same exact laws of economics. The only difference is simply that the demand is extremely high. “As demand increases, supply decreases” is a central tenet of economics (along with the several converse scenarios: demand decrease yields supply increase, supply increase yields demand decrease, etc.). I can still hear my first economics professor repeating this over and over as he lifted his right hand toward the ceiling and lowered his left hand in the direction of the floor.

But, as I said, I don’t think that health care necessarily dwarfs that of other goods and services. Water, food, shelter, and human interaction, are just a few examples of human demands that are arguably just as strong, if not stronger than that of health care.

2) Tragedy – The tear-jerking, heart-rending nature of human suffering creates a very strong impression that health care is unique – “it is unlike any other good or service and it is wrong to let anyone with badly needed care go without simply because he or she cannot afford it” is what many might say. Two things can help clear this notion up to improve the analysis. First, a great deal of health care is not of the “emergent and tragic” kind – rather, it is of the variety of yearly check-ups, preventative care, “better-safe-than-sorry care”, etc. So the response to the tragic nature of unmet health care needs should be taken with that in mind. Second, as tragic as unmet health care need is, there are plenty of other “equally tragic” problems in the world (and in this country). Here again, what about the tragedy of in-access to uncontaminated water, sufficient and nutritious food, sufficient shelter, human companionship, an attorney to free a wrongfully convicted criminal (or an affordable attorney in any horribly unjust situation)? What about the demand for travel in emergent situations to get to loved ones; what about the demand for a legal same-sex marriage when one is forbidden from marrying the one he or she loves; what about the demand for not losing a loved one to a military “back-door” draft? Aren’t any of these as bad as a health care situation?

Some might respond by saying “Well, those things don’t happen that frequently and there is nothing much we can do about them anyway.” My disagreement and response to that is “How do you know?”

I hope that I won’t be misunderstood here. I really do hope for a happy and healthy world without suffering. But I also think this requires realism: health care is a service or good just like any other and therefore any attempts to improve it or increase it by anyone will be governed by the exact same laws of economics. Some would say that to imagine what more public health care would be like, one should think of the Post Office or DMV – but that is perhaps a topic for another post on another day – perhaps.

The Water Bandwagon

"What's that you say - you're not feeling well? Drink plenty of water!"

"Everyone should drink 8 to 12 glasses of water a day."

"By the time you're thirsty it's too late."

"Always carry water with you at all times - always - and drink constantly throughout the day."

"Coffee dehydrates you, and anything that's not plain water will dehydrate you."

These are some examples of the types of beliefs I've heard people swearing by since some time in the 1990s to my recollection. I don't have any data to show whether people were so adamant about drinking water in the 1980s and earlier but I strongly suspect they were not.

Somehow, at some point, it's as though people became convinced that we are all dry sponges that must be constantly doused - constantly. It's understandable that people would believe so strongly that we all need to drink a lot more water: for one thing, it is far more important than food or almost anything else for our survival -- also, water just has that pure, clean, healing imagery to it doesn't it? I too used to believe so strongly in drinking water I figured you can't possibly get too much of the good stuff. Gradually, however, I became convinced that people might be way too zealous about it.

Nowadays, I have returned to my normal non-water anxiety self after having read more about it including the fact that plenty of things can hydrate you besides water -yes even coffee!

Today, I stumbled upon more information to debunk what is starting to seem almost like a "water myth":

Metabolism Myth #5
Is it true that by the time you're thirsty, you're already dehydrated?
Posted by Dr. Mark Dedomenico on Thursday, July 9, 2009 5:16 PM (MSN.COM)

How many of you have heard that by the time you are thirsty, it's too late, you're probably dehydrated? Well, let’s see what's really going on when your body signals it's thirsty.

Plasma osmolality is a measure of the concentration of substances such as sodium, chloride, potassium, urea, glucose, and other ions in blood. When you get an increase of plasma osmolality, this means substances in the blood such as sodium have become more concentrated, decreasing the amount of fluid or water in the blood.

Less than a 2 percent rise in plasma osmolality—that's not very much—will elicit thirst. However, it takes a 5 percent rise in your plasma osmolality to indicate true dehydration. Therefore, you could dine out on a high-sodium meal and make yourself extremely thirsty, but this doesn't mean you’re dehydrated. You can get significant increases in thirst without extreme concentration changes in your body fluid.

On the other hand, instances where “thirsty is too late” include water immersion and dehydration in the elderly. Water immersion is where you are plunged in cold water intermittently or for long periods at a time at 60°F or below. In some cultures such as in Russia, they perform such plunging to increase blood flow. Water immersion suppresses thirst response even though you may be dehydrated. And as for the elderly, unfortunately, as we age, our thirst response to dehydration becomes less sensitive, resulting in many elderly not meeting their fluid needs.

So don’t worry; this is just one more of those myths. Just because you're thirsty it doesn't mean you're severely dehydrated or that you've waited too long to hydrate yourself. You may have just had a high-sodium meal or increased your potassium intake by eating bananas, creating a greater concentration of ions in your blood, triggering your thirst.

Who knew? Definitely aim to drink consistently throughout the day. Water is the best hydrating agent and truly is the fountain of youth.

Society's Acceptance of Cloning...and WWDD (What Would Darwinianism Do?)

I waited about a month and I haven't seen much reaction anywhere in response to 5 cloned dogs in California. Quite notably, the dogs were all cloned from saved tissue after the death of one single dog. A "9/11 rescue dog" - the pet was selected as part of a contest to clone the most "worthy" pet. What non-dog owners may not realize is that dog-owners commonly view their pets as members of the family. In my observation this is suggestive of a societal acceptance of a sea change currently underway in biotechnology that may eventually result in a dramatically different human existence.

First, consider that we can see at this beginning of cloning household beings, society has embraced the notion of worthiness for cloning. "Worthiness" is at the very core of the concept of eugenics which many may have hoped largely ended with World War II. It's not that this one instance alone is shocking - it's just remarkable that traces of such a huge bioethical issue arise at the beginning of cloning entering our households. What's more, at a cost of about $144,000 truly only the wealthiest members of society have easy access to this. In a different way, however, cloned worthy animals may enter all of our households. Cloned meat has been accepted by the FDA since January 2008. Consider the pace at which these changes are taking place.

Secondly, consider another related tremendous shift in attitude is toward embryonic stem cell research now that Obama has opened the federal coffers. The relevance here is that one thing scientists are interested in is whether it is possible to create a clone of a human in order to obtain identical stem cells (back in 2004 someone falsely claimed to have accomplished this). Of course, even if creating a human clone were possible it would require a tremendous shift in societal acceptance. My point is only that society continues to head in that direction now that we are actively funding research on human embryos that were previously frozen and viable.

I personally suspect that all of these changes in society will have a sort of natural feel to them as they are accepted by society as improvement of medical technology. With regards to the current trend towards increased use of fertility treatment I even wonder whether (if human cloning becomes a reality) it would eventually be accepted as a means for procreation in rare circumstances where there may be no other option for procreation, or where a parent seeks to avoid expression of a recessive gene. Perhaps by that time, for example, we will have seen in our pets and other animals that no two clones ever look or act exactly the same. Only one of the 5 cloned dogs, in fact, is an exact replica. The others apparently have some different markings (notice the tan markings above) and personality traits (I'm assuming that because the owner mentioned that one dog stood out as acting the same as the original dog that the others act a little different - I think that's a very fair assumption).

One concern over wide-spread cloning would be setting the stage for a potential Irish potato famine scenario. That is, with reduced genetic diversity in agriculture comes an increase in risk if one or two of only a few genetic variations succumb to disease.



Another, more philosophical question if human cloning becomes a reality, is whether on any level, people would be driven more to clone themselves as much as possible or whether the general preference would remain to recombine with another set of genes. Arguably at least, under Darwinianism the instinct is to pass on as much of an individuals' DNA as possible and therefore society may face this pressure in the form of cloning - be it legal or illegal.

Obesity (A movie and my thoughts about it)

I just finished watching a movie called "Killer at Large: Why Obesity is America's Greatest Threat". I wouldn't really recommend the movie based solely on the fact that it is somewhat boring. As for the obesity problem in the U.S. and the world in general, there is legitimate concern about the health problems associated with obesity - most notable perhaps is that diabetes is currently the fifth leading cause of death in the U.S. What is unclear however, is exactly what is behind the problem.

Some of the more commonly mentioned causes for obesity in an individual include: genetics, poor nutrition, lack of exercise, or overeating (perhaps for emotional reasons). Unfortunately, it does not yet seem quite possible to identify the specific cause for obesity either on an individual level or for society as a whole. Instead, we have only generalized concepts. Knowing that there is a significant change throughout society (a revolution, if you will) however, we can look for other significant changes or revolutions that may have caused it.

Revolutions that come to mind include the baby boom generation and the internet. Notably, I would not include something like the availability of food as a recent revolution (I'm not sure that it was ever a revolution - it may have been a gradually increasing phenomenon) - nor would I count the changing shape of the traditional family as a revolution (again, I think it has changed gradually). I'm not saying that I can prove that the current explosion in obesity rates comes from a revolutionary change in society - I'm just suggesting it more likely does.

In order for the baby boom generation to factor into the obesity rates one might look for the aging population to be "throwing off the averages" - this does not seem to be the case however. One might also consider whether the "echo-boomers" have lived a dramatically different life because the economically prosperous times in which they were born and raised afforded them the ability to do far less physical work than any previous generation - and perhaps their children adopted some of these habits. Similarly, I tend to think that the internet revolution holds real possibility as one cause because it is a significant revolution of the uselessness of physical activity.

As for genetics, we know that a gene is only part of the "equation" - environment is the other part. To use the "lingo" Phenotype = Genotype + Environment. In my guess, the internet revolution is probably a significant environmental change that requires adaptation through intentionally increased physical work in order to combat obesity.

Of course, the problem with this theory is that many in the U.S. do not have internet access and obesity is often linked to poverty (which is linked with lack of internet access). It would be interesting to do a study to look for a correlation between internet access (at home, work, etc.) and obesity.

Sicko

[Sicko movie link]

First, however irrelevant it might be, I want to mention that I love the song at the end of the movie "Don't Be Shy" by Cat Stevens. I think one of the reasons it's there is Eddie Veder covered it during the "Vote for Change Tour" back in 2004. Great cover.

Second, and to begin the main point, Michael Moore fairly makes the argument that the health care system in the U.S. really does not seem good enough for a great many people and there are probably many tragic stories illustrating this. I think this is probably the extent of the valid points he makes in the movie.

Before going any further, I want to go around record as saying I would *love* to have excellent access to health care for myself, everyone I know, and everyone I don't know in the hopes that we could maybe all get along better if we just had the care we needed. The problem is, it's just not really clear that this is currently possible, or what actions might take us further from or closer to this dream. Legislation is costly, changes dramatically after it is introduced, and can arguably produce a result that is the opposite of what was hoped for. The Wright brothers accomplished flight on their own, despite the fact that government had invested resources in a failed attempt to do so. More relevant, although the human genome was mapped through a cooperative public effort, it had stiff competition from the private sector.

But getting back to the movie:

HMOs: a common complaint about health care is that HMOs barely work and are costly behemoths. However, as Moore himself correctly points out, HMOs arguably owe much of their existence to legislation signed in the 1970s that incentivized their creation and existence. Although I have no first-hand account of the movement leading up to the legislation, I'm fairly certain it was presented by members of Congress, the President, and many others as a way to improve health care. This is an excellent example of why one might consider exercising skepticism when presented with legislative ideas that "sound good" without good empirical evidence of their likelihood of success.

Social Programs: Surprisingly, Michael Moore points to the "free" library system, "free" education system, and the "cheap" post office. I don't think I really have to say anything more except maybe that yes, even libraries are cutting back on services and turning away patrons because cities just can't handle the expenses.

For-profit insurance companies: another complaint about those pesky insurance companies is that their CEOs suck up all the money in their compensation along with the shareholder and retained profits. However, one would really need to find out how much of the CEO compensation is in the form of exercised stock options versus an actual cash payout, and one would need to consider how much profit is retained by the company in comparison to what they charge consumers, etc. I don't have any figures but as an example, if a company has 20 million enrollees and has $10 billion in profit at the end of the year, the most they could ever possibly give back to enrollees is $500 each! But profit has to go to shareholders and towards company growth so that they don't go out of business.

Medical Reviewers: Sadly, there are probably unethical people in all professions. Medical reviewers are probably no exception. As for the argument that everything should be covered and nobody should ever be denied any coverage, it would be a *really* good idea to have a firm idea of the numbers before attempting anything like that. Also, keep in mind, we already have EMTALA (Emergency Medical Treatment and Active Labor Act) which essentially means that anyone who shows up at an emergency room at almost any hospital must be screened and stabilized without consideration of medical coverage or financial resources. Also, by law, no physician may terminate treatment of a patient for financial reasons without giving adequate notice for the patient to seek care elsewhere.

Lobbying: Yes, it seems horribly unfair but it is everywhere. The "big pharma" argument is really just an argument against lobbying.

Canada: Moore presents some interesting anecdotes but nothing more.

Life Expectancy: If life expectancy is lower in the U.S. it could be for almost any number of reasons: Violence, pollution, dangerous roads, and sedintary lifestyle just to name a few. It's possible that health care is not the cause.

London: Again, nice anecdotes but nothing more.

France: Wow, yes, having someone from the government come to do your laundry after you have a baby does sound really good. It sounds good. But you can't look at these things in a vacuum. You need to consider the effect that having so many programs has on the country. For me, it is intuitively inefficient to have a government program for doing your laundry. The more inefficiency a society has, the more problems it has. -- I also found it interesting that the man who had chemotherapy for his cancer was able to get a doctor's note to get a 3 month paid leave from work which he used, in his words, "...to soak up the sun..." (the irony being that he was paid to go soak up sun after being treated for cancer).

How would *I* "fix" health care?: I think I will write another post on that after we see what happens with this $1 trillion dollar Bill. I can tell you one thing though, if I wanted to bring down the amount being spent on health care I would probably not go out and spend more on it - and certainly not $1 trillion. That is more than a whopping twice the amount of our budget deficit for 2008! I'm pretty sure that would qualify as spending more on health care, not spending less.