DRI-382 for week of 8-19-12: About Aunt Flossie

About Aunt Flossie

The political news du jour – until it is overshadowed by the next gaffe or juicy scandal – is the announcement by Republican Presidential nominee Mitt Romney of his running mate, Rep. Paul Ryan of Wisconsin. Ryan’s chief claim to fame – or shame, according to the eye of his beholder – is his plan for budgetary reform of the two largest federal entitlement programs, Medicare and Social Security.

The Democrats’ take on Ryan is that his plan would “end Medicare as we know it.” This appraisal is presumably based not on Ryan’s actual plan but on its predecessor, which would have offered seniors a choice of private-sector-based plans for medical care. The current plan does that, but also gives seniors the option to remain in the current federal system.

The fact that Democrats factually distort the nature of Ryan’s plan is not a surprise. It would not be an election if Democrats (or Republicans, for that matter) engaged in sober, responsible, rational debate. It is the way Democrats present this issue that is so horrifying.

A syndicated column (August 19, 2012) by the New York Times’ Gail Collins is entitled “Wait a Minute: What Will Happen to Aunt Flossie?” After performing the ritual preliminaries – ridiculing Ryan for his hobbies (running and fishing) and for being physically fit – she gets down to the business of “consider[ing] what the selection of Ryan… will mean to the American health-care system.”

Choice is Good, Right? No, Choice is Bad

Ryan’s plan would leave the system unchanged for those 55 and older. This element offers Ms. Collins nothing to excoriate him for, so she makes the best of it by using her literary license. She creates a hypothetical voter who is 54 years old and “totally falling apart” health-wise. He (or she; Ms. Collins is atypically silent on the matter of gender) moans that “nobody cares about my health care.” Ms. Collins does not explain how the fact that Ryan revamped the entire system of government health care expressly for his benefit should have led him to that conclusion.

Instead, she quotes candidate Romney’s general approach to Medicare: “We’re going to give you a bigger choice.” For at least 236 years, the economics profession has unanimously supported enlargement of the range of human choices. And economics is the study of human choice, at least the rational side of it.

But Ms. Collins’ Everyman doesn’t see it that way. “And now you’re telling me that people just one year older than me will get guaranteed government coverage that everybody likes, while I am going to be getting a choice? What if I don’t want a choice?”

To which the obvious rejoinder, after an astonished pause, is: Well, in that case, you simply select the government option, the one you just got through saying you preferred. See how easy it is?

Just in case the reader thought he had experienced an optical or cognitive illusion, Ms. Collins reinforces her point with some purported sarcasm, spoken in Republican “voice”: “Freedom is always good” – meaning that freedom is not always good. The wonder is, of course, that Ms. Collins could write this sentence as sarcasm. If we were to elect any generalization as universal, this one might head the list of nominations. Just exactly how often is freedom bad? When we abuse our freedom by using to hurt other people or usurp their rights, we usually banish the word “freedom” from that context, don’t we?

At this point, having made the Big Points that Ryan and Republicans Do Not Care About Under-55s and that Choice Is Bad, Ms. Collins rhetorically claps the dust from her hands and moves on to her next Big Point. Everyman complains: “So, about Medicare. Why don’t Romney and Ryan want to let me have it?”

The reader is already reeling at this display of stupidity mixed with mendacity. But Ms. Collins has more in store.

Spending Reductions vs. Cost Savings

Ms. Collins’ Big Finish is that Republicans give lip service to saving Medicare but really want to destroy it. And to add insult to injury, the Republicans accuse the Obama administration of wanting to destroy Medicare when all along the administration is simply trying to preserve it in its present form.

“The National Republican Congressional Committee has warned all its candidates that whenever the subject comes up, they are to avoid mentioning ‘entitlement reform,’ or ‘privatization,’ or ‘every option is on the table.’ Instead, the keywords are ‘strengthen, secure, save, preserve and protect…’ Which will involve a lot of choices, even though every option is not on the table. Totally not.”

The late semanticist and Senator S. I. Hayakawa would have had a field day with Ms. Collins’ use of the words “theory,” “force,” “savings,” and “efficient.” “The administration’s theory is that new federal guidelines will force providers to be more efficient, reducing anticipated Medicare costs over the next 10 years by a little more than $700 billion. The savings could be used to help provide health-insurance coverage for the poor.”

“Under Paul Ryan’s proposal, instead of simply getting Medicare, people…will be given a voucher and told to choose from among a whole bunch of health-care plans. The Ryan theory was that the competition would force providers to be more efficient, reducing anticipated Medicare costs over the next 10 years by a little more than $700 billion.”

Ms. Collins then interrupts her comparison to point out that – look here, Mr. Everyman! –

both plans purport to achieve the same $700 billion in cost reductions. “But that was before [Ryan] joined the ticket. Now all talk of $700 billion in savings is being retracted, like a great catfish being yanked by the throat from its cozy burrow.”

Ms. Collins uses the word “theory” in the layman’s sense to mean a crackpot notion that appeals to improvident souls but probably has no practical use or validation. To a scientist, a theory is a set of propositions accepted as true. What she calls “the Ryan theory” of competitive efficiency has been validated by centuries of experience. It is what has built the standard of living enjoyed in the United States. It explains the fact that centrally planned economies in Soviet Russia and Communist China failed miserably during the 20th century while free-market ones throughout Southeast Asia and in the U.S. flourished. Her failure to distinguish between an unproved hypothesis and the theory that we demonstrate by our daily existence marks her intelligence equal to that of a box of rocks. Alternatively, she knows full well the meaning and effect of competition but is pretending to doubt it – which makes her a knave rather than a fool.

Ms. Collins’ “theory” is that governments “force” companies and individuals to be efficient by making them obey “guidelines,” e.g., rules. This implies that bureaucrats know efficient prices, quantities, inputs and employment ratios – otherwise how would they know what rules to write? Economic theory says that no government bureau or expert body knows that data – instead, the data necessary to formulate it is locked inside billions of individual brains. Free-market competition unlocks it and its release enables the production of more goods using given quantities of resources.

Notice also that while both government and the market “force” people to do things, the word operates differently in the two contexts. President Obama uses force majeure – commands that force people to obey rules or face criminal or civil penalties. The market uses voluntary exchange, but the powerful incentives it delivers force producers to obey the desires of consumers or go out of business. The difference is that the market gives people the latitude to uncover the information that makes consumers happy, while government merely forces people to obey rules. Unless the rules happen to duplicate the results of the market – which they never do – consumers are out of luck.

When President Obama commands money to be cut from Medicare and re-allocated to ObamaCare, he is not saving anything because there are no competitive efficiency gains. No market process unlocks new information; no resources are freed up to be used to produce more output. People are merely reshuffled from one inefficient, unproductive activity (Medicare) to another one (ObamaCare). Neither activity utilizes the price system by confronting individuals with the actual costs of their health-care consumption decisions, as the Ryan proposal would do in its competitive alternatives. The Obama administration can talk endlessly about “cost-cutting” and “cost-saving,” but this is mere accounting talk, not economics. True economic cost is reflected in the foregone uses of resources. Only a free market prices resources according to their value in the highest-valued alternative use; thus, only a free market can generate a true system of costs.

Let’s face it. If government already knew what needed to be done to achieve least-cost production, efficiency and cost-savings, we would simply dispense with markets completely and have government publish a list of all prices, quantities, input combinations and job assignments on the Internet. We might or might not bridle at being ordered around, but nobody could quibble with the efficiency of the results. Not only does government not know all this, it isn’t even close – and government attempts to plan production of whole economies or parts thereof have led to unshirted disaster for close to two centuries.

The End of Aunt Flossie

Finally, we are presented with Ms. Collins’ rhetorical peroration.” If you want my opinion -“is there a life form on Earth above the protozoan that wants Ms. Collins’ opinion at this point? – “Ryan’s passion for health-care cost-cutting is actually not directed at Medicare so much as Medicaid. The seniors who could really take a hit would be the ones in nursing homes who’ve already run through their own savings.”

That’s my Aunt Flossie! What’s going to happen to her?”

“Do you have a spare bedroom?”

And, with the flourish of a ham actor leaving the stage on an exit line, Ms. Collins concludes a history-making column. She thinks that she has delivered the ultimate zinger. After all, what could be more lethal, more demeaning, more terrifying than to suggest that Aunt Flossie spend her declining years living with her relatives? My God – do Republicans possess no drop of mercy, no scrap of compassion, no hint of sympathy?

Medicaid is the adjunct to Medicare designed to provide for the aged and disabled poor, where “poor” is defined in terms of assets or wealth rather than income per se. The logic behind this is straightforward. At least in principle, a retired person might have substantial assets while realizing little or no income. These assets should be depleted before drawing upon taxpayers as a source of funds for medical care. The original mandate of the program, which dates back to 1965, was expanded to include disabled persons and their offspring as well. Responsibility for Medicaid is shared between the federal government and the states, with each state administering its own version of the program.

That Ms. Collins takes it so completely for granted that the compassionate, caring alternative of first medical resort for the elderly is public rather than private is a fact of enormous significance. Part of the significance is the glaring falsity of the premise. The last thing in the world anybody would call federal government bureaucracy in general or the Medicaid in particular is “compassionate.” This is not right-wing rhetoric. Ask the nurses who staff nursing homes how Medicaid patients are treated. You will find they are accepted with reluctance, treated perfunctorily and neglected disgracefully. Once a patient becomes too senile or feeble to speak and act on their own behalf, their interests generally go unheeded. Doctors resent the parsimonious reimbursement rates. Everybody abhors the endless paperwork and compliance rituals that accompany the program.

Why do the elderly prize independence above virtually all other perquisites? Because it them to oversee and control their own daily lives. In an institutional setting, they give up this control in exchange for security. But as one’s days dwindle down to the proverbial precious few, this security dwindles more-than-commensurately in value. That is why so many old people risk death willingly rather than go gently into that good night of institutional living.

The next-best thing to living on your own is living with people who share your heartfelt desire for happiness. As a practical matter, relatives are usually the only people who fill that bill. That is why Ms. Collins’ callous, dismissive portrait of Republicans as those anxious to exile Flossie to the spare bedroom is so shocking. Her perception of reality is 180 degrees out of phase – she really believes that government is compassionate and families are cold and insensitive.

In racing parlance, Ms. Collins is betting a parlay. The odds are way against her. In an individual case, a family could be callous and indifferent. In this same case, the rare instance of a caring, sensitive bureaucracy might emerge. In the words of Damon Runyan, the race is not always to the swift or the battle to the strong – but that’s the way to bet. And when we introduce the role of private charity – people and institutions specialized to be caring and sensitive to the needs of the aged and less fortunate – it becomes clear that by relying solely on government bureaucracy, Ms. Collins is actually betting an even less likely trifecta. She is betting that both the family and private charity will fail and that only government can succeed. This is like continually betting on a mule to defeat a race horse at one-and-a-half furlongs.

A Few Minor Peccadilloes

In the face of this all-out assault on truth, justice and the American way, it seems almost trivial to point out the mere lies and errors of fact committed by Ms. Collins. Conservatives have sometimes promoted vouchers as a means of introducing a competitive element into the government provision of goods or services, notably in education, but contrary to Ms. Collins’ assertion there is no voucher component in Paul Ryan’s Medicare reform. The plan relies instead of premium support by the federal government.

Her characterization of Medicare as “guaranteed government coverage that everybody likes” is a lie of breathtaking proportions. Obviously everybody doesn’t like it or we wouldn’t be trying to reform it; in fact, something close to half the country is unhappy with it.

The warranty on that “guaranteed government coverage” is about to expire in Europe, where government expenditures on social insurance and medical care have driven various countries broke and threaten to bankrupt the entire region.

Even an apprentice wordsmith, groping to describe Ryan’s pastime of “noodling” (grabbing catfish by hand rather than landing them using rod and reel), wouldn’t settle on “retracted.”

Still, the lie that takes the Pinocchio palm for bald-faced, boldfaced, barefaced annihilation of truth is her bland assertion that Romney and Ryan don’t want to let under-55s have Medicare, when (11 years down the line) all those future seniors will have to do is check the box marked “Medicare” in order to receive it.

The Totalitarians in Our Midst

In his 1944 tract The Road to Serfdom, F. A. Hayek identified “the totalitarians in our midst” as those who unknowingly paved the way for the advent of fascism by sacrificing freedom on the altar of economic planning. Ms. Collins has applied for membership in that club.

Her denigration of choice (“What if I don’t want a choice?”) is chillingly reminiscent of the pre- and post-World War II socialist rhetoric. Her elevation of federal bureaucracy and simultaneous demotion of private care on the scale of compassion is nothing less than Orwellian. Her casual disregard for fact calls to mind the intellectual climate Hayek characterized as “the end of truth,” in which all notion of virtue is sacrificed to political necessity. Her apparent ignorance of the significance and purpose of markets leaves her with no recourse but the default option of all-powerful government, which has been the time-honored alternative to markets.

There has been much talk about the historic divide represented by the upcoming election. Ms. Collins’ column proves that the talk is not mere election-year hype. One of the choices available to voters really is totalitarian. The emotions it appeals to are those called upon by Hitler in the 1930s – fear, economic insecurity and envy. The techniques are also the same, particularly the use of the Big Lie. And as lies go, they don’t come much bigger than those retailed by Ms. Collins in this dreadful column.