“In other words, experts are often called in, not to provide factual information or dispassionate analysis for the purpose of decision-making by responsible officials, but to give political cover for decisions already made and based on other consideration entirely. The shifting  of socially consequential decisions from systematic processes, involving millions of people making mutual accommodations- at their own costs and risks- to experts imposing a master plan on all would be problematic even if the experts were free to render their own best judgment.  In situations where experts are simply part  of the window dressing concealing arbitrary and even corrupt decisions by others, reliance on what “all the experts” say about a given issue is extremely risky. Even when the experts are untrammeled, what “all the experts” are most likely to agree on is the need for using expertise to deal with the problem.”

“Experts have their place and can be extremely valuable in those places, this no doubt being one reason for the old expression, “Experts should be on tap, not on top.”

From Intellectuals and Society by Thomas Sowell

“Fannie and Freddie played the political game even more fiercely than their opponents, spending millions of dollars on armies of lobbyists on Capitol Hill. Each company was a revolving door for the powerful in Washington- both Republican and Democrat. Newt Gingrich and Ralph Reed, among others, worked as consultants for Fannie or Freddie; Rahm Emanuel was a board member of Freddie.”

“By the 1990’s, Fannie’s chief executive could boast, without much exaggeration, that “we are the equivalent of a Federal Reserve system for housing.”  At their pinnacle the two mortgage giants- neither of them and originator of loans- owned or guaranteed some 55 percent of the $11 trillion U.S. mortgage market.  Beginning in the 1980’s, the two companies also became important conduits for the business of mortgage- backed securities.  Wall Street loved the fees it collected from securitizing all kinds of debt, from car loans to credit card receivables, and Fannie’s and Freddie’s portfolio of mortgages were the biggest honeypot around.”

“But in 1999, under pressure from the Clinton administration, Fannie and Freddie began underwriting subprime mortgages. The move was presented in the press as a way to put  homes within the reach of countless Americans, but providing loans to people who wouldn’t ordinarily qualify for them was an inherently risky business.”

From Too Big To Fail by Andrew Ross Sorkin

An excellent article on the health care dilemma

‘A Wasted Opportunity‘
Wellpoint’s CEO on ObamaCare’s mistakes and how to pick up the political pieces.
by By JOSEPH RAGO in the Wall Street Journal

excerpts

Mrs. Braly says, when 85 cents out of every premium dollar or more “is paid out in the actual cost of care, doctors, hospitals, suppliers, drugs, devices.” Confiscating the 2009 profits of the entire insurance industry would pay for two days of U.S. health care.

“In Maine, where guaranteed issue went into effect in 1993, there were 11 carriers in the individual market, and now there are two: Us, and another company that would not be called in any circle an equivalent health insurance company.” In Kentucky, 45 insurers fled the state, with WellPoint the last one standing, until the state started in 1998 to repeal most of these regulations.

Depending on the plan, WellPoint’s monthly premium for a 20-year-old in Indianapolis, where the company is based, ranges from $53 to $202. But the same young adult looking for similar coverage in Albany would face costs anywhere between $832 and $1,047. Obviously health costs vary across the country, Mrs. Braly says, but these disparities are almost entirely due to New York’s regulatory mandates. In a state with 19 million people, 88 New Yorkers between the ages of 18 and 24—88!—have bought WellPoint’s best-selling individual insurance product because insurance laws make it perfectly rational not to acquire costly coverage until people need it.

As Mrs. Braly diagnoses the U.S. health-care system, its two main strengths are (a) choice and flexibility and (b) cutting-edge treatments and procedures. But while American medicine has been shaped by specialization, scientific advancements and major technological breakthroughs, it is paradoxically antiquated. The modern managerial and corporate practices for obtaining better productivity and quality that have revolutionized every other sector of the economy have largely passed over medicine.

“Despite elite concerns of a public backlash against capitalism, it has been the public, not Wall Street or Washington, that has supported capitalism all along.  Financiers were disconcertingly quick to run straight into the governments arms, while the public has stuck up for markets and fought against taxpayer subsidy of failure. The hope for free markets is “political constraint,” says former St. Louis Fed president William Poole.”

“The public intuitively grasps unfairness when it sees it. In poll after poll, citizens have opposed bailout after bailout, not just for the banks but for their own neighbors.  This opposition is not a reflection of a heartless and mindless populism. Ordinary people understand that bailouts have perversely punished individuals and companies that acted responsibly, creating an incentive to act irresponsibly in the future.  They can perceive the difference between a government that acts as an honest, transparent referee of competitors and one that acts as a guarantor of perceived favorites.”

From After the Fall:  Saving Capitalism from Wall Street- and Washington by Nicole Gelinas

Campaigns promise generalities but laws have to be specific. The health care disaster shows how difficult the road from promise to result is.

The current mess simply tried to do too much. There are two main problems in health care: cost and coverage.

85% of Americans have coverage that they are reasonably happy with. Costs are high for many reasons. We want short waiting times and high quality. We have some the best outcomes for most major diseases and access to wondrous new drugs and technology. Part of the reason health care is expensive is because we value it so much.

Yes there are administrative inefficiencies, but the cost shift from underpayment from government programs drives up costs much more. If one wanted to help drive costs down we would discuss tort reform, allow insurance companies to cross state lines, promote health savings accounts, promote final directives, and stem Medicaid fraud.

But rather than address the problems of the 85% they sought to address the 15%. Yet those without coverage are not without health care. And a case can be made that those 15% are closer to 5% when you exclude prisoners, those already qualified for government programs, illegal aliens, and those able to buy health coverage who choose not to.

But the difficulty comes when you require medical underwriting without pre-existing conditions. This sounds great but there are still two critical problems. Without forcing everyone to buy insurance people would simply wait until they needed it and the claims experience would drive costs sky high.  Without compressing the difference in premiums based on age, the older American’s would just get guaranteed coverage that they could not afford.

Both of these place an undue burden on the young.  Yet If we want to get health insurance into individual hands then we need some assurance that individuals can get reasonably priced insurance.

We could treat health insurance like a life insurance contract.  The younger you are the cheaper it is. You could lock into a plan period with restrictions on increases.  This is essentially an HSA.  When you are young with few claims you can build ‘cash value’ that can be tapped when you are older. This can be encouraged with individual tax credits for individuals to buy their own health care.

We tend to treat health insurance like auto insurance except that we file a claim for every oil change and flat tire. No wonder administration costs are high.

The problem is that the government wants to provide a benefit but not incur the cost. This leads to more cost shifting , some form of rationing, or lower quality care.  Proponets of more government involvement in health care contend that market forces do not work in the health care field.  I disagree; it responds to market forces too well.

Richard Cohen writes in the Washington Post “From John Edwards, lessons on celebrity and politics”

“- the lesson to be learned from the John Edwards affair. “We have substituted the camera — fame, celebrity — for both achievement and the studied judgment of colleagues.”

David Brooks warns of the “The Populist Addiction” in The New York Times.  ”

“voters aren’t as stupid as the populists imagine. Voters are capable of holding two ideas in their heads at one time: First, that the rich and the powerful do rig the game in their own favor; and second, that simply bashing the rich and the powerful will still not solve the country’s problems.”

The Supreme Court decision reversing McCain Feingold leaves a lot to consider. Many on the left are as outraged as the right was on Roe vs Wade. Jeff Jacoby tries to calm the storm in “Candidates, campaigns, and New Coke“ in The Boston Globe.

“But even those that do choose to advertise during an election cycle will not make the mistake so many of the court’s detractors are making. They know that Americans are not sheep, easily herded by means of clever commercials. If corporate advertising was irresistible, after all, we’d all be drinking New Coke.”

Finally I have an article at American Thinker:  “Why Elitists Fail.”

“Even the brightest minds cannot escape emotional impediments to a rational conclusion. Combining such emotional rationalism with a focus on theories detached from the verification of practical experience can be downright dangerous. This is why it concerns so many that Obama’s administration has the lowest number of appointees from the private sector in his cabinet of any president in history.”

And yesterday also at American Thinker : “Why Obama’s tax incentives for small business will backfire“

“Such micromanagement of the economy is not surprising from the moral supremacists who are more interested in  imposing their view of social justice than truly enabling the economy to allocate capital and create jobs.”

I greatly appreciate the numerous comments at American Thinker. They are thoughtful and worthy of your reading.

Thanks to all the visitors at Rebelyid.

Tips to Rabbi Bat-Or.

I do not know if this is a real ad, but it really doesn’t matter.

“People on both sides of the ideological fault line may believe that those with the most knowledge should have the most weight in making decisions that impact society, but they have radically different conceptions of just where in society  there is in fact the most knowledge. If knowledge is defined expansively, including such mundane knowledge whose presence or absence is consequential  and often crucial, then individuals with Ph.D.’s are as grossly ignorant of most consequential things as other individuals are, since no one can be truly knowledgeable, at a level required for consequential decision-making for a whole society, except within a narrow band our of the vast spectrum of human concerns.”

“The ignorance, prejudices, and groupthink of an educated elite are still ignorance, prejudice and groupthink- and for those with one percent of the knowledge in a society to be guiding or controlling those with the other 99 percent is as perilous as it is absurd. The difference between special knowledge and mundane knowledge is not simply incidental or semantic. Its social implications are very consequential.  For example, it is far easier to concentrate power than to concentrate knowledge.  That is why so much social engineering backfires and why so many despots have led their countries into disasters.”

From Intellectuals and Society by Thomas Sowell

Economic growth hit 5.7% in the last quarter of ‘09.  We should be hitting a rebound at this point in the cycle, but Wall Street is still in the midst of a losing streak. What gives?

First,  it is always dangerous to assess the economic scene by a short term move in the stock market; there are just too many factors affecting the market. But there are other reasons for caution.

Part of the pickup could be a ‘dead cat bounce.’  This could be that inventory levels have been depleted so low that businesses have no choice but to buy inventory  in order to keep the doors open. In the metal and some commodity businesses an uptick in prices had many scrambling to get inventory in before the price increase.

But if backorders are not increasing and end users are not  buying more, this bounce will be temporary.

Some projects that had been put on hold during the initial economic shock are moving forward, especially in businesses such as electric utilities that must keep pace with maintenance and demand and do not have problems getting credit or still showing a profit.

You may have put off replacing you old car, but if you still drive you will eventually need a new car, or at least new tires for your old car.

If we can grow 5.7% with record unemployment, what does this say about business demand for new employees? Employers who see no strong end user demand will keep employment lean, and will shun capital investment.

Inventory pickup is often the first sign of a recovery, but that assumes that the end user demand is there to justify it. Housing demand and employment should soon follow. If it doesn’t this recovery will flatten out soon.

Richard Cohen Writes in the Washington Post,

From John Edwards, lessons on celebrity and politics

Tuesday, January 26, 2010

Excerpt

We have substituted the camera — fame, celebrity — for both achievement and the studied judgment of colleagues. The political machine, the organization, even the parties themselves are gone, severely atrophied or discredited as (ugh) mainstream. They once served as filters, admission committees, but they have been replaced by a sham familiarity — fame at its most beguiling and dangerous. This was John Edwards. He’s not a scandal. He’s a lesson.