Opinionated @ CFE

What do Comcast and Blue Cross have in common?

Oct
02

We love to hate cable companies. Thanks to little competition for their products, prices rise at least once a year and often twice. The customer service is maddening, we often end up having to buy products we don’t want to get the products we do, and there really aren’t a whole lot of alternatives to it without some serious market disruption. Come to think of it, those descriptions could very well describe your average insurance company. In most states, they have a commanding share of the market (60%+). They raise prices whenever they want. We hate the customer service, we’re covered for things we don’t want, and trying to find an alternative often results in frustration. It’s not hard to see how they’re in similar situations.

Cable companies act as distributors for video programming. They are middleman between us and the content we want. The content owners often want cable companies to agree to various terms to carry their content. This could be an agreement to carry less popular channels in exchange for the must-haves, specific channel assignments, or, as is usually the case, more money than last year. While we’re the consumers of the content, we have very little say in the purchasing decision. Almost annually, one or more cable providers will get into a fight to put on a good face as a customer advocate, lose the programming for a few days or weeks, and we get stuck with the higher bill.

In the same way, insurers act as a distributor for access to healthcare. They’re also middlemen, but between us and medical providers. The medical providers spend a lot of time and energy trying to maximize payments from insurance companies. The actual consumers of the service, you and me, have very little leverage or control over the process. In fact, we usually aren’t even able to find out what a given procedure costs, instead hoping that our insurance will, on our behalf, negotiate better pricing.

Just like TV viewers who traded their cable package for Netflix, doctors are already wising up to the insurance scam. With the cost of managing insurance claims and constantly cut payments, some practices spend more than half their income managing the mess. Some even go so far as to offer a sort of insurance of their own that, when combined with a high-deductible catastrophic plan, is much cheaper than carrying insurance. How do they do it? It’s not just the overhead. They’re also able to do tests either in-house or with negotiated rates of their own, sometimes for pennies on the dollar what it would otherwise cost.

So why hasn’t this model been broken to pieces? As John McClane says, it’s always been about the money. Just as with cable, there’s a lot of it on the table. Content providers like forcing every single cable subscriber to pay a small fee for their stations whether they want/watch them or not. It’s a model that puts a lot of money in a lot of pockets by socializing the costs. Medical coverage is largely the same way. In fact, well-managed quality care would likely shutter half the hospitals in the country. The Comcasts and the Blue Shields of the world are making a sizeable fortune on inefficiencies.

As with most enterprises facing their own extinction, the knee-jerk reaction is to try and insulate themselves against the changing winds, at least until they can figure out how to keep their bottom lines. Cable reacts by scaring programmers away from selling directly to consumers, degrading competitors that use their hugely profitable Internet connections to bypass traditional distribution channels, and blocking competition in their local markets with predatory pricing. Insurance is taking more-or-less the same road. They got a law passed to require everyone to buy their product, secured huge subsidies for those who can’t afford to buy it, and don’t have to answer at all for costs. Both have found ways to coerce others into supporting a model that they hate and want to replace.

What this highlights is the danger of strong market dominance by a single player. That dominance inevitably leads to higher prices for a lower-quality service. Solving those problems requires disruption from new players, not doubling down.

The Myth of Government-Free Marriage

May
10

I’ve seen a trend among my libertarian friends to try and argue that the solution to the entire same-sex marriage debate is to completely remove government from any involvement in marriage. I can see where this would have some kind of appeal. After all, the goal of same-sex marriage is to force those who do not support it to do so using the power of government. Libertarianism holds special contempt for using the force of government to make people do things to which they object. Unfortunately, their solution is pure anarchy and undoes one of the central and proper powers of government.

Contracts between private parties are central to functioning society. They allow individuals to spell out the terms of an arrangement and penalties for failing to oblige by those terms. A contract has no power unless you have a mechanism by which you can seek relief if a party to the contract violates it. If a contract is vague or leaves some terms undefined, we have to operate with some assumptions as to what would constitute fair terms to both parties. If we didn’t, a contract for purchasing a stick of gum would require reams of paper and months of legal review. For obvious reasons, we have to have some kind of assumed terms for various transactions lest we be paralyzed by an inability to enter into more casual contracts.

This is where government comes in and provides much-needed services to ensure contracts can function. Our system of laws, as imperfect as it may be, establishes some basic assumptions to use in the absence of anything more specific. It also provides a way to force a party that doesn’t live up to the terms of the agreement to either comply or provide compensation for abrogation. If we didn’t have these two things, contracts would be unworkable monsters and “might makes right” would be the only way to enforce a contract.

Legally speaking, the marriage contract is no different. Two people enter into an agreement. If one of them breaks the agreement, the other needs some kind of element of force to either seek redress or compliance. In the absence of a meticulously-detailed prenuptial agreement, we have to have some set of assumptions to work from. It sounds really good to say “keep government out of my marriage”, but who are you going to run to when a spouse decides to seize all of the joint property and change the locks on you? Without someone to enforce the terms of the contract, marriage becomes a lot like a casual dating relationship.

My fellow libertarians have fallen into the trap of thinking that simple mantras can solve complex problems. The reality is that they make a good starting point for discussion, but they are rarely implementable on their own. The marriage debate is no different.

Partisanship creates hypocrites

Feb
06

Someone asked today where the anti-war, pro-civil liberties left has gone. They’re certainly not as loud as they were six or so years ago. I think I can explain it. I’ve noticed a pattern from the media and partisans alike. They are highly deferential to presidential power during the first term, then start to let the teeth come out once that second term is secured. It happened with Bush, and it’s happening with Obama. My guess is once they are assured that their president-emperor doesn’t need to face the ballot box once more, they can finally be honest about him. By then, though, it’s usually too late to do anything of substance about it.

A core problem with this blatant hypocrisy is that it suggests that you can and should  compromise deeply held principles (or at least be less vocal about them) if you think that the person in power can give you some of what you want. I think it’s a bad idea to make that kind of deal with the devil. When the power shifts, and it inevitably will, that lack of principled stand will cost you credibility when you call it out in The Other Side(TM). You’ve revealed that power, not principle, is your guiding force, and your criticisms will ring hollow as you find the perpetrator of the misdeeds to be a bigger issue than the misdeeds themselves.

Why do so many Republicans spurn libertarians?

May
07

I’ve noticed that a lot of members of the Republican Party have nothing but vitriol for self-described libertarians who have chosen to affiliate with the GOP. It seems a bit incongruous to me. The GOP brand is supposed to be one of a government with limited and well-defined powers exercising them as lightly as possible. This is something that would naturally attract libertarians, and it would make them allies of many conservatives on any number of issues. So what’s the deal with all of the hostility?

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Libertarian Environmentalism

Mar
09

A fairly common parody of libertarians is that they’re anarchists willing to let people with lots of money call all of the shots. While this is a convenient caricature for the intellectually slothful, it’s far from how libertarians actually view the role of government in general. Nobody wants dirty air, polluted water supplies, and poisoned land, so trying to act as if someone does is dishonest at best. Instead, we simply view it through the lens of property rights, something that can be tangibly enforced. John Stossel and Ron Paul offer views on how exactly the environment is protected under a libertarian model.

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Seniority is a Liability

Jan
23

Whenever an incumbent is running for office, they will almost invariably turn to talk about how the length of time they have spent in that office as a means of proving that they know how to work things. You’ll see that same claim made at the federal, state, and local levels. Just as certainly, challengers will point to the length of service as a bad thing, a sign that they have made a comfortable career of what should be public service. Both of these sides have been going at it for years, but it looks like the pro-seniority side is starting to lose out.

One of the few positive things of the Tea Party crowd (and the members they are electing) is a vehement opposition to political elitism, including the practices associated with seniority. Instead of accepting that you have to outlast your peers to get your desired committee assignments, they have pushed for significantly more technocratic ways of committee selection based on ability. Senators like Rand Paul and Mike Lee (the latter of whom I have significant disagreements with) have managed to wield significant influence in the “deliberative” body of Congress despite being the new kids on the block.

So now that the influence of seniority isn’t as solid of an indicator of influence in the body, does it still have value? Not likely. Now that good ideas and ability are the currency of influence, being in office for a significant period of time without a significant list of accomplishments is a huge negative. Guys like Bennett, who seemingly accomplish little of what the general electorate cares for, get replaced by the brash go-getters who make things happen in short order.

Former State Sen. Dan Liljenquist accomplished two major reforms, state employee pensions and Medicaid, in just three years in office. Doesn’t this seem like the kind of guy who’d get things done in Washington? And, more importantly, don’t those seem like the right things to get done?

Election fraud? Focus on the right part of the problem

Nov
10

It seems like there are a number of conservatives who have an unhealthy fixation on the issue of vote fraud. This fixation usually results in making it a lot more difficult to register to vote with requirements to register far in advance and produce copious identification. This focus, however, is horribly misdirected.

The reality of vote fraud is that it is rare, often uncoordinated, and unlikely to change the outcome of most elections. In cases where an election is close enough to make a difference, additional scrutiny is placed upon the ballots to ensure that they were properly cast. Any attempt to game an election from the front end would be quickly discovered and result in huge penalties for people who usually have little to gain from it.

Election fraud, however, is a real specter. Time and time again, electronic voting machines are shown to be easily gamed and changed to result in substantially different outcomes. Because the results can be modified to show a significant victory for a given party with the involvement of very few players, it becomes less likely that it will draw attention and scrutiny. As Joseph Stalin, someone well-versed in manipulating elections, has said, “He who votes does nothing. He who counts the votes decides everything.”

Most of us want elections to be fair and square, so let’s focus on the parts that can actually be gamed.

The Rise and Fall of the Tea Party

Sep
16

I’m not a fan of the Tea Party and haven’t been for some time. As Jon Stewart put it, most of them are moral majoritarians in tri-tipped hats. It’s hard to see how they differ from the Ralph Reed disciples that stormed into the Republican Party in 1994. That said, it seems like what has become just a mouthpiece for the more outrageous elements of the GOP had some roots in something worthwhile. It’s just been thoroughly co-opted by the establishment for their own purposes.

So how did it all start? Way back in mid-2008, Ron Paul’s campaign for president was winding down and the newly energized campaign volunteers were still all kinds of riled up. They were sick of the constant centralization of both government and economic power, and sickened by the power structure of the parties that only allows “annointed” candidates to advance to elections. A coalition of libertarians, fiscal conservatives, and reformers were ready to challenge any and all party structures that did business as usual. So what happened?

Well, those in power in the parties didn’t get there by being stupid. They saw the wave coming and knew they had to nip that sucker in the bud, and what better way than pulling a reverse infiltration? Almost immediately, the same people who had been a part of the problem started loudly singing the praises of the Tea Party, carefully steering it into an attack dog of the Republican Party, not a near-partyless populist mob demanding more from everyone. In Utah, the problem was particularly bad as the organizers chose to invite elected officials to come speak to crowds, hardly the kind of thing a reform movement should want. It only took weeks or months to quell the uprising and get the media to label the newly-formed beast as a group of angry zealots  whose rage was fueled by racism, misogyny, xenophobia, or whatever ugly thing could be attached to it.

What got botched was a trans-partisan populist movement to fight against centralization of power, public and private, that has lead to rampant crony capitalism, impenetrable political party power structures that exclude any kind of insurgent candidates from the process, and the reigning in of an out-of-control pattern of federal spending perpetuated by both parties. All of these are laudable and arguably popular goals. Unfortunately, they’ve been buried under a mountain of far-right social neo-conservatism with a very narrow appeal, obviously explaining the precipitous drop in popularity among the general populace.

Is there any hope for these much needed reforms to happen anytime in the near future? Maybe. It depends on if the lightning in a bottle during the first few weeks can be recreated, or if the original reformers have stuck around now that the real work begins.. Otherwise, I expect the same old story.

Fixing Redistricting Through Smaller Districts

Jun
19

We all knew that redistricting would be a tough business, but I’m not sure anyone suspected it would be this tough. In addition to the normal partisan concerns, cities and counties are all calling for not being split up into multiple districts. There’s also a dichotomous message of “don’t gerrymander” combined with “don’t make us lose seats even though the population figures say we should” coming from Utah Democrats. There are things, though, that would readily alleviate many of these problems.

The Legislature has opted to keep the House frozen at 75 seats rather than allowing it to expand to the limit of 87 from Article IX, Section 2 of the Utah Constitution. This creates less flexibility in redistricting as each seat need to contain roughly 33,000 residents. Even an expansion to the maximum limit would only drop the size of a district to 28,500. This makes it difficult to not split up large cities or combine smaller cities together, sometimes in piecemeal, but it is a step in the right direction. Consider that in 1900, just four years after statehood, Utah had just 276,000 people and a district with the current number of seats would be just 3700 people. We have ten times as many people, but no more representation. This will obviously mean that many voices will not be heard.

While we can’t do much about the federal level (though organizations like ThirtyThousand working to fix it), we can absolutely work to make sure that our districts allow for much more fine-grained representation. It’s too late to do anything for this year, but we should ask that something be done to expand the House as much as possible. It will keep neighborhoods whole, make legislators more responsive and accountable, and allow cash-poor candidates the opportunity to serve.

Economy of Scale, Product Differentiation, and Education

Jun
05

In most companies, growing larger means you have the capability to offer a wider range of products and services than when you got started. Once your customer base reaches a certain size, products that were once too specialized to be worth pursuing are now worth the time and effort of investment. After all, no two customers are the same or have the same needs, and failing to meet customer needs means you will doom your business.

Education should operate in the same fashion. No two students learn the same way, and any given group of them may cover as many different career paths as there are students. Accommodating this variety is very difficult in a smaller school or school district for the same reasons that small companies can’t offer a wide array of specialized products: it’s simply not efficient to do so. This should mean that a larger school or school district should be able to offer many specialized areas of study. In practice, however, we’re married to the idea of producing the exact same product using the exact same methods because it’s “efficient”.

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