Well, it looks all but unavoidable that the federal government will shut down the day after tomorrow and there’s even a possibility that the federal government will default. I’ve already given my opinion: I think the actions by the House Republicans are bad politics and bad policy.

As I have been pointing out almost from the inception of this blog, moderation is the essential virtue of a republic and, frankly, I’m beginning to despair for the survival of the republic. This morning on the various “talking heads” programs what I’ve mostly seen has been a mass exercise in special pleading. Their refusal to compromise is stupid, harmful, and traitorous. Our refusal to compromise is practical, principled, and patriotic. I honestly don’t see how the republic can survive without a mutual willingness to compromise.

I don’t relish the idea of real shooting revolution but sitting here in Chicago it looks to me that it’s already under way. I think the simplest explanation for the violence that’s been going on in South Side neighborhoods here is that the police have given up on those neighborhoods and people there are taking matters into their own hands. The gangs are an alternative form of government. That the civil authorities are more concerned about producing the appearance of concern rather than materially changing the situation is an indication of how desperate the situation has become.

Megan McArdle lists eleven “talking points repeated as if they’re facts” and attempts to explain the factors behind them. Are they correct or incorrect? No one knows for sure but they are not facts. They are either predictions or opinions with more or less basis. Here they are:

1. Once Obamacare goes into effect, it will be impossible to substantially cut it back.
2. Accountable Care Organizations are certain to bring down overall health spending.
3. Obamacare works because it gets money from deadbeats who go to the emergency room and then stiff the rest of us for the cost.
4. Emergency room use will decline.
5. People can game the system by going without insurance and then buying it when they get sick.
6. Breaking the link between health insurance and employment will spur entrepreneurship.
7. Obamacare will reduce the budget deficit.
8. The Independent Payment Advisory Board is going to radically change the relationship between you and your doctor.
9. People with pre-existing conditions will be able to buy insurance in the private market for the first time.
10. Obamacare will bend the cost curve.
11. Obamacare will make bankruptcy a thing of the past, at least for the people who gain coverage.

Some of these are likely, some are possible, some are unlikely. I don’t think that any of them is impossible.

This might be a good time for me to remind people of my views on the PPACA: I think it’s inadequate and will mostly serve to kick the can down the road. However, my objectives are very different from those of most people—I think that we need to constrain the increase in healthcare spending to the increases in costs in the non-healthcare part of the economy.

I’m occasionally taken to task for not rejoicing in this or that new development in the healthcare system. That’s easy to explain. I don’t care that premiums in the exchanges won’t be as high as some of the PPACA’s opponents were predicting. I never predicted one way or another and that’s just a test of predictions rather than a test of the program. I don’t care that healthcare spending is only increasing four times as fast as increases in the non-healthcare parts of the economy rather than six times as fast as it was just a few years ago—it’s still increasing far too fast, unaffordably high. And nobody really knows why that is.

I do agree with this observation of Megan’s:

The consensus about Obamacare among health economists is narrower than the range of opinion among the broader community of public intellectuals, and much narrower than that in the general public. Mostly the experts think that it will be good for the individuals it covers, but that the other beneficial effects promised — such as bending the cost curve — aren’t particularly likely. Increasing the demand for a service does not usually drive the price of that service down, especially when supply is constrained, as the supply of doctors is in the U.S.

I don’t really see how we can constrain the supply of healthcare as we do in the United States, increase the demand of healthcare as has been the case even without the PPACA which, if it functions perfectly, will further increase the demand for healthcare, and still reduce costs as I think the sine qua non of healthcare reform must be.

The Watcher’s Council has announced its winners for last week.

Council Winners

• *First place with 2 2/3 votes! The Right Planet –Defining the Enemy — Islamic Terror
• Second place with 2 1/3 votes – Joshuapundit  – This Time It’s Nairobi’s Turn
• Third place with 2 votes – The Razor – Ignore Iran Today – But Not Tomorrow
• Fourth place *t* with 1 2/3 votes – Bookworm Room –Is Ted Cruz’’s promised Obamacare filibuster the equivalent of King Leonidas’s stand at Thermopylae?
• Fifth place with 1 vote – Liberty’s Spirit-Politically correct dilettantes devoid of morality and a spine
• Sixth place *t* with 2/3 vote – The Glittering Eye-Life in the Petri Dish
• Sixth place *t* with 2/3 vote – The Noisy Room- Parent Arrested from Common Core Meeting for Speaking Out of Turn
• Sixth place *t* with 2/3 vote – Simply Jews – John McCain vs Vladimir Putin: an abject failure of good intentions
• Sixth place *t* with 2/3 vote – VA Right! –‘Impotent Eric’ Cantor WILL APPROVE Obamacare Before All is Said and Done. Virginia WILL GET Cantorcare
• Seventh place *t* with 1/3 vote – Rhymes With Right –Palin Is Right On Ted Cruz Attackers
• Fifth place *t* with 1/3 vote – The Political Commentator – Bernanke’s successor will be caught between reality and a hard place!

Non-Council Winners

• First place with 2 2/3 votes! – Victor Davis Hanson-Our Truest Lies     submitted by Joshuapundit
• Second place  with 2  votes – Mark Steyn –Next Stop, Banana Republic   submitted by Liberty’s Spirit
• Third place *t* with 1 1/3 votes – Melanie Phillips – A Devastating Truth     submitted by The Watcher
• Third place *t* with 1 1/3 votes –The Passing Parade–Interesting times we live in, aren’t they?      submitted by Simply Jews
• Fourth place *t* with 2/3 vote  Adam Garfinkle –More Curiouser   submitted by The Razor
• Fourth place *t* with 2/3 votes – Accuracy In Media –New York Times Exposes Marxist Mayoral Candidate    submitted by The Right Planet
• Fourth place *t* with 2/3 vote – John Hayward/The Conversation –Peeling back the banana republic   submitted by Nice Deb
• Fourth place *t* with 2/3 vote –Glenn Reynolds –Obama selfish, stubborn on health care    submitted by Bookworm Room
• Fourth place *t* with 2/3 vote –DoD Buzz – AirSea Battle Adds Substance to Concept   submitted by GrEaT sAtAn”S gIrLfRiEnD
• Fourth place *t* with 2/3 vote –NewsBusters –MRC Study Documents Virginia Newspapers’ Viciously Negative Slant on GOP Gubernatorial Candidate    submitted by VA Right!
• Fourth place *t* with 2/3 vote –Self-Styled Siren  –The Collaboration: Hollywood’s Pact With Hitler    submitted by The Glittering Eye
• Fifth place *t* with 1/3 vote –The Independent Sentinel –New York City’s Bleak Future with Bill de Blasio submitted by The Watcher
• Fifth place *t* with 1/3 vote –Mises Daily –Fear the Boom, Not the Bust submitted by The Political Commentator
• Fifth place *t* with 1/3 vote –Gates Of Vienna –On Force, Control, and Freedom  submitted by The Watcher

The announcement post at the Watcher’s site is here.

The editors of the Chicago Tribune note that nobody really knows what impact ObamaCare will have on insurance costs in Illinois:

But the fact is that, five days before the launch of this massively ambitious redesign of national health care, the insurance policies to be offered in Illinois are still a mystery.

Copays? Deductibles? Premiums? Still a mystery.

Will your doctor and your hospital be included in the insurance networks? Still a mystery.

State officials assured us those details will be cleared up on Oct. 1, when the Illinois health care exchange opens for business. We hope so. But the officials also told us that federal regulators still haven’t quite finished tweaking the plans and rates. That’s probably why insurers we contacted this week couldn’t answer our most basic question — will people pay more or less for insurance than they do now?

We do know that the dizzying number of plans and their costs will differ dramatically depending on where you live in the state. Apparently, there’s more competition in Chicago so Chicago has cheaper healthcare. If that’s the case “slim networks”, limiting competition, would seem to be a perverse approach.

They conclude:

Our best advice for Obamacare consumers is: Caveat emptor. Watch for insurance plans that hold down premium prices by restricting the choices of doctors and hospitals available to customers. Insurers “passed over major medical centers in Chicago” and elsewhere in an effort to tamp down costs, according to a new report from the Health Research Institute of PricewaterhouseCoopers, the consulting firm. That’s a way for insurers to squeeze bigger discounts out of doctors and hospitals.

The state promises to have 1,200 “navigators” available to help guide people through the maze. We’d like to tell you the phone number or website to reach them but … that’s still a mystery.

Daniel Henninger writes at the WSJ:

A political idea, once it becomes a national program, achieves legitimacy with the public. Over time, that legitimacy deepens. So it has been with the idea of national social insurance.

While I recognize that as the fear of ObamaCare’s opponents and the hope of its supporters, I don’t think it’s completely correct. Social programs retain popular support as long as the people receiving the benefits don’t need to pay for them. That’s ObamaCare’s great weakness. It depends on people who won’t receive benefits paying for them anyway.

Nonetheless I agree with Mr. Henninger’s prescription:

The odds of ObamaCare’s eventual self-collapse look stronger every day. After that happens, then what? Try truly universal health insurance? Not bloody likely if the aghast U.S. public has any say.

Enacted with zero Republican votes, ObamaCare is the solely owned creation of the Democrats’ belief in their own limitless powers to fashion goodness out of legislated entitlements. Sometimes social experiments go wrong. In the end, the only one who supported Frankenstein was Dr. Frankenstein. The Democrats in 2014 should by all means be asked relentlessly to defend their monster.

Republicans and conservatives, instead of tilting at the defunding windmill, should be working now to present the American people with the policy ideas that will emerge inevitably when ObamaCare’s declines. The system of private insurance exchanges being adopted by the likes of Walgreens suggests a parallel alternative to ObamaCare may be happening already.

If Republicans feel they must “do something” now, they could get behind Sen. David Vitter’s measure to force Congress to enter the burning ObamaCare castle along with the rest of the American people. Come 2017, they can repeal the ruins.

I don’t oppose ObamaCare; I am merely concerned about it. My concern is that it is not healthcare reform, merely a system of subsidies for healthcare insurance. The healthcare system remains desperately in need of reform and I worry that ObamaCare postpones that reform rather than facilitating it. Time will tell. Sadly, policy-making by crisis, a very flawed process, looks more likely now rather than less so.

The editors of the Washington Post, the diary of the prevailing Washington wisdom, are upset that President Obama’s interventionist aspirations are limited to making Syria safe for Syrians rather than for Syrian democracy as well:

N HIS second inaugural address, President Obama delivered a ringing pledge of U.S. support for American ideals around the world. “We will support democracy from Asia to Africa, from the Americas to the Middle East,” he promised, “because our interests and our conscience compel us to act on behalf of those who long for freedom.”

Just eight months later, the idealism is gone. In what may be the most morally crimped speech by a president in modern times, Mr. Obama explicitly ruled out the promotion of liberty as a core interest of the United States. Instead, he told the U.N. General Assembly on Tuesday, America’s core interests consist of resisting aggression against allies; protecting the free flow of energy; dismantling terrorist networks “that threaten our people” and stopping the development and use of weapons of mass destruction.

No president should cite democracy promotion as the United States’s only core interest or even, invariably, its first priority. A superpower always must juggle competing concerns of security and commerce. But has a president ever boasted that promoting democracy will not be a core interest? To say that America cares more about the flow of oil than the rights of men and women is to diminish the U.S. soldiers and diplomats who have sacrificed to far higher purpose than Mr. Obama would acknowledge. It is to cede the exceptionalism argument to Vladimir Putin.

revealing the antipodal and contending forces in American foreign policy. America’s Hamiltonians continue to view the rest of the world as an opportunity for making a buck. That was alluded to as “protecting the free flow of energy” (read: oil). I wonder if the president recognizes the irony in a policy that seeks to foster the free flow of oil everywhere but here.

The Wilsonians continue to want to promote American values, in President Obama’s case diluted to safety from chemical weapons. Again, I wonder if the president recognizes the irony. If they had heard him the people of Afghanistan, Pakistan, Yemen, and Somalia must have thought he sounded delusional. They don’t appreciate the fine distinctions between civilians killed intentionally with chemical weapons and those killed unintentionally but inevitably by drones, the distinction between Bashar al-Assad and Barack Obama. Dead is dead. They are just different words for “death from the air”.

The Jeffersonians, what few of us there are, continue to be the well-wishers to the freedom and independence of all but do not seek to go abroad in search of monsters to destroy.

The fight is left to the poor Jacksonians who continue to be baffled that they’re not actually being allowed to seek victory.

That is perhaps the strongest argument for a universal draft. Putting the lives of their own children on the line might slake the Wilsonians’ enthusiasm for grand crusades. In an era of warfare by remote control even that would not be enough.

Meanwhile, I believe the Washington Post’s editors are wrong. The conflicting interests aren’t “the trouble with U. S. policy”. They are our strength. They prevent us from waging total war, shuttering our doors in isolation, or hurtling off, tilting at every windmill.

In an article at The Atlantic on how bad jobs data is driving our lousy economic policy, Matthew O’Brien notes:

Just how bad are the data? Well, keep in mind that the jobs report’s margin of error is supposed to be about 90,000. But these post-crisis seasonal errors have almost doubled it to about 170,000. That’s right: the jobs report’s real margin of error has been about as big as the average jobs report itself the past few years. Now, the one bit of good news here is this effect has already faded away for the most part. Remember, the BLS only looks back at the past 3 years of data when it comes up with its seasonal adjustments — so the Lehman panic has fallen out of the sample.

and that’s not even taking the obviously flawed “birth-death” factor into account. In addition to the way the Mr. O’Brien points out that the jobs numbers are “cooked”, they’re also cooked based on the rate at which businesses enter and leave business. But businesses are now being formed at a rate significantly below historic levels (even historic levels during economic downturns).

He concludes:

The BLS can, and should, do better.

Do they have incentives to do better?

I’ve been working on the first post in my series on Chicago neighborhoods and I’ve been a bit surprised at how poor the available scholarship is. Most things are poorly documented, there’s lots of hearsay and speculation presented as facts, some things you find in print are just flat out wrong.

Thinking about this lead me to a realization of why I was so dissatified with my undergraduate education. My high school didn’t prepare me for college. It prepared me for grad school. When I entered college I already knew how to do independent research but I wasn’t expected to and I was surrounded by people who didn’t.

This is a subject that whole books can be and are written about but I think I can summarize our national economic policy in just a couple of sentences. Economic growth will be driven by consumer spending which will in turn be driven by expanding consumer credit.

You can break that down a little farther. Consumer spending has several components: durables and consumables, healthcare spending, education spending, housing, and so on. By far the largest of those is housing. Here’s their average annual amounts for 2012:

Multiply that by the 124,416,000 “consumer units” they’re counting and that’s the private personal economy.

Basically, that’s the reason so much policy is directed towards subsidizing housing. As long as you’re going to depend as heavily as we do on consumer spending it makes a certain amount of sense to subsidize home ownership and home purchasing.

Going back to my previous post on GDP, there are only a certain number of options available for boosting economic activity—consumer spending, business investment, government spending, lowering imports, increasing exports. I think the practical reality is that we need to reduce imports and increase domestic business investment. Those are my preferences but that’s not the direction of policy. Policy is geared towards housing, increased government spending, and increased exports.