Stromata Blog

Arthur Laffer as a Leading Indicator

Today’s Wall Street Journal praises the California Tax Commission’s forthcoming proposal to revise the state’s tax system dramatically, replacing the current personal income, corporate income and state sales taxes with a semi-flat personal income tax and a VAT-like “business net receipts tax”.

A point that struck me was how closely this structure resembles the one proposed for the country by Arthur Laffer, Stephen Moore and Peter J. Tanous in their recent book, The End of Prosperity. They advocate a 12% flat income tax rate, with a large personal exemption and deductions only for mortgage interest, charitable contributions and rent, plus a 12% value added tax. All but a handful of other federal taxes would disappear. The upshot, according to their calculations, would be just as much government revenue as the present system produces and improved prospects for future economic growth.

Compare that to the California proposal:

The commission would replace the current, hugely complex system with one that has no sales tax (currently 5 percent) and no corporate income tax (currently 8.85 percent). Instead, it would have a Business Net Receipts Tax of 4 percent, which would tax what a business sells minus the cost of what they purchase from other firms. It is, therefore, very similar to the Value Added Tax widely used in Europe. . . .

The personal income tax would move sharply towards the flat-tax model. There would be a personal deduction of $22,500 for individuals and $45,000 for joint filers, and only three tax rates: 2.75 percent on taxable income up to $56,000 for a couple, 6.5 percent on income above $56,000, and 7.5 percent on income above $1 million. The current tax has seven tax rates and reaches as high as 10.55 percent. There would be deductions only for mortgages, property taxes, and charitable contributions. A family could fill out its state income-tax form in five minutes.

When I read The End of Prosperity, my reaction to the tax ideas was that they were pipe dreams. On the national level, where a fundamental alteration of the tax code would create huge transitional problems, that may be the case, but California’s choice is between bankruptcy and fundamental reform, not between a not-very-good tax system and a better one. Today California’s tax burden drives away the producers who pay taxes and thus leaves the state poorer in every sense, a perfect illustration of the Laffer Curve. (Dr. Laffer himself has relocated his prosperous consulting business from California to income tax-free Tennessee.) As the prospect draws nearer of California as a Third World polity, with entrepreneurs chased out and rent seekers in the ascendant, perhaps the legislators, or at least the voters, will concentrate their minds.

Degeneracy Prime

At the moment, I happen to be in Las Vegas, which is supposed to be the epicenter of Western decadence. A future Laclos will, however, portray it as a place of simple, straightforward morality compared to what one might call “Global Hollywood”.

In Vegas, drunken couples contract insincere “marriages” in fake chapels, hawkers thrust prostitutes’ calling cards at passing tourists, and “comedians” think George Carlin’s “seven words” are the only funny ones in the English language. But nobody promotes sex-with-drugged-13-year-olds as a harmless amusement verging on a civil right. To reach that level of degeneracy, one must turn to Whoopi Goldberg and other film dignitaries defending fugitive from justice Roman Polanski.

An enterprising reporter might want to ask the celebrities who pledged allegiance to Obama last January what they think of their leader’s indirect complicity in the apprehension of roamin’ Roman. Which is more important to them: bowing down to their “sort of god” or upholding the modern version of droit de seigneur?

I hope, BTW, that the Justice Department underlings who took note of Polanski’s stepping outside of sanctuary and acted swiftly to take advantage of it will receive bonuses and promotions, though I realize that, if publicly identified, they may never be able to rent a DVD again.

Addendum: Not being someone who follows Roman Polanski’s movements – until a couple of days ago, I couldn’t have told you whether he was dead or alive – I was unaware that he “has been traveling between his main residence in Paris and his chalet in Gstaad[, Switzerland] for years” and could have been nabbed several Administrations ago. Cheers, then, to the Obama Justice Department for doing the deed. I hope that the President will stand behind his subordinates in the face of the wrath of Woody Allen et al.

Correction: I’ve been informed that it was California rather than federal authorities who arranged for the Swiss to nab felon-on-the-run Polanski. I’m sorry to have to withdraw my praise of the Obama Justice Department but hope that I’ll have an occasion to say something nice about it in the near future, perhaps when the attorney general stops stiff-arming inquiries by the Civil Rights Commission.

The President of Chicago

I’ve seen four theories about why President Obama has decided that the most important task he can undertake this week is to fly to Copenhagen to lobby in behalf of the Chicago bid to host the 2016 Olympic Games.

The one that I would like to believe is Bill Kristol’s: that the sports junket is a cover for a surprise visit to our troops in Afghanistan. The trip could be the start of a White House effort – conspicuously absent to date – to rally public support behind the Af-Pak campaign and contradict the hints (such as his delay in authorizing new force commitments and nearly complete absence of communications with the commander in the field, not to mention Joe Biden’s vaporous “fight terrorism from 35,000 feet” proposal) that Kabul is about to go under the spacious Obama bus.

A second theory is that the International Olympic Committee has covertly made the decision to pick Chicago and that the President wants to bask in the “glory” of putting an American city over the top. If that’s the motive, it will be yet another example of our chief executive’s childish vanity. Hundreds of rank-and-file Chicagoans have devoted thousands of hours to pushing the bid. The One swoops down to claim the credit. Appalling.

For the true cynics, Jim Geraghty notes that the trip “just happens to take him out of the country the day the unemployment numbers for September will be announced”. How handy to have a big foreign story to overshadow what’s likely to be an unhappy domestic one.

Finally, and most plausibly, there’s the view of John Fund, writing in the WSJ.com Political Diary (subscription-only, and the best use of $7.95 you have this month):

Some even in Chicago question the wisdom of his lobbying trip. “To let himself be distracted by a parochial concern like this does not speak well for Obama’s judgment,” wrote Chicago Tribune columnist Steven Chapman. Not every Chicagoan shares Mr. Obama’s enthusiasm for hosting the games. The latest Tribune poll shows only 47% of residents backing the city’s bid in the wake of Mayor Richard Daley’s decision to put taxpayers on the hook for any cost overruns.

But in reality President Obama’s decision makes perfect sense. Chicago’s bid for the Olympics is in jeopardy, and even though the president will have perhaps five minutes before the microphones of the International Olympic Committee, his star presence could make the difference. What’s on the line in Copenhagen is much bigger than the Olympics, at least to the parochial players who run Chicago. Mayor Daley has staked his legacy on snagging the games. The 67-year-old mayor has dominated the city for the past two decades, but recent scandals and financial strains have dented his prestige. “The mayor’s ability to continue to run the city as he sees fit could hinge in great part on whether the Olympics bid succeeds,” reports the Chicago Tribune.

That’s why Chicago sources tell me Mayor Daley pulled out all the stops to mobilize the White House to save the city’s bid. He was aided in his appeals by the fact that the White House is now stuffed with top aides who are Daley loyalists, ranging from Valerie Jarrett to David Axelrod to Rahm Emanuel.

In their heyday, the big city political machines wielded massive influence. The bosses had governors, senators and congressmen in their pockets – but never quite managed to dominate a Presidency. Richard M. Daley is generally regarded as a pale shadow of his father, Richard J. In this respect, at least, he has surpassed the old man.

Further reading: The American Spectator, “Obama’s Olympic Spirit”

A Fact a Day About Obamacare – Day Seven: Insurance Company Profits

Okay, so I missed a few days. As Glenn Reynolds often says, blogs aren’t public utilities. Anyway, resuming the series, let me call attention to a post by Andrew Biggs of the American Enterprise Institute, discussing the allegedly outrageous profits that health insurers gobble up at the expense of the rest of us:

Despite all the hype, the health-insurance industry’s profit margins remain modest. On average, health insurers deliver a profit of less than 4 cents for each dollar of sales.

Health insurance’s profit margin is lower than that of the soft-drink industry, which competes ferociously through advertising. It is lower than that of the fast-food industry, which lures customers with dollar menus and supersized meals. It is far lower than that of the beer industry, with its profit margin of 18 percent. And it’s not just foodstuffs that earn higher profits than health insurance: Some 85 industries have higher profit margins. . . .

Assuming that the only difference between the public option and private insurance is the need to deliver a profit, the public option would cost only about 4 percent less than private-sector coverage. And even this is an overstatement. Private health insurers produce a profit to pay the return demanded by their investors. The public option, instead of having investors, would receive its capital from the government. Those funds will be borrowed, of course, and the taxpayer must pay interest. When interest costs are included, the total costs of the public option are about the same as those of private insurance.

While demonizing health-insurance profits is a central part of the Democratic leadership’s strategy, it is a red herring: health insurance is no more profitable than dozens of other industry sectors. And it’s the free market that keeps it so. That’s something to be remembered as the health debate progresses.

The same reasoning applies to the nonprofit cooperatives that the Baucus bill would set up to compete with profit-making insurers. A nonprofit organization requires capital in order to continue to exist. If the government doesn’t subsidize it and private equity investment is by definition impossible, it must rely on either borrowing or retained earnings. In either case, it will have to charge prices comparable to those of its for-profit competitors.

The President may believe that a four percent profit margin is exorbitant and that, in any case, profits are just a dispensable element of overhead. Meanwhile, he misses the true structural problem with the insurance industry: that the ban on competition across state lines has split what should be a huge national market into 50 little fragments, each subject to the whims of state regulators.

Clunk, Clunk, Clunk

Anybody who has read Bastiat could have told you that destroying old but functional automobiles is not a path to wealth, and some did. The geniuses in Washington were sure, however, that the lure of “cash for clunkers” would produce a bonanza for car makers and help invigorate the economy. The government spent $3 billion. Predictably, the bribe brought out lots of buyers in August. It turns out, though, that the net effect was merely to shift sales from one month to another. Henry Payne reports what happened after the golden shower came to an end:

Edmunds.com [the link is behind a subscription wall] reports that “September’s light-vehicle sales rate will fall to 8.8 million units . . . the lowest rate in nearly 28 years, tying the worst demand on record. After the cash-for-clunkers program boosted August sales to their first year-over-year increase since October 2007, demand has plunged. In at least the last 33 years, the U.S. seasonally adjusted annual rate has only dropped as low as 8.8 million units once — in December 1981 — with records stretching back to January 1976.”

“Many people regard February as the darkest month of the recession, but even then (sales were) higher, at 9.1 million units,” adds Edmunds.com statistician Zhenwei Zhou.

The price of this maneuver was the destruction of a couple of hundred thousand vehicles that could have served the needs of less affluent purchasers who can’t afford new cars. Now the poor will pay higher prices for transportation. Rarely does the government come up with so brilliant a reverse-Robin Hood scheme.

P. S.: Other matters have distracted me from my “fact a day about Obamacare” endeavor, but I’ll make the banal observation that the same folks who can’t figure out the most obvious facts about the market for cars think they can reshape the market for health care without adverse side effects.

A Fact a Day About Obamacare – Day Six: Why Medical Costs Rise

Thanks to The Belmont Club, I came across a fascinating article by Richard Fogel, dean of the cliometricians. In “Forecasting the Cost of U.S. Health Care”, Professor Fogel looks at the trends affecting the major factor in aggregate medical expenses: the illnesses of the elderly. At age 85, the average person is consuming about six times the health care resources that he used at age 50. Trying to look forward to what the care of the oldest cohorts will cost later in this century requires weighing a number of contradictory factors.

On the positive side, people are getting sicker later in life, and pharmaceutical and technological advances have reduced the cost of treatment. But there are now many more old people. The latter is, of course, a good thing from every point of view but that of the most blinkered cost-cutter. Professor Fogel glances at a few facts demonstrating just how spectacular – and unexpected – the medical advances of the last century have been.

Whereas more than a third of all deaths at the turn of the 20th century were of children under 5, today infant and childhood deaths are less than 2 percent of the annual total. By contrast, deaths among persons age 65 and over, which accounted for just 18 percent of the total in 1900, have grown to three-quarters of all deaths today [meaning that you are four times more likely to reach age 65 now than you were then]. . . .

[T]he record life expectancy at birth in 1840 was found among Swedish women, who lived on average a little more than 45 years. In the year 2000, Japanese women achieved a record life expectancy of nearly 85 years. . . .

In the late 1920s, L. I. Dublin, the chief actuary of the Metropolitan Life Insurance Company, put a cap of 64.75 years on life expectancy for both men and women. In 1936 he collaborated with the leading mathematical demographer of the first half of the 20th century to publish a revised upper limit of 69.93 years. [Except in Africa, even very poor countries, such as Albania, now exceed that prediction.] . . .

At the beginning of the 20th century the burden of chronic diseases among elderly Americans was not only of greater severity but began more than ten years earlier in the life cycle than it does today. Moreover, the number of comorbidities at each age between 50 and 70 is well below levels that prevailed a century ago. . . . Studies of changes in functional limitations among persons who have reached age 65 since the early 1980s indicate that such limitations declined at an accelerating rate during the balance of the 1980s and the 1990s. . . .

For those who reached age 65 during the first decade of the 20th century, the average age of onset of chronic disabilities was about 51. By the 1990s, however, the average age of onset of chronic conditions was more than ten years later. Moreover, these disabilities are now generally milder, and many effective interventions to reduce the impact of chronic conditions are available.

All of this good news has led, however, to a conundrum that our President labels a national emergency, deserving of far more of his time and energy than minor matters like the possibility of a nuclear armed nest of anti-Western fanatics in Iran: “Why is it that although the average age of onset of disabilities has been delayed by ten years, and that these disabilities have become milder than they used to be, the share of GDP spent on health is rising?”

Professor Fogel suggests that the fault lies not in insurance companies or greedy doctors but in ourselves – and that it’s not a fault at all:

The main factor is that the long-term income elasticity of the demand for healthcare is 1.6 – for every 1 percent increase in a family’s income, the family wants to increase its expenditures on healthcare by 1.6 percent. This is not a new trend. Between 1875 and 1995, the share of family income spent on food, clothing, and shelter declined from 87 percent to just 30 percent, despite the fact that we eat more food, own more clothes, and have better and larger homes today than we had in 1875. All of this has been made possible by the growth in the productivity of traditional commodities. . . .

Consequently, there is no need to suppress the demand for healthcare. Expenditures on healthcare are driven by demand, which is spurred by income and by advances in biotechnology that make health interventions increasingly effective. Just as electricity and manufacturing were the industries that stimulated the growth of the rest of the economy at the beginning of the 20th century, healthcare is the growth industry of the 21st century. It is a leading sector, which means that expenditures on healthcare will pull forward a wide array of other industries including manufacturing, education, financial services, communications, and construction.

In other words, as we get richer, we voluntarily buy more health care. The growing proportion of the GDP expended on doctors, hospitals and drugs is no more ominous than the growing proportion that went to automobiles and televison sets in the 1950’s or to personal computers and cell phones today.

This is not to say that the medical cost trend is wholly benign. Rising expenditures on other goods and services reflected market forces. A portion of what we spend of health care stems from the dead weight of government intervention. No other sector of our economy is so heavily regulated and subsidized. Perhaps it is time to give freedom a chance.

A Fact a Day About Obamacare – Day Five: The Individual Mandate

As the “public option” fades from view, the “individual mandate” – a requirement that everybody purchase health insurance meeting a government standard or pay a substantial fine – has come to the fore. It is a centerpiece of Senator Baucus’s new legislative proposal, the “bipartisan compromise” backed only by Democrats.

During the Democratic Presidential primaries, candidate Obama opposed Hillary Clinton’s plan to “force every American to buy health care”. That stance may have been a response to the fact that the mandate is highly unpopular. One of the Krazy Kos Kidz, after scrutinizing the polls, remarks wryly, “It seems that the individual mandate gets broad support, until a fine for non-compliance is mentioned.”

The main objections to the individual mandate were well summarized by Ramesh Ponnuru back when Mitt Romney first floated the idea in Massachusetts:

First of all, the problem he’s addressing doesn’t seem to be a major factor in pushing health-care costs up. Greg Scandlen of the Galen Institute writes: “There may remain some free-riders who refuse to pay their fair share, and remain uninsured, confident that society will take care of their needs eventually. But, so what? Even today with 41 million uninsured, the cost of uncompensated care is a mere 3.5% of total health spending. . . .

Second, the analogy the governor makes [and that President Obama repeated in his speech to Congress this week] to mandated car insurance doesn’t hold up. Michael Cannon of the Cato Institute puts it this way: “First, mandated auto insurance leaves you free to take the bus. You can’t exactly decline to own your body. Second, mandated auto insurance is supposed to insure that victims are made whole after they are hit by a tortfeasor” – which germs aren’t. . . .

Third, if you’re going to mandate health insurance, you’ve got to define what counts as health insurance. Every provider group will be lobbying for inclusion in the government’s definition of a standard benefits package. . . . And it will be hard to resist demands for price controls over a product that you are required to purchase. So we are talking about a reasonably direct path to a much greater expansion of governmental involvement in health care. . . .

Finally, we should face the fact that health insurance is not an attractive deal for many young, healthy people. Getting rid of some mandates – for example, the state-level mandates that make it harder for people to buy a cheaper catastrophic policy – to make it a better deal for them would make more sense than forcing them to buy a product they don’t want.

Today’s Washington Post explains quite candidly why liberal “health care reformers” like this kind of compulsion:

Drafting young adults into any health-care reform package is crucial to paying for it. As low-cost additions to insurance pools, young adults would help dilute the expense of covering older, sicker people. Depending on how Congress requires insurers to price their policies, this group could even wind up paying disproportionately hefty premiums – effectively subsidizing coverage for their parents.

It will be interesting to see whether the generation of young Obamalators cheers for economic conscription.

Massachusetts, by the way, enacted Governor Romney’s mandate proposal (with a number of additions by the Democratic legislature). The Boston Globe, no foe of government-run medicine, today reported the results so far, calling attention to a problem that Ramesh didn’t mention – the tendency of conscripted buyers to try to recoup their premiums by overutilizing medical services:

The state’s major health insurers plan to raise premiums by about 10 percent next year, prompting many employers to reduce benefits and shift additional costs to workers.

Increases will range from 7 to 12 percent, capping a decade of consecutive double-digit premium increases, according to a Globe survey of the state’s top health insurers. Actual rates for 2010 will depend on the size of the employer and the type of coverage, with small businesses and individuals expected to be hit hardest. Overall, premiums are more than twice as high as they were 10 years ago. . . .

Some insurers say the Massachusetts law mandating coverage has added to the cost burdens on the health system. At least initially, they said, it encouraged newly enrolled members to flood the offices of primary care physicians and specialists to receive physicals and other exams. . . .

Despite being dominated by not-for-profit health plans, Massachusetts had the highest family coverage premiums in the nation – an average of $13,788 – in 2008, the most recent year for which figures were available, according to the Kaiser foundation. That included employer contributions of $10,425 and $3,363 from employees.

A large portion of those costs can be traced to the Boston area, where world-class medical centers perform expensive operations that elsewhere are handled for less money at community hospitals.

Raise the demand curve. Leave the supply curve constant. Prices go up. President Obama may be able to lower the oceans and heal the planet, but he can’t repeal the laws of economics.

A Fact a Day About Obamacare – Day Four: The “Lump of Health Care” Fallacy

Writing in today’s Wall Street Journal, Rupert Darwell asks why Britain’s National Health Service “is institutionally ageist”. The NHS doesn’t exactly have “death panels”, but its concern for the lives of the elderly is limited.

In a report, the [Patients Association, an independent charity] presented a catalogue of end-of-life cases that demonstrated, in its words, “a consistent pattern of shocking standards of care.” It provided details of what it described as “appalling treatment,” which could be found across the NHS.

A few days later, a group of senior doctors and health-care experts wrote to a national newspaper expressing their concern about the Liverpool Care Pathway, a palliative program being rolled out across the NHS involving the withdrawal of fluids and nourishment for patients thought to be dying. Noting that in 2007-08, 16.5% of deaths in the U.K. came after “terminal sedation,” their letter concluded with the chilling observation that experienced doctors know that sometimes “when all but essential drugs are stopped, ‘dying’ patients get better” if they are allowed to.

In other words, you don’t have to be all that close to death for the NHS to regard you as “life unworthy of life” (as the Germans used to call it). The starvation death of Terri Schiavo a few years ago was tremendously controversial in this country. Everyone agreed, though, that her circumstances were extraordinary. In Britain, she would have been just one among thousands. The practice is so routine that, according to another report, doctors often don’t bother discussing it with patients’ families.

In the U.S., health care spending rises sharply for older patients. In Britain, it doesn’t. “The U.K.’s pattern of health-care spending by age [has] more in common with the former Soviet bloc.” Since age brings increased illness and infirmity, holding down spending for the elderly can only mean that fewer of their medical problems are treated. Mr. Darwall identifies the key premise behind this policy, what he labels “the lump of health care fallacy”:

Because health-care resources are assumed to be fixed, those resources should be prioritized for those who can benefit most from medical treatment. Thus the NHS acts as Britain's national triage service, deciding who is most likely to respond best to treatment and allocating health care accordingly. . . .

The elderly have fewer years left to them; why then should they get health-care resources that would benefit a younger person more? . . .

A scarcity assumption similar to the British mentality underlies President Barack Obama’s proposed health-care overhaul. “We spend one-and-a-half times more per person on health care than any other country, but we aren’t any healthier for it,” Mr. Obama claimed in his address to Congress last Wednesday, a situation that, he said, threatened America’s economic competitiveness.

But, Mr. Darwall asks, is what “we” spend the important metric? Only if health care is a zero-sum game, in which A’s treatment comes at the expense of B.

But in a market-based system triggering one person’s contractual rights to health care does not invalidate someone else’s health policy. Instead, increased demand for health care incentivizes new drugs, new therapies and better ways of delivering health care. Government-administered systems are so slow and clumsy that they turn the lump of health-care fallacy into a reality.

According to the 2002 Wanless report, used by Tony Blair’s government to justify a large tax hike to fund the higher spending, the NHS is late to adopt and slow to diffuse new technology. . . .

The Wanless report found that of the five countries it looked at, the U.S. was the only one to be both an early adopter and rapid diffuser of new medical techniques. It is the world’s principal engine driving medical advance. If the U.S. gets health-care reform wrong, the rest of the world will suffer too.

A Fact a Day About Obamacare – Day Three: The Good Side of the Status Quo

One of the President’s core assertions, oft repeated, about health care is that the status quo is unacceptable. He regularly assails opponents of his (nebulous) plan for lacking one of their own, coming very near to that fine old line of reasoning:

Something must be done!
This is something.
Therefore. . . .

Fred Barnes has penned an excellent column assembling the case for the health care system we have now. It’s worth pondering before we rush to make massive fixes to something that isn’t all that badly broken.

One major reason for satisfaction is that American medicine has been astoundingly successful in lessening mortality from the two most feared killers, cancer and heart disease.

Two major studies (EUROCARE-4 and a study by the National Center for Epidemiology, Health Surveillance, and Promotion, in Rome, both published in the September 2007 issue of Lancet Oncology) [compared] five-year survival rates for Americans and Europeans diagnosed with cancer.

For all cancers, 66.3 percent of American men and 63.9 percent of women survived [for five at least five years]. In Europe, 47.3 percent of men and 55.8 percent of women survived five years. Those are statistically important gaps.

And the survival rates were higher in the United States for the most common cancers as well. More than 99 percent of men with prostate cancer had survived in the United States after five years, 77.5 percent in Europe. Those with colon or rectal cancer survived at a 65.5 percent rate here and 56.2 percent in Europe. The rates for breast cancer showed a similar difference, 90.1 percent for Americans, 79 percent for Europeans.

The U.S. does more than other countries to prevent heart disease. Barnes quotes Dr. Scott Atlas, chief of neuroradiology at Stanford University Medical School:

“Some 56 percent of Americans who could benefit from statin drugs . . . are taking them,” Dr. Atlas wrote. “By comparison . . . only 36 percent of the Dutch, 29 percent of the Swiss, 26 percent of Germans, 23 percent of Britons, and 17 percent of Italians receive them.”

When Americans do suffer heart attacks, their prospects for survival have improved vastly compared to just a few years ago.

“Wildly successful” is the way David Brown of the Washington Post has characterized the transformation of heart treatment. “Today, someone having a heart attack who gets to a hospital in time is likely to get cardiac catheterization, angioplasty, the placement of a medicated stent, therapy with four anticoagulant drugs and, on discharge, a handful of lifetime prescriptions,” he wrote. These are innovations over the past half-century.

The results are in. “In the 1960s, the chance of dying in the days immediately after a heart attack was 30 to 40 percent,” Brown wrote. “In 1975, it was 27 percent. In 1984, it was 19 percent. In 1994, it was about 10 percent. Today, it’s about 6 percent.”

These results are matched by the success in dealing with all heart disease. “In 1970, the death rate from coronary heart disease was 448 per 100,000 people,” according to Brown. “In 1980, it was 345. In 1990, it was 250. In 2000, it was 187. In 2006, it was 135.”

In other, less life-and-death areas, the United States leads the world by a large margin. For example,

The two most significant innovations for patient care in the past decade are magnetic resonance imaging (MRI) and computerized tomography (CT) . . . . The United States has 27 MRI machines per million Americans. Canada and Britain have 6 per million. The United States has 34 CT scanners per million. Canada has 12 per million, Britain 8.

Surprisingly (at least if one has listened only to lamentations about excessive costs), Americans pay less directly for this care than people in other countries.

Out-of-pocket expenses by American patients amounted to 12.6 percent of total national health spending ($2.24 trillion) in 2007.

That’s one of the lowest percentages of private out-of-pocket spending among the world's advanced countries – lower than Germany, Japan, Canada, and most countries in Europe, including those with government-run health care systems. Why do Americans get more and pay less? Because their insurance policies provide broader coverage than most government plans, says Tom Miller of the American Enterprise Institute.

That breadth of coverage is, in fact, a major cause of one of our system’s perceived problems: “[B]reakthroughs and discoveries are enormously expensive, so much so that America spends far more on health care (now 17 percent of GDP) than any other country.”

That statistic is, however, the aggregate product of individual decisions. Someone who wants to minimize his own personal medical expenditures can do so by purchasing only catastrophic coverage, forgoing tests and treatments that are not strictly necessary to deal with current health problems, and accepting the risk of a shorter life span. Is it, for instance, cost-effective to take statins in order to reduce a one-in-five chance of developing heart disease during the next ten years to a one-in-ten chance? The figures quoted above indicate that Americans making their own choices think so, while central medical planners in other countries are more skeptical. Ultimately, the debate about health care reform is a debate about who should decide.

Overall, the status quo gives Americans high quality medical care, for which they pay a great deal, albeit through insurance company conduits. It isn’t the only possible trade-off, but many worse ones are imaginable.

Eighty-nine percent of Americans in a June 2008 ABC News/USA Today/Kaiser Family Foundation survey said they were satisfied with their health care. Put another way, more than 270 million Americans (I’m including kids) are reasonably happy with the system of medical care in this country. Other polls have found the same level of satisfaction.

President Obama and other liberals are sure that their countrymen are the victims of false consciousness and that only massive government intrusion can remedy the status quo’s intolerable defects. Maybe the difficulties that they’re facing in selling hope-and-change are evidence that their certainties are at fault.

Bill Buckley and “the Dark People”

Rick Brookhiser (whom I knew when he was an undergraduate but haven’t been in touch with since) knew Bill Buckley very well. I met WFB only twice. He is, then, far more expert than I on the father of modern conservatism. Nonetheless, I’m certain that he is dead wrong in his explanation of Buckley’s skepticism about the Iraqi campaign:

Two points: 1) Bill spent much of 2005 and 2006 writing that the Iraq War was lost, over, a bad job. I give instances on p. 232 of Right Time, Right Place, and I could easily have given more. The fact is indisputable. What do we make of it? What I make of it is that it was a major failure of Bill’s judgment, as great as his support for segregation in the 1950s (see pp. 12, 33). I believe the two failures are linked by an indifference, inherited in the first instance, atavistic in the second, to the rights and well being of dark people. 1950s Bill did not care that white people oppressed black people, 2000s Bill did not care that brown people tormented brown people.

I haven’t read Rick’s book (and paragraphs like that don’t encourage me to pick it up), but there’s no doubt that, if it presented solid evidence that Bill Buckley was a racist, the elite media would have been trumpeting it in their headlines, and excerpts from Right Time, Right Place would litter the pages of the New York Times. The inference that Buckley opposed federal civil rights legislation (which is what “support for segregation” must mean – at least, that’s all that I find in Up from Liberalism and the early National Review) and persistence in Iraq because he didn’t care what happened to non-whites is pulled out of the air.

Isn’t it far more likely that Buckley said in 2005 and 2006 that the war in Iraq was hopeless, because that was a reasonable view of the facts on the ground (not the only reasonable view – I didn’t believe it – but believable regardless of what one might think about “brown people torment[ing] brown people”)? Rick himself supplies the proof that Buckley wasn’t indifferent to the fate of the people of Iraq:

By the end of his life, Bill snapped out of it, supporting the surge and telling the last directors’ meeting he attended that the struggle against jihadists was our world war (p. 241).

As for civil rights in the 1950’s, there are two clear themes in Buckley’s writings from that period: that the government should not try to rectify individuals’ attitudes toward other people and that trying to impose non-bigotry from Washington, D.C. would spark massive resistance that would threaten the fabric of the nation. Those are non-racist arguments. They were, however, founded on false beliefs about the real situation of the South. Segregation was the perfervid cause of an intimidating minority, who kept everyone else in line through the threat of violence. The region’s accommodating reaction to the Civil Rights Act of 1964 showed that most whites had no real desire to perpetuate Jim Crow and welcomed an excuse to send him out to pasture.

Conservative politicians understood more about real popular attitudes than conservative intellectuals. Except for a handful of Goldwater libertarians, every conservative Republican in Congress in 1964 voted in favor of the Civil Rights Act, including, for instance, Rep. John Ashbrook, than whom no right-wing legislator was ever more sans peur et sans reproche.

As a Parthian shot (suggested to me by another ancient Brookhiser acquaintance), let me note that Rick became Bill Buckley’s protegé, a position with which he showed no discomfort, at a time when he could have read all that his mentor had written about civil rights. He doesn’t seem to have found any of it objectionable until he was passed over for the editorship of National Review.