I didn’t what this piece from A. Gary Shilling at Bloomberg to go by unremarked upon. More than anything else it’s a good example of how weak most writing about our health care system is. Here’s his explanation for why our system is so expensive:

Medical costs are understandably high since the system is designed to be the most expensive possible for four distinct reasons. First, with the constantly improving but increasingly expensive modern technology, the best is none too good when your life or mine is at stake. Also, few patients have the knowledge to decide whether a recommended procedure will be medically much-less cost-effective. The medical delivery system encourages a gulf between the providers who supposedly know what’s needed and their patients who don’t.

Second, patients are quite insensitive to costs since their employers or governments pay most health care bills. And those who are privately insured want to get their money’s worth from their premiums, especially since Obamacare does not allow insurers to set premiums on a health risk basis.

Third, the pay-for-service system encourages medical providers to over-service. After my dermatologist burned off the pre-cancerous growths on my face, he wanted me back in two weeks to be sure, but also to bill another office visit.

Finally, domestic training programs and facilities for medical personnel are inadequate. As a result, many MD residents and nurses come from abroad, while medical schools of dubious quality in the Caribbean train U.S.-born physicians.

and here’s his prescription for fixing it:

To control costs on the demand side, use the appeal of money. The importance of their health to most Americans means they will spend proportionally more on medical services than other goods and services, but they’ll think twice if it’s money they otherwise can keep. Increasing deductibles and co-payments are moving in that direction. In 1999, employees on average paid $1,500, or 22%, of $6,700 in family health coverage premiums, according to the Kaiser Family Foundation. The total rose to $26,600 in 2019, but employees’ share has climbed to $6,000, or 29%.

Medical savings accounts also make patients more aware of costs. Companies give employees a set amount of money and they can keep what they don’t spend on health care.

Let’s talk about his prescription first. AFAICT the connection between the reasons our system is expensive is pretty tenuous. For example, how does it address the cost problems if any introduced by foreign-trained professionals? And is he completely unaware how much of the demand in our health care system is provider-induced?

And the pilot programs that have been tried along those lines have not been successful: people economize on necessary as well as unnecessary care.

My opinion of the reasons for why our system is so expensive is:

1. It’s about what you would expect from a system in which 60% of the total is paid from taxes and the same people determine prices, the need for treatment, and the course of treatment.
2. People aren’t exposed to prices and don’t have incentives to economize.
3. We are a very large country and the point at which decreasing costs to scale was reached was at a much smaller population.
4. Everything our government does is more expensive than anywhere else in the world.

One of the many stories attributed to Abraham Lincoln was his telling the story of a boy who, when asked how many legs his calf would have if he called its tail a leg, replied, ‘Five,’ to which the prompt response was made that calling the tail a leg would not make it a leg.

There are so many things I find frustrating about Dr. Lawrence Summers’s latest Washington Post op-ed I hardly know where to start. Let’s start at the beginning:

Few economic virtues are more universally applauded than thrift.

Going back at least to Ben Franklin, Americans have equated greater thriftiness with greater worthiness. Progressives decry the limited saving and wealth accumulation of middle-income families and express alarm over the widely reported “fact” that 40 percent of Americans cannot come up with $400 in an emergency. Conservatives applaud thrift as an aspect of self-reliance and propose ideas such as health-savings accounts to help families prepare for emergencies. Moderates believe universal social insurance programs such as Social Security and Medicare, which they label as entitlements, should be modest or even curtailed out of fiscal prudence.

Who are these fiscal conservatives, conservative or moderate, of whom he writes? At the very least they are an endangered species. In the House precisely ONE Republican voted against the 2017 tax cut for reasons of fiscal prudence. As far as I can tell fiscal conservatives exist primarily in the minds of economists and politicians who want the federal government to spend more for whatever reason. They make useful whipping boys.

Onwards to the next passage:

In the current economic context of extremely low interest rates, however, these views are more wrong than right. The federal government should provide more, not less, social insurance. If it did, the result would be reduced inequality, a more secure middle class and a stronger economy.

The real challenges that keep middle-class families up at night are retirement, economic dislocation and supporting their children as they go to college and then buy a first home.

That sounds a lot more like the upper middle class to me. And what does he mean by “economic dislocation”? Presumably not literally. I’m guessing he means job security. The only people with job security these days are academics with tenure, civil servants, politicians, and the top management of big companies. I’m still at a loss for how increasing the payouts from our system of social insurance as presently structured reduces income inequality. If major restructuring were on the table, I could be persuaded.

Quite to the contrary I think what keeps more middle class people up at night are paying the bills and wondering whether they’ll have a job tomorrow, next week, next month, next year. I also think that’s a major reason that wages aren’t increasing. I think the main sources of income inequality are financialization of the economy, subsidization of the upper middle class, and immigration for the rich, middle class, and poor, respectively.

And who are these children of the lower middle class who are buying new homes? Has he looked at the statistics on home ownership by Millennials and Gen Z lately?

I found this perplexing:

Rather, a generous and well-functioning society in which Social Security meets retirement needs, appropriate unemployment and wage insurance programs cushion economic shocks, adequate public funding holds down college costs, and health insurance has generous coverage would greatly reduce the need for most households to save.

The emphasis is mine. I’d like to see some evidence of that bolded passage. IMO the preponderance of the evidence suggests that public funding increases costs in education. Does he mean out-of-pocket? He’s smarter than that.

This is the passage I liked least:

Genuinely preparing for such contingencies would involve building up a large nest egg at a substantial cost in terms of current consumption. Meanwhile, the feared contingencies never arise for most people. That’s why pooling risk through insurance is the best strategy.

I wish he would call things what they are. We don’t have either a system of social insurance or health care insurance. We have a welfare system. Among the qualities of our systems which makes them not insurance are that in an insurance system premiums should be proportional to risks and some risks are not deemed insurable. That’s not the case for either our social “insurance” or health care “insurance”. A tail is still not a leg.

The only thing I can conclude from reading that piece is that it’s a writing sample for a job application with a presumed progressive Democratic administration.

In on sentence in their New York Times op-ed Elizabeth Cobbs and Kimberly C. Field demonstrate that they don’t understand U. S. history or foreign policy:

America desperately needs a new grand strategy — a concise, high-level vision for our role in the world.

The United States does not have a grand strategy and has never had a grand strategy in that sense. Our grand strategy has been an emergent phenomenon that arose from the contending political, economic, and social forces in the country. Walter Russell Mead outlined the dominant forces that have shaped that grand strategy in his book, Special Providence, characterizing them as Jeffersonian, Jacksonian, Hamiltonian, and Wilsonian. Another way of looking at them is pessimistic idealist, pessimistic realist, optimistic realist, and optimistic idealist. We are too large and diverse a country for any grand strategy but our emergent grand strategy has been remarkably consistent and persistent over time. Failing to understand that is to fail to recognize how we are different from France, the United Kingdom, or Germany. Or Russia or China for that matter.

To understand how that consensus functions, consider the events leading up to our entry into World War II. Wilsonians had supported our entering the war as early as the Spanish Civil War. Hamiltonians came on board quickly (war is good for business). The holdouts were Jacksonians and Jeffersonians.

That all changed with the attack on Pearl Harbor. Jacksonians, without whose support U. S. warmaking would be impossible, immediately changed from disinterest in what was going on in Europe to a desire for revenge. Isolationist Jeffersonians stopped protesting entering a European war in the interest of defending the republic. We were united and that persisted throughout the war.

What we need is not a grand strategy but a consensus. That will never be accomplished by having one imposed by experts, the process experts invariably prefer. What has actually happened over the last 30 years is that Congress has abandoned its Constitutional duties and Hamiltonians and Wilsonians have run rampant. Today’s Wilsonians come in two flavors—neoconservatives who believe they can spread liberal democracy by the sword and liberal interventionists who want to save people, either from their tyrannical rulers or from themselves or each other. Of course so long as they aren’t taxed to pay for our wars, Hamiltonians have no problem with them. As noted above, wars are good for business. If our few lonely Jeffersonians had their way we wouldn’t be at war at all and if the Jacksonians had their way the Middle East would have no cities. You need only look at pictures of Dresden or Nagasaki during World War II to understand the Jacksonian way of war.

I had a bit of trouble with Bobby Ghosh’s discussion at Bloomberg of whether Iran under the mullahs were a “rational actor”. He thinks it is:

My own view is that the regime has just one priority: its own perpetuation. Supreme Leader Ali Khamenei has demonstrated repeatedly in his three decades in charge that his sole objective is to preserve the peculiar form government that vests him with vast power over his people with little accountability. But his pursuit of that priority is as likely to be informed by ideology as it is by logic, as much by paranoia as it is by pragmatism.

That’s spoken like any good 21st century Western materialist. I would suggest he cast his mind back to Operation Eagle Claw. Back in 1980 the mission to rescue the American hostages being held in our Tehran embassy was a failure due to mechanical problems and a sandstorm. On hearing of it Ayatollah Khomeini declared it a sign of the direct intervention of Allah on Iran’s behalf. How does that fit into the “rational actor” paradigm?

It seems to me that either a) you’ve got to think that the mullahs are just faking it and are just as materialist as a Western politicians; b) Iran under the mullahs is not a rational actor; or c) you’ve got to figure out a way to include expectations of the direct intervention of Allah under the rubric of “rational actor”.

Mr. Ghosh does touch on this a little in his piece:

Plenty of smart people — including military men such as General Martin Dempsey, former Chairman of the U.S. Joint Chiefs of Staff — say it is. Other foreign-policy thinkers take the more nuanced view that Iran is rational without being reasonable: It has different priorities from those of its enemies, but its behavior is entirely logical in the context of those priorities.

I fit more into the “rational without being reasonable” camp but I would phrase it differently. The mullahs aren’t Western politicians and they aren’t materialists but they are pragmatists as they understand pragmatism. IMO that’s what we should be worrying about.

The remarks about the assassination of the commander of the Iranian Quds Force in Iraq continue. The New York Times has devoted nearly the entirety of its online opinion page to it with editors and columnists alike condemning the action, warning of dire consequences. I thought I might express my own views. I will do so as tersely as possible in bullet format.

• Iran has been a major power in the Middle East for nearly 3,000 years. At its greatest extent the First Persian Empire went from parts of Eastern Europe on the West, parts of Egypt on the Southwest, all of the Middle East, and parts of India on the East. It is one of the oldest continuous cultures in the world. Those saying that this is the first time the Iranians have been a major force in the Middle East are misinformed.
• Throughout most of U. S. history our relationship with Iran has been favorable.
• The claim that the U. S. overthrew the Mossadegh regime in 1953 is an exaggeration, a combination of Soviet disinformation and modern Iranian creation myth, abetted by Kermit Roosevelt’s resume padding. It was overthrown by a putsch of Iranian military offices with encouragement from Britain and the United States. The most we did was supply a little walking around money for paid agitators. I have read the account of the putsch by one of the officers involved and I believe it.
• The Islamic Republic of Iran has been at war with the United States since its beginnings. Occupying our embassy and holding members of our embassy staff hostage was an act of war. Failing to protect our embassy was an act of war.
• The present ruling regime are very bad people. When they came to power they executed thousands of their own citizens probably including some of my college classmates. Remembering Mossadegh, initially those executed were military officers and royalists. Later, recognizing their mistake, they began murdering members of Tudeh and those who sympathized with them. Estimates vary on how many were executed, probably in the tens of thousands.
• Like the Soviet Union the present regime is millennialist. It is what makes them dangerous.
• That’s the reason that Saddam Hussein started his war with Iran. Most Iraqis are Shi’ites and Saddam was afraid that the Iranian revolution would spread to Iraq.
• Most of the Iranians who died in that war died before the U. S. had supplied anything other than non-lethal aid to the Iraqis, probably before we had supplied any aid at all. Saddam wasn’t mining the Gulf but the Iranians were.
• I don’t believe in advancing our foreign policy interests by assassination or by war. That’s why I oppose Soleimani’s assassination.
• I think the threat posed by Iraq joining forces with Iran is greatly exaggerated. Most Iraqi Shi’ite clerics are not Khomeinist. Those clerics are actually more of a threat to the present Iranian regime than we are.
• The Iranians had an active nuclear weapons program until 2003. The IAEA has said that it has found no credible evidence of an active nuclear weapons program since 2009.
• We don’t know what we don’t know about Iran. Our human intelligence in Iran is not good although Israel’s appears to be.
• Israel is extremely worried about Iranian nuclear weapons. Israel is about the size of a good-sized U. S. county or smallish state. One well-placed and appropriately-sized nuclear weapon would destroy Israel. Given Iran’s obvious views about Israel and its support of Hezbollah, along with Israel’s vulnerability the Israelis’ views of Iran are understandable.
• I’m not worried about Iran cozying up to China. If the Iranians think that the U. S. attitude is arrogant, wait until they’ve dealt with China for a while.
• I doubt that the present Iranian regime can persist for long. It is not a popular regime and its mismanagement is increasingly obvious.
• I think that our interests are best served by strategic patience with respect to Iran. However, Iran’s recent provocations not the least being the threats to our embassy in Iraq make Soleimani’s assassination understandable.

I want to commend to your attention a piece published at Pat Lang’s place by an Australian member of his “committee of correspondence”. Here’s a snippet:

I am a member of august clubs and societies around the world but the membership I most treasure is that of a volunteer fire fighter in the local brigade. To be judged worthy of a place on the fire ground is, to me, the child of immigrants, a pearl beyond price precisely because it is awarded, not by the great and good, but by tradesman, farmers, shopkeepers – the least in society who have judged me capable of serving the community. I am so proud. A month ago I was part of a strike team sent to Northern New South Wales for a week to grapple with their fires, I even got a lift home in a C17 Globemaster.

We are currently facing bushfires near us affecting five times the size of last years California blazes – 500,000 Hectares, 1.2 million acres across the Northeast of Victoria and into New South Wales. Our truck was called out to join a strike team of five tankers at seven am on New Years Eve to go about a hundred miles north to grapple with the edge of the monster which we did, leaving our tanker for a changeover crew early on New Years day.

Read the whole thing. On reading it my wife, two of whose uncles and whose brother are retired firefighters and one of whose nephews is a firefighter, said “Thank you for that (second to) last paragraph”.

I agree with Victor Joecks’s assessment of the campaign for the Democratic nomination for president, published in the Las Vegas Review-Journal:

Even though the Iowa caucus isn’t for another month, I feel confident that Joe Biden will be the Democrat presidential nominee. Here’s why.

It starts with the polls. Biden has been dominant. Since Real Clear Politics started its polling average in December 2018, Biden has led for all but one day. Sen. Elizabeth Warren eclipsed him by 0.2 percentage points on Oct. 2. She now trails him by 13 percent and is in third place, also trailing Sen. Bernie Sanders.

This isn’t how many political pundits expected last year to go. They chalked up Biden’s pre-announcement lead to his high name ID. He was supposed to gaffe his way into an early exit. He wasn’t progressive enough for the liberal wing of the party either.

What makes Biden’s durability look sustainable is that he hasn’t been a great candidate. Far from it. His debates have been cringeworthy.

He goes on to catalogue a number of Biden’s gaffes. We should get used to them. We’ll hear a lot more between now and November. I also think it’s quite possible that the early primaries could be run by several different candidates.

Mr. Joecks concludes:

There’s a reason political pundits usually make predictions as late in the game as possible. A few days can be a lifetime in politics. Any number of things could radically alter the race — Michelle Obama or Oprah would win if either jumped in. Biden could have a medical issue. Warren could join Sanders on a left-wing unity ticket.

All that said, I believe Biden will be the Democratic nominee and a serious threat to President Donald Trump.

The only thing I can add is that the political landscape is littered with the dead or dying ambitions of people who underestimated Donald Trump. There were many lessons to be learned from the 2016 election but the most important is that just because you tell a pollster you disapprove of Donald Trump doesn’t mean you won’t vote for him.

I found Joseph Sternberg’s prediction in the Wall Street Journal of victory in Trump’s trade war in China so problematic I hardly know where to begin. Let’s begin at the beginning:

A new year brings new optimism that the U.S.-China trade war might not blow up the global economy after all. The two sides are on track to sign a “phase one” deal within weeks. Oddly, no one has stopped to ask if America is ready for what will happen if President Trump “wins” the trade war.

Mr. Trump’s premise is that China exports too much, and the U.S. exports too little. That’s an economically dodgy proposition—trade surpluses and deficits are neither “good” nor “bad”—and as a factual matter Mr. Trump’s thinking is roughly a decade out of date.

But I have issues with this:

While China still runs a trade surplus with the U.S., its trade position with the world as a whole is changing dramatically.

China’s current-account surplus—the amount by which its exports of goods and services and income from overseas investments exceeds imports—has shrunk for years.

China doesn’t just run a trade surplus with the U. S. Based on the World Bank figures for 2017, the most recent year for which data are available, China runs surpluses with every North American country, every European country except for Finland (cellphone technology) and Norway (oil), most South American countries, most African countries, and India. Yes, most of its trade surplus is with the United States. What is actually happening is that China imports raw materials and exports manufactured goods.

It’s likely to tip into a deficit early this decade, meaning China will import more goods and services (and receive less profit from overseas) than it exports.

Why would he say that? It isn’t the trend. I presume he’s speculating based on demographics:

One reason is that China’s population is aging, and its working-age population declining. As this happens, older households spend down their savings. This boosts demand for imported goods. It also upends an economic model dependent on financial repression—that is, funneling household savings (for which Chinese savers receive outrageously low interest) into inefficient state-owned enterprises that fuel the export machine.

China remains an authoritarian country Translation: the rules of economics are not the only rules that apply. And this statement just baffles me:

Another is that China has exhausted its ability to boost exports by undercutting other producers on price to poach market share. China can’t absorb all manufacturing capacity for every good in the world.

To me that appears to fall under the category of wishful thinking. The only thing that would stop China from continuing to absorb manufacturing capacity is financial collapse, something increasingly likely to happen. That is explicitly what the Made in China 2025 plan means. Then he makes the single statement with which I agree wholeheartedly:

Beijing’s alternative would have been to use China’s own economic growth to boost global demand—making the global pie bigger so that China’s piece also could grow in absolute terms. Alas, the Communist Party’s decadeslong use of industrial policy centered on suppressing domestic demand foreclosed this option.

That’s what victory would look like to me. Not China importing more raw materials or exporting less. The balance of his piece is a lot more wishful thinking.

Contrary to Mr. Sternberg, I think that Hong Kong tells us the future of China. Power will continue to be concentrated into Xi’s (or his successor’s) hands. There will be increasing repression. Ultimately, there will be an attempt at undoing 1979. The Chinese Communist Party has little alternative if they wish to retain control and they do. There really is no other game in town for them and they have no regard for ordinary Chinese people.

My experience in life is that there is a nearly irresistible temptation to double down on failing strategies and China’s leaders are no different. They would rather reign in hell than serve in heaven.

Peggy Noonan makes some predictions in her latest Wall Street Journal column:

On the impeachment of the American president, the story’s already been written, hasn’t it? It didn’t quite work, did nothing to help and little to hinder his position. The question whether to have witnesses in the Senate trial is a side issue. He can’t be proved more guilty. Even his supporters know he leaned on Ukraine for political gain. They judged this deserving of embarrassment but not removal. It will be the impeachment that didn’t move the needle, that history barely remembers.

On to the real action, the presidential election 10 months away.

The Democratic primary field is still flailing and doesn’t see it’s flailing. At the moment their theory of the country is wrong, and it’s wrong because it’s a theory, not a cold-eyed look at circumstances and facts on the ground. That is what good generals look at first. If there is a grinding war or an economic downturn people will want change and the out party has a good shot. If the economic downturn is severe they will consider deep structural change, even radical change such as socialism. It isn’t true that America will never go socialist. Maybe it will, but not under current conditions—full employment, rising wages.

Maybe all this will be settled at an open convention. But they ought to know by now they went too far left too quickly. And sometimes you have to stand up to the base.

President Trump is no doubt happy. He thinks he’s beating his domestic enemies. The great threats are North Korea and Iran. On the latter he will experience two conflicting impulses. On the one hand he sees himself as Mr. No More Benghazis—I’m the tough guy, I’m not afraid to take action. On the other, he sees himself as the unconventional president who doesn’t have wars, who thinks the Mideast is a loser’s game, who wants out.

Underlying his eventual decisions will be an unspoken theme of his re-election campaign: I’ve been president three years and the world didn’t blow up. My critics said it would because I’m crazy. I’m crazy like a fox! I kept things cool. That theme is about to be put to a test.

In the 2020s, the American position on China will harden—not the government’s but the country’s. Whatever happens with the administration and China, Mr. Trump will think it’s about him and lose interest when it appears not to be. But among the people, especially the business class, the perception will deepen that China is not our friend. Channeling this into the creation of an actual coherent China policy will be the big work of the next administration. This one doesn’t do coherent.

The belief that big tech needs to be corralled—to be broken up or declared public utilities—will grow on the left and right. The big companies are too powerful and have too insinuating an effect on our lives. This won’t be Mr. Trump’s issue—again he thinks it’s about him, and whether their algorithms are unjust to him and to conservatives. He wants big tech to bow to him, and they will. They’ll come for dinner, be his pals and work out deals. They think he can be had. He can. But the issue isn’t going away, and wise lefties and creative conservatives may fully seize it.

Speaker Nancy Pelosi made herself look ridiculous this year when she backed lowering the voting age to 16. This is an idiotic and destructive idea, an epic and hackish pander, and is offensive to the baseline reality that the adults of a great nation have the right to govern its affairs. It will go nowhere, but the coming decade may see some pushback against the 18-year-old vote, passed in 1971. A lot has changed since then. We know the brains of 18-year-olds are not fully developed and haven’t fully knitted. Young people are educated more poorly, and the screens that surround them and through which they learn encourage sensation, not thought. Their experience of the world is limited; most are financially and emotionally supported by others. All this as the questions we face grow more complex. We should raise the voting age, not lower it.

The past decade saw the rise of the woke progressives who dictate what words can be said and ideas held, thus poisoning and paralyzing American humor, drama, entertainment, culture and journalism. In the coming 10 years someone will effectively stand up to them. They are the most hated people in America, and their entire program is accusation: you are racist, sexist, homophobic, transphobic; you are a bigot, a villain, a white male, a patriarchal misogynist, your day is over. They never have a second move. Bow to them, as most do, and they’ll accuse you even more of newly imagined sins. They claim to be vulnerable victims, and moral. Actually they’re not. They’re mean and seek to kill, and like all bullies are cowards.

Everyone with an honest mind hates them. Someone will finally move effectively against them. Who? How? That will be a story of the ’20s, and a good one.

I wish I believed her predictions but I’m not a Whig. What I see is an America that bears little resemblance to the one I wanted when I was 20 and continues to move in the wrong direction.