Obamacare Death Spiral: Incompetence or Cunning?

This week Aetna announced that it was going to reduce its exposure to Obamacare, offering less policies on Obamacare exchanges.

So the Obamacare death spiral continues.

The question is: was this the plan all along? To crash the health care system and then announce that the only solution was to go to "single-payer." According to La Wik:

Single-payer healthcare is a system in which the state, rather than private insurers, pays for all healthcare costs.

So was this the plan all along? I must say that I doubt it. That's because I think that political people are not long-term thinkers. They are just thinking about how to do the next thing.

I'd say that the Obamacare designers probably wanted to do single-payer, but knew that they couldn't pass it in 2009. So they designed a program, according to the model of Jonathan Gruber, that kept the elephant in the room, corporate employee health plans, while laying waste to the individual health insurance market to prop up the Obamacare subsidized population. Then, I expect they said, we'll revisit it in ten years.

You can see the attraction of single-payer to the ruling class. When the government "pays for all healthcare costs" it means that the taxpayers pay for all healthcare costs. When the government pays for all healthcare costs it removes the embarrassments of co-operatives going out of business and Aetna retreating from Obamacare.

Also, of course, it means that people don't have to get good jobs with good benefits to get good healthcare. Everyone gets care according to need and pays according to means. What is not to like?

The problem is, of course, that healthcare become a similar game to education. In education the customers are not the students but the teachers and administrators and vendors. So the outcomes for students are not that important compared to the outcomes for teachers, administrators, and vendors organized to get results from politicians. The middle class get half-decent service and the poor go to the wall. Also, because the government is in charge it doesn't get the blame the way that insurance companies get the blame for health care costs today.

Of course, the trend in all government programs is to centralize and standardize and increase government control. But when control is central and administrative you get a system that is very bad at responding to peoples' needs, and very bad at adapting to changing needs and conditions.

The problem is, of course, that the government system will be designed to offer free stuff up front, and hide its costs behind a curtain. Innovation is stifled and existing powerful interests are protected.

It is telling that Obamacare was passed by filling the insurance companies' mouths with gold and risk corridors. These were the same organizations that every Democratic partisan had been excoriating for years as profit-seeking wasters. Yet the Obama administration got Obamacare passed by stitching up a deal to get insurance company buy in.

Of course it did. Yet most people drink the KoolAid that government is there to help.

No it isn't. Government is in the business of rewarding its supporters and buying the support of opponents when necessary.

What should Republicans and conservatives do about this? I suppose the answer is to provide an Amazon or Uber alternative. Something that can sidestep the existing special interests and deliver services in a new way while the special interests aren't looking. How should/could this be done? I don't have a clue, but I sure would love to see some scrappy newcomer figure out a way to do it.

Meanwhile, if I were a Democratic politician I would blame the whole Obamacare mess on the insurance companies and their obsession with profits.

Politicians Will Always Mobilize People Against Danger

If you are totally frustrated by the Obama era and just can't take it any more, I have bad news for you.

Politics is never going to get any better. That's because, on my theory, politics and government are always and everywhere engaged in one thing and one thing only.

Politics and government are in the business of rallying people against an existential danger, and then leading them to make war on it and defeat it.

It's pretty obvious how this works with respect to so-called primitive tribes. They occupy land with access to food supplies and their lives depend on defending that territory against other tribes that might also want to occupy that territory and feed off its benison.

The agricultural age was no different. Each feudal lord was the master of some food-growing territory. As Hegel points out, this Master didn't actually grow any food. He was the Master that put the food-growing Slaves to work. He dominated the Slaves and took a big cut of the food in return for living under his protection. The Master was the Protector in a cold hard world.

But things changed with the growth to dominance of the exchange economy. In the old days exchange only happened with high-value objects. Basic commodities were produced, typically, by the same people that consumed them. Now that has changed. Nearly everyone now sells their labor on the labor market for money to purchase the basic commodities instead of make them at home or on the farm.

Now my idea is that a wise and compassionate elite, brimming with education and knowledge about the new exchange economy, would have helped the workers and peasants used to truckling to a lord and experiencing the market at arms length. They would have taught them how to thrive in the labor market, how to switch from a subordinate cultural role as a peasant to a responsible role as a responsible individual that goes out into the world looking for a way to contribute rather than fortifying his patch of ground against marauders.

But in fact our elite, educated as it is, has not followed that path. Starting with the Class of 1848 it has encouraged first the rising working class and then women, blacks, gays and more in the culture of victimhood, to stay as People of the Subordinate Self. It has done this by convincing all these groups that they face existential peril unless they enlist in the liberal political army.

So everything has changed with the new exchange economy and yet nothing has change, because politics is still about mobilizing against the existential foe.

All politics reflects this dynamic and always will. There is no warrant for political power and the mobilization of private resources into the service of the state unless there is an existential peril. So modern ruling classes have copied the methods of the old regime. They terrify their people with the dangers awaiting them, and they offer themselves as the only means to fight the danger.

So modern politics oscillates between fighting the dangers from external enemies -- Kaisers, Führers, Commies, Maos, and now Musliams -- and fighting the dangers from internal enemies -- capitalists, CEOs, racists, sexists, homophobes, polluters, and climate deniers.

Frankly, I'm in the camp for fighting the external enemies. Most of them really are an existential threat, although not perhaps as bad as the war party has advertised.

My problem is with the fight against capitalists, CEOs, and the rest. Sorry Charlie, but I just don't think that they are real threats to civilization as we know it. Capitalists and CEOs, properly restrained from crony deals with politicians, have raised us from $3 per day to $100 per day. Racists, sexists, and homophobes are just an excuse for the ruling class to keep their supporters anxious and frightened.

Then, of course, there is the whole menu of free stuff, from pensions to health care to education. The idea is that the average person cannot provide for themselves; only government has the resources to provide pension, health care, and education. Sorry Charlie, but I think that having the government run that stuff is the dumbest idea since bloodletting. I believe that the royal road to human dignity points towards ordinary people doing their own thing with regard to child education and old age. But what do I know?

I do think that the politics and the government of the present ruling class will go down in history as the Great Injustice, the most heartless and cruel manipulation of ordinary people of the last millennium.

That's because I think the political philosophy of our ruling class denies the ordinary person the dignity to order their lives on their own without a power-crazed activist from the Circumlocution Office breathing down their neck to teach them How Not to Do It.

The whole point of social animals is to do as much as possible without force and domination. And humans are the most social of animals. Just ask the Cajun Navy presently self-organizing to rescue people in the Louisiana floods. I wonder what Walmart is doing to help.

Dear African Americans: Politics is Not the Answer to Your Problems

You can talk all you like about the failings of Donald Trump, but the riots in Milwaukee, Wisconsin, subsequent to the killing of a black suspect by a black police officer seem to speak more clearly about the state of America today.

Years ago, I read a guy that said simply that politics and laws can do something about egregious injustice and discrimination. But politics should get its nose out of moderate and light injustice and discrimination.

In other words, politics is a very blunt instrument and can't do much more than keep the peace, and then not even that all the time.

So people that put their faith in politics keep getting disappointed.

Thus, in the 1960s the race riots in major American cities began after the passage of the landmark civil rights laws.

Thus, in the 2010s the race riots in Ferguson, Baltimore, and Milwaukee began after the election of America's First Black President.

Why? Because politics and civil rights laws cannot make African Americans whole. It can make slavery and Jim Crow illegal but it cannot vault African Americans into the middle class.

You get into the middle class by changing your culture from the subordinate, resentful culture of the worker or the peasant to the responsible culture of the middle class. Not by Affirmative Action and diversity programs.

By the way, the chap killed by a cop in Milwaukee, 23-year-old Sylville Smith beat a shooting rap.

He beat a shooting rap at a jury trial in 2015 when a witness recanted, allegedly after Smith intimidated him. 

This is what Jill Leovy recounts in Ghettoside. Cops can't get a conviction on murders, because of witness intimidation. So they arrest the bad guys, that everybody knows who done it, for minor violations where they can be convicted on the testimony of a police officer.

I was on a jury years ago where a black suspect was tried for some minor offence purely on the testimony of two police officers. During jury deliberations the five white jurors were all quiet until the sole black woman on the 6-person jury announced for conviction. Then we followed her lead and voted for conviction.

If you want to step out into the modern world of global exchange and of trusting anyone who demonstrates trustworthiness then you must step out of your tribal enclave. You cannot sit there ready to strike out at the tribe over the hill or in the next urban gang territory. You have to declare for peace and base your public life on the principle of serving others before you serve yourself. And the first thing you do is stop listening to the politicians and activists that tell you that the answer to your problems is force: against the police, against the bosses, against the 1%.

Maybe, after the disappointment of the civil rights revolution, and after the disappointment of the First Black President, and after inner-city African Americans have burned down their cities again, our African American friends will give up on the false promise of politics and just pitch in and become Americans who happen to be black.

But that is the way of humans, and of the United States. We only do the right thing after trying all the alternatives.

Republican Rebirth: Is It That Simple?

Jon Gabriel is the guy with the evergreen tweet: "My favorite part about the Obama era is all the racial healing." He's head of Ricochet.

Now he has written that the Republican base has burned the party down and given it to a guy that isn't a conservative, let alone a Republican.

OK, pal, but what do you propose?

It will take an army of forward-thinking leaders to build a party that welcomes conservatives — an army motivated by clear ideas and concrete action. Unlike the recommendations of the 2012 autopsy, what’s needed is not a Beltway-centric push for round 932 of comprehensive immigration reform, but a full-spectrum return to the small-R republican ideals this nation was founded upon.

Now, I would say that the problem Republicans and conservatives have faced over the 25 years since the end of Reagan is that there just aren't enough people in America that believe in the small-R republican ideals this country was founded upon.

I'd say that the Republican debacle occurred because party leaders understood that small-government politics only gets you so far. Until you start talking about reforming Social Security around people that have been paying payroll taxes for the past 30 years. Until you start talking to sixtyish women with end-of-life mothers. Until you start talking to parents getting "free" education for their children. Then you are out to lunch because people are not ready to give up on Social Security, Medicare, and government education.

People will not give up on their Precious. Not yet.

On the other hand far too many people think about politics as a rational discussion of the issues. It is not. Modern politics is about the anger of the dispossessed against the power of the ruling class.

When the dispossessed get angry about the injustice they experience (real or imagined, it doesn't matter) they act on their anger. So the white working class is burning down the Republican Party. Just as Black Lives Matter is burning down the cities. Both groups are mad as hell and they are not going to take it any more.

Now you can say to the white working class: Sorry chum, but the good old days of good jobs at good wages are over. Today you have to hustle for a buck. It's a global world and you have to figure out how to thrive in it. On. Your. Own. Your problem ain't gonna be solved by some chap promising to bring jobs to you, or to punish the Chinese or evil corporations outsourcing. But a politician cannot get votes by telling people the facts of life. He gets votes by telling people what they want to hear.

Now you can say to African Americans: sorry homeys, but the First Black President ain't gonna solve your problems. In fact all the civil rights and diversity in the world is not going to do it for you, not after the blatant Jim Crow laws have been washed away. It's a cold hard whiteboy world out there, whether the white boys are actual white racist cops killing homeboys or South Asians pouring into Amazon or East Asians taking all the places at Caltech. But a politician cannot get votes by telling people the facts of life. He gets votes by telling people what they want to know.

And so on.

That is why the world doesn't go from sensible reform to sensible reform, but lurches instead from revolution to conquest to disaster. People get angry and decide to burn the place down rather than compose their differences.

But usually burning the place down doesn't help, except by hastening the end. So the Ghost Shirt movement in the western plains didn't save the Plains Indians. So the Boxers didn't save China from the western imperialists. So the Bolsheviks didn't make a better Russia.

The Maoists burned down China, just to make it fair. But now China is exploding with economic growth, now that the Commies are permitting consensual capitalist acts between adults. Hmm, what a concept.

I don't like this. I don't think it ought to be that the way to solve the problems of a nation is to burn the old ways to the ground and then start to build, and finally succeed after a couple of failed tries.

Nobody wants to hear that, least of all voters at election time.

So, assuming that Donald Trump goes down to defeat, as "everyone" expects, we won't rebuild the party with a bunch of "forward-looking thinkers." It ain't gonna be that easy.

Before a new party can be built on the ruins of the old many conceits and hopes will have to be ground into dust. Only when people give up keeping their Precious will we be ready for a rebirth of freedom.

And frankly I don't have a clue what the new Republican Party will look like.

"I Would 'Twere Bedtime, and All Well"

This season conservatives feel like we are staring into the abyss. And there's a temptation to wish it all away, and say, as Falstaff said to Prince Hal right before the battle: "I would 'twere bedtime, Hal, and all well."

It's a real temptation. To wish it all over. Think about it. The Republican base is angry. The white working class has come storming into the GOP with Trump. African Americans are angry that the First Black President turned out to be a complete bust. Feminists are determined to wipe out the rapists and the patriarchs. Gays are determined to wipe out the haters. Liberals are determined to stand against the xenophobes.

We moderns and globalists have a myth that everything can be resolved by rational discussion and the scientific advice of the experts. Alas, the experts are the bribed apologists of some special interest. And nobody can ever agree on the rational response to the current crisis.

So everything has to be determined by anger and force. This is hard to understand, but that is the way it has always been. in War Before Civilization the primitive tribes ran constant border wars featuring raids and massacres, but they didn't experience it as a rational way to maintain the borders and food supplies. Their wars were "caused" by cross-border insults, or the wrath of the gods.

So it is with us. We have our wars, that used to be about princely honor, then about national honor, and now about wars to save the world from fascism, communism, Islamism. That's when we are not fighting to save the world from environmental degradation, the ozone hole, or climate change.

And our local wars, that used to be between the king and his barons -- that's what Falstaff and Prince Hal were doing -- are now about class wars, race wars, and the various wars led by our modern barons of activism on behalf of marginalized people everywhere.

My point is that all the angry people here in the US want the government to put its thumb on the scales of justice for their benefit. The Republican base wants -- yes what do we want, exactly, beyond fighting back against Obama? The white working class wants the good old days of "good jobs at good wages" for graduating from high school, which are gone forever. African Americans want -- yes what do they want? We know what the elite Marxist lefty Black Lives Matter wants, but that will lead to nothing but misery. And African Americans got civil rights half a century ago. Feminists? They got what they want decades ago, only what they wanted didn't really pan out, so now they want more of it. Gender benders? They are swinging a lot of elite cultural weight but none of it will make them happy, because to get off the main stream of ordinary human sexual reproduction is to descend into a maelstrom of misery.

We conservatives can see, after a Trump failure, a Supreme Court that will roll back the First Amendment and make it illegal to criticize the Clintons and roll back the Second Amendment to make it illegal to protect your family. And more big government solutions to health care and education that will only make things worse.

But really, that's the way the world works. It doesn't get fixed by rational discussion and the timely advice of the experts. The world works with one mess followed by another.

We conservatives like to think that with some sensible reform and roll-back of big government excess we can return to a bourgeois world of responsible cooperation. We have been rehearsing this dream for half a century and more, but really, the world doesn't work like that. Instead the big government model will go on from one lurch to another until the whole thing collapses. And then something will emerge out of the ruins that nobody expected or planned for, something that completely confounds the experts and the activists.

Sorry, Jack Falstaff. Your hope for a quick fix and home by bedtime is not the way the world works. It is always much messier than that.

And we had better get used to the world as it really is.

Do You Want Your Corporate Employer to Pay More Taxes?

Aside from the the fun and games about whether Donald Trump told gun owners to cry havoc and let loose the dogs of war, there is the difference in economic policy between Trump and Clinton.

Trump has just released an economic plan that calls for a reduction in corporate income taxes to 15% -- although it sounds a bit more complicated than that.

This is probably a no idea. Most other first world nations have a corporate income tax rate more like 15% while the nominal rate in the US is 35% for federal corporate income tax.

Hillary Clinton claims that Trump's plan is "tax breaks for corporations."

I'd say that this is an argument we need to have, on the merits. Do the American people want corporations to be tax farmed by government or do they want corporations to be lightly taxed so they can make more money, create more jobs and pay their employees more?

Now maybe Donald Trump can make that argument or maybe he can't. But the science is settled. The Great Enrichment of the last 200 years occurred because of innovations that government failed to smother in their cradles.

The idea put out by progressives that government should pick winners and losers and fight inequality is economic rubbish. Everywhere that equality politics has been practiced it has resulted in more inequality. That's because whatever government says it is doing, or thinks it is doing, it always ends up rewarding its supporters. And that means that the supporters have to pay less attention to what the market is telling them to do in the way of producing for the consumers and more attention to what government is telling them in the way of signing up for free stuff.

The basic fact of our economic system is that government has succeeded beyond the dreams of the 1848 radicals in using corporations as government ATMs and tax collectors. And the corporate income tax is the least of it. Right now, in FY 2016 government, federal, state, and local, is collecting about 11 percent of GDP in individual income taxes and 10 percent GDP in social insurance taxes like the federal FICA tax. Nearly all of that money is stripped off the wages of US workers by deductions from worker paychecks. In other words the government uses employers as tax collectors to strip workers of about 20 percent of their wages before they even see the money.

By the way, the corporate income tax, federal and state, comes in at about 1.9 percent of GDP.

Now just imagine that the 20 percent GDP was not conveniently collected by employers for the government and was paid directly once a year to the government by taxpayers. What do you think would happen? I must admit that I just can't imagine. And I don't want to say what I think might happen because Democratic operatives with bylines might suggest that I am inciting violence and I wouldn't like that.

If you want to get mad at corporations why don't you get mad at them for acting as the government's tax collectors, where they are creaming 20 percent off the top to give to government. Because the 1.9 percent that they are paying in corporate income tax is just penny-ante stuff. But it sure keeps a lot of lobbyists trying to buy loopholes from the politicians.

I say let's abolish the corporate income tax and pray for jobs. That is certainly a lot more rational that electing Hillary Clinton, the crony capitalist enabler, and hoping for better times.

Mob vs. Snob: Let's See If I Understand This

Back in the post revolutionary period, writes Peter Lee, Alexander Hamilton was the guy that saw a critical need for the young United States. He needed to keep the loyalty of the economic elite bound to the new United States. After all, the rebellion of the colonies was based on the merchant elite becoming separated from the British homeland, and not backing the Brits 100% in the Revolutionary War.

Lee calls Hamilton's policy Mob vs. Snob.

So Hamilton's economic policy, from the Feds picking up the state debts at par to the Bank of the United States and the industrial policy, put the US government and the rich together like bacon and eggs.

It was the division of the southern and northern elites that led to the secession of the southern states, so that it took a Civil War force the southern states back into the Union.

These days the elite doesn't worry so much about secession as about runaway white populism. So the elite has formed an over-under coalition with non-white groups to form a united front against the disaffected middle class whites.

That's why the liberal elites have suddenly warmed to Hamilton, according to Lee. It was Hamilton that led the US forces against post-revolution rebellions like Shay's Rebellion. This was the elite putting down a troublesome mob.

A guy like that suddenly looks attractive to a liberal elite alarmed by the Tea Party and "Lumpenführer" Trump. Hey, the GOP elite thought that Hispanic-friendly Rubio, Bush, and Cruz would square the circle between Hispanics and whites. Instead they failed and:

White power, as I put it, was left lying in the streets…and Donald Trump picked it up.

Oops! That wasn't supposed to happen. It has scrambled the Baldrick's Cunning Plan of the US elite and reversed, at least for a moment, the elite plan to let the white working class die of despair while the elite bought the support of the rising non-white groups with pretty baubles while keeping its power and wealth and influence safe from the stirrings of white rebellion.

So that is why the elite wants to revive Hamilton's Mob vs. Snob politics on the theory that it should make the annoying Trumpian mob go away.

But there is a problem. The elite politics of Hamilton was founded on Hamilton's genius. He had worked in the world; he had seen a war financed; he knew about Dutch finance and how to tend to the health of the state.

But our current elite is soft and foolish. It sought to teach the Middle East a lesson and yet threw away its victory; it set on a foolish real-estate boom and bust based upon a faulty credit policy of insufficient collateral and unsound borrowers. It has failed to heal the economy broken on its cheap money policies. And yet, having "barely contained disaster for the last two decades," it dares to sneer at the populism of Donald Trump. These are latecomer fans of Hamilton that do not understand Hamilton.

The success of Hamilton's policy was that his fiscal bounty for the elite ended up enriching the common man as the sound state finance of his system turned the United States into an economic powerhouse.

The failure of today's elite is that its condominium with the financial elite is not the simple windfall of Hamilton's national debt that energized the whole economy. This new deal is more the protection policy of the criminal gang. Support us and our welfare state and identity politics if you know what is good for you. That is the message for the Warren Buffets and the techno billionaires, and nobody has got the message better than PayPal billionaire Elon Musk. He has built a crony-capitalist empire with NASA-assisted SpaceX and climate-focused and subsidized Tesla.

No wonder the middle middle class is getting restless.

The only question is whether there is a real Hamilton waiting in the wings with the magic potion ready to administer to the national patient and revive its flagging spirits with a new financial and political concoction, and whether Donald Trump would know him if he saw him.

For after all, everyone was amazed when Hamilton's system blew wind into the sails of the good ship United States and set it off on a prosperous voyage for 200 years. Would today's wise men recognize a Hamiltonian genius if he walked onto the national stage?

When Ronald Reagan strode onto the national stage 36 years ago the elite knew exactly what to think. He was an "amiable dunce," and a "bellicose Cold War cowboy."  Yet he was the guy that ended the "stagflation"of the 1970s and won the Cold War without firing a shot.

It isn't clear that the elite has learned anything useful in the last 36 years. Yet it still claims the right to rule.

Let us hope that God still looks after drunks, fools, and the United States of America.