There are a lot of good points here, but it leaves a pretty unfair impression of some of the democrats' proposed policies. No one suggested free $200k useless journalism MAs; the proposal was 2 years of community college, which is really cheap, & while less good than Harvard, a decent value proposition. Likewise, the ACA didn't just throw money at subsidizing health care, it initiated lots of programs to try to 'bend the curve' (which has since bent). Etc
Thank you for your thoughts on free college education. From things I have observed, I am concerned that "free" college would ultimately decrease the quality of that education, as it has done in public high school. I live in a state with well-subsidized and high quality community college options. It seems to me that the combination of believing post-secondary education to be necessary for getting a job and the pressure to increase graduation rates has lowered graduation standards, shifting the ultimate education responsibility to the community colleges.
The community colleges understand their position and have strict rules for attendance, among other things. Miss class more than twice and get kicked out - they have too much demand to waste on students who aren't serious.
I am concerned that if this program becomes free, the perceived need to accommodate less than serious students while meeting high graduation rates will ruin a highly effective program. The problems that weakened high school graduation will do the same to community college degrees.
Students have to have skin in the game for assistance to result in skills, not just credentials.
I don't know about Dune, but here on Earth we only have scarcities in things like CO2 absorption capacity of the atmosphere and (in some places) water where the is no market or a badly misrelated market. We know how to solve these problems but the political support is not there.
If the Duke had a cost effective technology for increasing the supply of water, why stop with producing only enough for "his" needs. Put one in every Friman village.
Back when ACA was just a concept there was a lot of talk about the US spending too much (compared to other countries) on medical care relative to outcomes. Unfortunately little was done to actually increase the supply of cost effective medical care because it's hard to introduce cost benefit analysis along the chain from what suppliers are trying to invent, what DFA approves, what Medicaid/private insurance pays for and what doctors prescribe. Only freeing up immigration of health care professionals is easy and that's not easy.
I wish they would come out and say whether they mean to say the same thing, or when they are trying to make a different point (in this case, I am like 75% sure they are both saying the same thing, but not 100%)
Very much agreed here. This is basic econ 101. If you want the price of something to go down, you need to increase supply faster than demand, AND have competition.
Thus if you want total healthcare costs to go down. You should focus on increasing healthcare supply, and make sure there's competition (pretty much the opposite of what Obamacare did, which focused on more people getting healthcare coverage which will increase demand, and thus costs).
To have that competition, you need to mandate that providers post those prices online. That price should also be the same no matter who's paying. IE, the cash price, insurance price, or government price should be the same no matter who's paying.
If you increase supply, and have actual competition because people can see the prices, then that will focus providers on getting costs down.
Fun fact, more expensive healthcare is often worse care. Healthcare centers of excellence like the Cleveland clinic, and Oklahoma surgery center often have much better results, at a lower cost.
It seems like there are two kinds of abundance: that from technological change and productivity improvements, and that from overruling rentier groups and transferring benefits to a larger population. In the first, we get smartphones, cheap solar energy, and falling costs of cars; in the latter, we get more housing, more doctors, and a bigger Harvard class size.
Benefiting from the first one is great, but is largely out of our control. Getting the second one benefits the many over the few, but is hard because of the entrenched interests that grow in a successful society, as Mancur Olson brilliantly laid out in "The Rise and Decline of Nations." And while I think we all decry their narrow, parochial interests, in truth it's a lot easier to do when we're the ones who stand to benefit and not the ones who are targeted for losing some of what we have. I think it would behoove all of us to think in what ways we ourselves are rentiers as well, and how we would react if it's our turn in the barrel.
I would suggest that the benefits of your first type, while unpredictable, are _more_ under our control than you're suggesting. Government willingness to invest in blue-sky research has been going down over time. Both the real value of investment dollars has been pinched, and the constraints on what research can get funded has been narrowed, because of a successful campaign of lampooning things that sound weird to a layman. I'm sure you can list off plenty of examples of industries that exist thanks to government research. And it's much harder for the private sector to invest in the kind of basic, exploratory work that produces these big long-run benefits, because it's so hard to predict the timeline on which it will produce any return.
I think we've gotten immensely great things from government research --and not just Tang and Teflon! But it's not under our "control" unless one thinks mechanically that X dollars of basic R&D will produce Y value to society in the long run, though we have no idea which 1% of those X dollars will be the winners.
The place where I spent my career did much of the early intellectual work underlying the Internet (packet switching, going digital vice analogue and all that), purely for defense purposes (how to communicate during a nuclear war). Trust me, no one doing that work back in the 60s had any idea that this work would contribute to the global transformation we witnessed as a result of that incredibly tiny expenditure of R&D funds.
And then, on the other hand, we have the billions and billions of federal dollars spent on fusion research. Could be a big deal in the 22nd century I guess. Maybe the 23rd . . .
That's just my point though -- of course you can't mechanically predict that $X of additional research funding will translate into Y% improvement in future growth.
But we definitely know that past research paid off in HUGE ways, and we are a rich enough society that it seems ludicrous to suppose that the social payoff to handing another $1B in reduced taxes to people who already have billions and are having trouble coming up with investments that they consider to have safe enough returns will be better than keeping that $1B and funneling it into long-shot research. (And this leaves aside the argument that very high taxes on corporate and individual income actually incentivized private corporations to instead funnel their money into long-shot research, both for the glory of it, and because actually growing their industry would make everyone involved richer than paying out the cash. See: https://slate.com/business/2012/07/xerox-parc-and-bell-labs-brought-to-you-by-high-taxes.html )
I agree that we should be spending a lot more public money on R&D. Also a lot more money on clinical trials. For example, testing generic drugs like metformin that quite probably will be the first approved life extension drug (people with diabetes on metformin have been shown to outlive people without diabetes that aren't taking the drug).
But higher taxes spurring companies to do more R&D? nope, not even close. higher taxes spur companies to spend more money to figure out how to get out of paying taxes.
Not to mention in the past the government hasn't exactly been good stewards of money...
"And doctors, knowing that their services are in high demand, tend to be contemptuous of patients’ time and very bad at sticking to their schedules."
And customer service or even being a qualitatively better doctor makes very, very little difference to their bottom line, unless in a concierge or no insurance practice.
One aspect of this issue I haven't seen emphasized enough is that abundance not only makes people better off, it makes them more liberal-minded, tolerant, and generous-- and scarcity does the opposite of all those things. Benjamin Friedman's "The Moral Consequences of Economic Growth" is the key historical text here. Really seems like if you want to create the cultural foundations for people to expand their circles of concern, overcome prejudices, be more open to helping those in need, etc, you should be more focused on creating the abundance that we know is a powerful tool for laying those foundations.
I often think about Hitler invading Eastern Europe to give German farmers Lebensraum and ensure Germans never went hungry again. Then after the war new agricultural technologies increased crop production to make this a moot point. Abundance could have halted his rise to begin with.
Agree with most of this, but there are a couple of things missing:
- Congress failing to increase the number of residencies has nothing to do with not wanting to spend more money, it's due to the lobbying power of existing doctors. It was that same lobbying power that compelled Congress to spend more money by doing "doc fix" legislation for a decade before repealing the Medicare growth caps completely. The difficulty in modernizing medicine away from artisanal practices is also due to these entrenched interests.
- Expanding higher education is unlikely to bring the price down - there is plenty of room at low-tier schools and community colleges. Anyone who wants to go to college can. The problem is that college acts very much like a luxury good where status is a very important factor.
- And the regulatory and lobbying capture is just as present in higher education. I agree that we shouldn't be subsidizing schools that don't expand, or are wealthy enough to stand on their own. But the government isn't run by philosopher-kings, it's run by bureaucrats and politicians who listen to influential and organized "stakeholders" more than anything else.
"On higher education, we’re stuck between the left saying “spend more” and the right saying “spend less” with very little interest in trying to do something different."
This I agree with completely and it's been the main reason why I don't identify with or support either party. It's not limited to higher education - partisans on either side are simply not interested in effective governance.
It seems like you’re 180 degrees wrong about residency slots.
“ According to the Association of American Medical Colleges—the country’s leading advocates for lifting the residency cap….”
“ The AMA has been a long-time advocate for modernizing GME [Graduate Medical Education]. This includes increasing funding for medical residency slots, developing innovative practice models, and creating residency positions that reflect patient and societal needs. Most recently, the AMA urged support for two federal bills. These include the Resident Physician Shortage Reduction Act of 2017, which would expand Medicare funding for 15,000 additional residency positions, and the Advancing Medical Resident Training in Community Hospitals Act of 2017, which would close a loophole in GME cap-setting criteria affecting hospitals who host small numbers of residents for temporary training assignments, also known as “resident rotators.”
There are a lot of good points here, but it leaves a pretty unfair impression of some of the democrats' proposed policies. No one suggested free $200k useless journalism MAs; the proposal was 2 years of community college, which is really cheap, & while less good than Harvard, a decent value proposition. Likewise, the ACA didn't just throw money at subsidizing health care, it initiated lots of programs to try to 'bend the curve' (which has since bent). Etc
Thank you for your thoughts on free college education. From things I have observed, I am concerned that "free" college would ultimately decrease the quality of that education, as it has done in public high school. I live in a state with well-subsidized and high quality community college options. It seems to me that the combination of believing post-secondary education to be necessary for getting a job and the pressure to increase graduation rates has lowered graduation standards, shifting the ultimate education responsibility to the community colleges.
The community colleges understand their position and have strict rules for attendance, among other things. Miss class more than twice and get kicked out - they have too much demand to waste on students who aren't serious.
I am concerned that if this program becomes free, the perceived need to accommodate less than serious students while meeting high graduation rates will ruin a highly effective program. The problems that weakened high school graduation will do the same to community college degrees.
Students have to have skin in the game for assistance to result in skills, not just credentials.
This discourse has too little recognition iof J.W. Mason's classic blog post on this: https://jwmason.org/slackwire/public-options-general-case/
“ So a planning paradigm that emphasizes hyper-local interests and community consultation leads to dysfunctionally small amounts of housing.”
Yep, this captures my planning experience in one sentence.
Another great fundamentals post.
You'd think that being Finns, the Harkonnens would have had a more egalitarian approach to resolving those water issues.
I don't know about Dune, but here on Earth we only have scarcities in things like CO2 absorption capacity of the atmosphere and (in some places) water where the is no market or a badly misrelated market. We know how to solve these problems but the political support is not there.
If the Duke had a cost effective technology for increasing the supply of water, why stop with producing only enough for "his" needs. Put one in every Friman village.
Back when ACA was just a concept there was a lot of talk about the US spending too much (compared to other countries) on medical care relative to outcomes. Unfortunately little was done to actually increase the supply of cost effective medical care because it's hard to introduce cost benefit analysis along the chain from what suppliers are trying to invent, what DFA approves, what Medicaid/private insurance pays for and what doctors prescribe. Only freeing up immigration of health care professionals is easy and that's not easy.
> someone — perhaps the government, perhaps a philanthropist — ought to at least try to make an online-only college program that’s really good.
This sounds like Western Governors University to me. It should get more press.
https://www.wgu.edu
I know that Matt and Noah Smith are aware of each other, and when they write about the same things like this (here is Noah on "Scarcity Mindset" - https://noahpinion.substack.com/p/americas-scarcity-mindset),
I wish they would come out and say whether they mean to say the same thing, or when they are trying to make a different point (in this case, I am like 75% sure they are both saying the same thing, but not 100%)
Very much agreed here. This is basic econ 101. If you want the price of something to go down, you need to increase supply faster than demand, AND have competition.
Thus if you want total healthcare costs to go down. You should focus on increasing healthcare supply, and make sure there's competition (pretty much the opposite of what Obamacare did, which focused on more people getting healthcare coverage which will increase demand, and thus costs).
To have that competition, you need to mandate that providers post those prices online. That price should also be the same no matter who's paying. IE, the cash price, insurance price, or government price should be the same no matter who's paying.
If you increase supply, and have actual competition because people can see the prices, then that will focus providers on getting costs down.
Fun fact, more expensive healthcare is often worse care. Healthcare centers of excellence like the Cleveland clinic, and Oklahoma surgery center often have much better results, at a lower cost.
It seems like there are two kinds of abundance: that from technological change and productivity improvements, and that from overruling rentier groups and transferring benefits to a larger population. In the first, we get smartphones, cheap solar energy, and falling costs of cars; in the latter, we get more housing, more doctors, and a bigger Harvard class size.
Benefiting from the first one is great, but is largely out of our control. Getting the second one benefits the many over the few, but is hard because of the entrenched interests that grow in a successful society, as Mancur Olson brilliantly laid out in "The Rise and Decline of Nations." And while I think we all decry their narrow, parochial interests, in truth it's a lot easier to do when we're the ones who stand to benefit and not the ones who are targeted for losing some of what we have. I think it would behoove all of us to think in what ways we ourselves are rentiers as well, and how we would react if it's our turn in the barrel.
The State Bar of Georgia is a fine guild. That being said, I would be happy to let paralegals do simple divorces if I had guaranteed health care
I would suggest that the benefits of your first type, while unpredictable, are _more_ under our control than you're suggesting. Government willingness to invest in blue-sky research has been going down over time. Both the real value of investment dollars has been pinched, and the constraints on what research can get funded has been narrowed, because of a successful campaign of lampooning things that sound weird to a layman. I'm sure you can list off plenty of examples of industries that exist thanks to government research. And it's much harder for the private sector to invest in the kind of basic, exploratory work that produces these big long-run benefits, because it's so hard to predict the timeline on which it will produce any return.
I think we've gotten immensely great things from government research --and not just Tang and Teflon! But it's not under our "control" unless one thinks mechanically that X dollars of basic R&D will produce Y value to society in the long run, though we have no idea which 1% of those X dollars will be the winners.
The place where I spent my career did much of the early intellectual work underlying the Internet (packet switching, going digital vice analogue and all that), purely for defense purposes (how to communicate during a nuclear war). Trust me, no one doing that work back in the 60s had any idea that this work would contribute to the global transformation we witnessed as a result of that incredibly tiny expenditure of R&D funds.
And then, on the other hand, we have the billions and billions of federal dollars spent on fusion research. Could be a big deal in the 22nd century I guess. Maybe the 23rd . . .
That's just my point though -- of course you can't mechanically predict that $X of additional research funding will translate into Y% improvement in future growth.
But we definitely know that past research paid off in HUGE ways, and we are a rich enough society that it seems ludicrous to suppose that the social payoff to handing another $1B in reduced taxes to people who already have billions and are having trouble coming up with investments that they consider to have safe enough returns will be better than keeping that $1B and funneling it into long-shot research. (And this leaves aside the argument that very high taxes on corporate and individual income actually incentivized private corporations to instead funnel their money into long-shot research, both for the glory of it, and because actually growing their industry would make everyone involved richer than paying out the cash. See: https://slate.com/business/2012/07/xerox-parc-and-bell-labs-brought-to-you-by-high-taxes.html )
I agree that we should be spending a lot more public money on R&D. Also a lot more money on clinical trials. For example, testing generic drugs like metformin that quite probably will be the first approved life extension drug (people with diabetes on metformin have been shown to outlive people without diabetes that aren't taking the drug).
But higher taxes spurring companies to do more R&D? nope, not even close. higher taxes spur companies to spend more money to figure out how to get out of paying taxes.
Not to mention in the past the government hasn't exactly been good stewards of money...
"And doctors, knowing that their services are in high demand, tend to be contemptuous of patients’ time and very bad at sticking to their schedules."
And customer service or even being a qualitatively better doctor makes very, very little difference to their bottom line, unless in a concierge or no insurance practice.
I'm pretty sure three times in the first week qualifies you for "fanboi" status...
One aspect of this issue I haven't seen emphasized enough is that abundance not only makes people better off, it makes them more liberal-minded, tolerant, and generous-- and scarcity does the opposite of all those things. Benjamin Friedman's "The Moral Consequences of Economic Growth" is the key historical text here. Really seems like if you want to create the cultural foundations for people to expand their circles of concern, overcome prejudices, be more open to helping those in need, etc, you should be more focused on creating the abundance that we know is a powerful tool for laying those foundations.
I often think about Hitler invading Eastern Europe to give German farmers Lebensraum and ensure Germans never went hungry again. Then after the war new agricultural technologies increased crop production to make this a moot point. Abundance could have halted his rise to begin with.
Agree with most of this, but there are a couple of things missing:
- Congress failing to increase the number of residencies has nothing to do with not wanting to spend more money, it's due to the lobbying power of existing doctors. It was that same lobbying power that compelled Congress to spend more money by doing "doc fix" legislation for a decade before repealing the Medicare growth caps completely. The difficulty in modernizing medicine away from artisanal practices is also due to these entrenched interests.
- Expanding higher education is unlikely to bring the price down - there is plenty of room at low-tier schools and community colleges. Anyone who wants to go to college can. The problem is that college acts very much like a luxury good where status is a very important factor.
- And the regulatory and lobbying capture is just as present in higher education. I agree that we shouldn't be subsidizing schools that don't expand, or are wealthy enough to stand on their own. But the government isn't run by philosopher-kings, it's run by bureaucrats and politicians who listen to influential and organized "stakeholders" more than anything else.
"On higher education, we’re stuck between the left saying “spend more” and the right saying “spend less” with very little interest in trying to do something different."
This I agree with completely and it's been the main reason why I don't identify with or support either party. It's not limited to higher education - partisans on either side are simply not interested in effective governance.
It seems like you’re 180 degrees wrong about residency slots.
“ According to the Association of American Medical Colleges—the country’s leading advocates for lifting the residency cap….”
“ The AMA has been a long-time advocate for modernizing GME [Graduate Medical Education]. This includes increasing funding for medical residency slots, developing innovative practice models, and creating residency positions that reflect patient and societal needs. Most recently, the AMA urged support for two federal bills. These include the Resident Physician Shortage Reduction Act of 2017, which would expand Medicare funding for 15,000 additional residency positions, and the Advancing Medical Resident Training in Community Hospitals Act of 2017, which would close a loophole in GME cap-setting criteria affecting hospitals who host small numbers of residents for temporary training assignments, also known as “resident rotators.”
Thanks for that - it seems that things have changed since I last seriously looked at this.