Saturday, February 28, 2009


Part of the President's stimulus program is concerned with electronic medical records, promising that they will improve care. The theory is, apparently, that any doctor who sees a patient will have access to the patient's previous previous history, and therefore will make more informed medical decisions. Certainly having access to an accurate history contributes somewhat to treatment decisions for a given patient, and to the extent that such records can be made reasonably available, we should make an effort to do so. However, the improvement in quality to be expected from such availablity is likely overstated. A much more significant factor is the continuity in care that a pateint enjoys over time with a single dedicated provider. Knowing a patient's allergies and previous history is not the same as knowing the patient. NOt all of the subtle and subjective information related to a patient's health will ever make it into a written record, no matter how thorough the effort at documentation.

Reforming the healthcare system to make it more data-intensive is not likely to improve upon the care that is delivered by physicians who spend time with their patients and form therapeutic relationships over time.

Wednesday, February 25, 2009


An interesting quote from Theodore Roosevelt, from the speech "Citizenship in a Republic" given at The Sorbonne, Paris, April 23, 1910:

Of one man in especial, beyond any one else, the citizens of a republic should beware, and that is of the man who appeals to them to support him on the ground that he is hostile to other citizens of the republic, that he will secure for those who elect him, in one shape or another, profit at the expense of other citizens of the republic. It makes no difference whether he appeals to class hatred or class interest, to religious or antireligious prejudice. The man who makes such an appeal should always be presumed to make it for the sake of furthering his own interest. The very last thing an intelligent and self-respecting member of a democratic community should do is to reward any public man because that public man says that he will get the private citizen something to which this private citizen is not entitled, or will gratify some emotion or animosity which this private citizen ought not to possess.


Monday, February 16, 2009


In reading various commentators reagrding the recently passed stimulus legislation, one thing seems to be non-controversial: the thing that stimulus money is buying is confidence; confidence that the economy is sound, that jobs are relartiely secure and that better times are on the horizon. The success of the stimulus will depend on how well the billions of dollars achieve this end.

One would think that the most efficient use of money for this purpose is to actually invest in activities that are expected to lead to the production of wealth. It appears however that there are entire classes of spending that seems to have the opposite effect, that far from enabling the production of new wealth or value in the American economy, we are underwriting the creation of persistent money sinks that will take money in the future, rather than produce it. The most obvious of these is the dependency programs (welfare) in which the whole point is to give money to people who do not produce enough of value to make their own. Another category is healthcare, where the returns are decidedly non-economic, and the grab bag of educational spending that most likely contains both worthwhile and worthless programs. Underwriting dependency seems to be a poor investment.

The presence of questionable spending in the stimulus package raises an obvious question: if the need for targeting spending was so urgent, why does the package contain any spending that does not have the purpose of promoting valued economic activity? Can the amount of pork in the bill be taken as an inverse measure of the seriousness of those who drafted it?

Sunday, February 15, 2009


The lawyer's art consists of this: Making distinctions between things that are identical and finding similarities between exact opposites.

Wednesday, February 11, 2009

Cost Effectiveness

The stimulus bill has created some consternation over its creation of a federal board to evaluate the realtive cost effectiveness of various medical treatments. I have no problem with the general theory of evaluating the cost effectiveness of medical care, but I share the qualms about an appointed government entity doing so. The reason is quite simple: Appointed government boards are not objective. In fact any such body is prone to degenerate into an ideological feifdom in which the personal agendas, tastes, prejudices and hare-brained theories of the members compete for validation. This is true of any body that pretends to consensus, such as the Joint Commission on Accreditation of Healthcare Organizations, The Intergovernmental Panel on Climate Change, The Judicial Qualifications Committee of the American Bar Association, or the various Nobel Prize juries.

It is quite natural for individual memers of such bodies to adopt pet issues, which they then focus on until they become causes, and eventually obsessions. This is how the current campaigns against "medical errors" and patient confidentiality are allowed to go to such pointless extremes in disrupting the practice of medicine. It explains how one powerful politicial could mandate universal testing for phenylketonuria, despite the notable rarity of the condition. A fifteen member federal commission assessing the cost effectiveness of medical treatment might reflect the personaol conviction of one member that any casue of death is preferable for a person who has shown the first signs of Alzheimer's disease. Another might believe that "cost effectiveness" should include the relative economic contribution expected of a Down's syndrome child in deciding that any type of care is not cost effective, or that an objective measure of years of life saved must be adjusted for the subjective sense of what makes life worth living.

As an alternative, one might consider what would happen if halthcare payers were freed of any mandates regarding the coverage that they provide. It should be emphasized here that health insurance neither insures health nor provides access to healthcare. It fundamentally protects the assets of the insured against catastrophic financial losses resulting from the use of expensive medical services. If insurers could contract directly for specific services, e.g. ICU care for heart attack, or dialysis for kidney failure, the actuarial process would naturally weed out therapies that are not cost effective. Now the person needing a non-cost effective treatment would be disadvantaged regardless if the cost effectiveness decision were made by the marketplace or by some pack of bureaucrats, but in the former case at least, this disadvantage would not be due to the ideological bent or the flawed judgment of politcal appointees. People would be free to pursue availablity of orphan therapies, much as they do now for elective plastic surgery, or new age mumbo jumbo. Since insurers would have to compete for insureds, they would have an incentive to make the broadest array of services available, but would naturally favor those with the greatest cost effectiveness. The providers of services not covered would have na incentive to improve the cost effectiveness of those services, and if the demand for such services is great, the insurer could fairly distribute the cost among those creating the demand. Cost effectiveness would be determined, in short by what types of services people value and are willing to pay for, rather than what some policy makers would like to prescribe.

Sunday, February 08, 2009


It is somewhat disheartening to realize how degraded many of our institutions have become, once ideology was accepted as an excuse for abrogating ethics. Journalism is of course the most familiar discipline to succumb to the concept that some things are too important for principles. They are not alone, however. During the Clinton impeachment hearings, the Journal of the American Medical Association rushed into print an article of questionable scientific merit, regarding what is and is not considered sex. This was a clumsy political stunt that inevitably tarnished the reputation of peer-reviewed scientific literature. This episode was followed by the Lancet's bogus inflation of Iraqi war casualties, and the embarrasingly incestuous Intergovernmental Panel on Climate Change's politically motivated and insultingly un-scientific report on global warming.

It should of course immediately cast doubt on the ideologies compelling such dishonesty, that they require shading, spinning and concealment of the facts for their advancement. Perhaps we would all do well to remember why integrity was at one time considered a virtue instead of an impediment to the march of doctrinal fantasies.

Wednesday, February 04, 2009


President Obama has had a little trouble getting his feet under him post-inauguration. He has had difficulty with some of his appointments, difficulty keeping true to some of his campaign rhetoric, and his pronouncements about foreign affairs have not been met with the welcome that one would have assumed now that Bush was no longer president. India has invited the President to butt out of the Kashmir issue, Europe responded quite predictably to the "Buy American" provisions of the stimulus bill, necessitating an awkward retreat. The confidence and adulation of the campaign and run-up to the inauguration are fading, as it seems the President is discovering that the job is much harder than it appeared from the campaign trail.

What is evident here is a trait of human nature that afflicts nearly all inexperienced persons. Many people think that they can do another person's job, because what they know of it without experience is typically quite superficial. It is tempting to think that the airline pilot just takes off and lands the plane while the autopilot does the bulk of the flying, or think that a respiratory therapist just provides nebulizer treatments, or that an engineer just plugs numbers into equations that he looks up in books. Many people fall into the easy conceit that can do other people's jobs as well or better, and this trait has become part of the vernacular of everyday life: kibitzer, Monday-morning quarterback, arm-chair general, sidewalk supervisor, etc. There is no shortage of people who think that they are a lot smarter than they actually are, until reality brings the fact home to them.

The tendency to underestimate tasks until one is actually responsible for their performance leads to other errors of thought, for instance, the conclusion that any competent person should be able to perform the job better than the person against whom the critic judges his own hypothetical performance. If difficulties are encountered by someone in their job, it must be due to the someone, rather than the job.

This particular infirmity of thought seems to have afflicted the most devout of President Bush's detractors. It is seemingly inconceivable to them that the difficulties encountered by President Bush could have been the result of unseen complexities, difficult circumstances, good faith mistakes or simply bad luck. No, it is important for the hard core critic to attribute any shortcomings of the Bush administration to bad character. It must be shown that anyone who disagreed with the progressive view of Bush's policies did so out of malevolence, with the implication that Bush's critics not only favored better policies, but were also better people. This is the foundational principle behind the cry to prosecute Bush administration officials. Bush's people had to be scoundrels, because it should have been so easy to do a better job.

Now President Obama is finding out that not only is it not easy to do a better job, it is not easy to do the job at all, especially without meaningful executive experience. The detainees at Guantanamo are not characters in a video game that disappear when the game is turned off. The easy moralizing that plays well to sympathetic audiences becomes a burden when one's associates can not live up to it. Foreign governments actually expect more than "understanding" and will not sacrifice their interests to our good intentions.

President Obama might be excused some of the recent mis-steps of his young administration, but one suspects that these stumbles arise from the naive perceptions of a talented man who doesn't know nearly as much as he thought he did.

Tuesday, February 03, 2009


President Obama's plan to close the military detention facility at Guantanamo Naval Station in Cuba contained a noticeable amount of latitude. It may well be the case that practical ambiguities sometimes trump theoretical certainties.

The existence of the facility in Cuba is not necessarily the result of malign motives, war criminals or pell-mell abandonment of fundamental principles. It might just be the case that establishing the facility was an attempt to deal with a vexing and grave problem within constraints imposed by general principles. A tough legal and moral challenge arises when conventional military forces encounter enemies that do not observe accepted standards of conduct, and whose rogue activities intentionally put at risk non-combatants and other innocents.

This is not the first time in history such issues have arisen. The common law concept of "outlawry," in which criminals were deprived of any protection of the law as a result of their non-observance of it, is an analogous situation. Note that the outlaw, once declared, could be killed with impunity, as he could not seek protection of the law. Prior to the Nuremburg Trials, the English Chancellor, Lord Simon suggested that Allied forces resurrect the principle of outlawry so that Nazi war criminlas could be summarily executed. Churchill was sympathetic to this suggestion, but the United Staes and Soviets insisted on the more formal requirements of a trial.

No doubt, there were those dissenters from the concept of outlawry who argued that declaring the law not applicable to certain persons was a rejection of the concept of laws, and doing so was sacrificing the very thing that was sought to be protected. And doubtless, these concerns were dismissed with the observation that the surest way of sacrificing the thing to be defended was by refusing to defend it, not only with words and rhetoric, but by violence if necessary.

The claim that Americans are sacrificing their principles by balancing them against existential threats is simply an invalid generalization that may be nurtured in the academy but orphaned in the real world. It is comforting to think that in a civilized society, no one would forfeit his life to the state without a trial. This airy notion is refuted by the fact that even in civilized societies, police carry guns, and sometimes use them to deadly effect without a priori concurrence of judge and jury. It takes little deductive reasoning to conclude that sometimes justified homicide occurs without due process of law.

Ideals by their very nature are concerned with perfection; otherwise they are not ideals. But human affairs by their nature are seldom perfect. If they were, there would be no need for Guantanamo, no need for rules of war and no need for policemen. Recognizing that real world threats often do not accommodate idealistic responses is not abandoning principles; it is recognizing that such principles do not spring immaculately from the breasts of chattering and self-important critics, but that they must be fought for continually by good and honorable people, sometimes in ways that are ugly.

None of this is to say that Guantanamo should or should not close, that the detainees there should or should not have recourse to habeas corpus, or that they should or should not be given the protections of the Geneva Conventions (incidentally, the explicit exclusion of non-uniformed combatants from GC protocols was felt necessary to protect non-combatants). It is merely to point out that those who wish to fight terrorists with platitudes should not expect to be taken seriously when real people are slaughtered because the choices are hard and the theories just didn't work out very well.


A lot of discussion surrounding the proposed stimulus legislation concerns whether it is too big or too small, whether it should focus on spending or tax cuts, whether the prgram will have the intended effect, etc. There is a much for fundamental question, however and that is: what is the one single thing that is needed for the stimulus to be a success? What is the fundamental condition necessary to begin economic growth?

It is at arguable that if you give people money to spend, they will not do so if they believe that they will need it for more important things later. That is the fundamental issue. What the economy for needs as a stimulus is for people to believe that the economy will grow, that if they spend money, it will be possible for them to make more. What the stimulus requires therefore is not a large infusion of cash that people will be unable to resist spending, it is confidence that spending is not an imprudent impulse that will lead to impoverishment down the line.

What the economy needs more than anything is for people to have confidence that their economic circumstances will be sustainable. This makes gloom-and-doom posturing in order to generate political pressure to pass the stimulus legislation counterproductive. What makes the economy grow is people producing products and providing services that are necessary or desirable. How much economic activity occurs is a result about how confident people are about their own economic stability, rather than their perceived need to spend whater funds thay might get their hands on. There are vanishingly few, if any, families that will stop spending money altogether if the economy worsens. There is going to be some baseline level of economic activity regardless of the stimulus, tax policy, unemployment or whatever. The economy will grow naturally when the demand for the things that people want and need impels others to supply them. Lenders will lend money to people who are good credit risks for transactions that are economically reasonable. Recessions end when normal, healthy and rational economic activity resumes following the imbalances and miscalculations of periods of growth. Growth resumes when money is once again used to allow the provision of services and the production of items that people have use for, not the sloppy and haphazard consuption that a panicked government seeks to impose upon its citizens.

Monday, February 02, 2009


Critiques of American foreign policy, particularly by the more progressive and academic commentators, appear to suggest several premises:

1.) That the nations of the world will only pursue their interests if another nation makes them angry, or provokes them in some way;

2.) That nations will will not pursue their interests in exchange for "understanding;"

3.) That only the United States and its allies have extra-territorial interests;

4.) That wars result not from intractable conflicts between the interests and ambitions of nations, but because of misunderstandings;

5.) That only the United States and its allies select as leaders persons that cannot be reasoned with;

6.) That diplomatic failures that result in massacres are preferable to military successes that do not;

7.) That all conflicts on the planet result, somehow, from the United States's use of natural resources.

Sunday, February 01, 2009


Ever wonder why there seems to be no consensus about economic issues? Why it is that some economists advocate greater government control and others adovocate less; why some are Keynesians and others subscribe to the Austrian school? Shouldn't the proper relationship of deficits to tax rates and fiscal to monetary policy be worked out by now, instead of serving as the subject of very boring debate? I suspect that a large part of economics is tied up in what economists think rather than what they see. Even if they do see something worthwhile, like Pareto's observation that 20% of the land owners owned 80% of the land, they cannot help but letting their imaginations run wild, inflicting upon the dismal science all sorts of integral equations, probability distributions and theoretical gobbledegook. When economists do hit upon a valid observation, they tend to become like the blind men and the elephant, allowing their valid observations to lead them to specious conclusions.

The good news is that non-economists can traipse off on the same intellectual journeys. Non-economists like me can make basic observations and mar them up with wild conjectures about what they mean, and as it is usually the analysis that leads to folly, I should like to propose a few simple observations, which I trust will be largely non-controversial, and leave the theorizing as an amusement for others.

The first observation is that economics, as apposed to say biochemistry, is a discipline of no use to non-humans. Even the industrious creatures, like beavers, bees and starlings, go about their activities unvexed by supply and demand, and consideration of fiscal policy. Economics arise where human beings interact with each other, and economics is a characteristic of those interactions. The "laws" of economics are thus corrollaries of the laws of human nature, having as their objects very limited ends. It is human ingenuity that creates derivative markets, micro economies and loan to value ratios. The reason that humans need economics and bees do not is that bees build hives, collect pollen and make honey without fretting about how efficient they do those things. Humans however are concerned with progress, and progress requires efficiency. Thus, we have the secdond observation about economics.

The point of economics is to allow people to produce goods, perform services and exchange these among each other in the most efficient way possible. The most important word in the language of economics is "per" because all efficiencies are simply the amount of something per the amount of something else; the amount of corn per acre, the amount of dollars per hour, the amount of income per capita, the amount of healthcare per dollar, the amount of benefit per unit of risk, etc. The economist takes notice of a basic truth about nature: all progress is really just an improvement of the efficiency of something, and efficient organisms survive at the expense of the inefficient ones.

The observation that bees and beavers do not consciously alter their behavior as they adopt newer economic theories leads to the third observation: economics is really a subdisciplne of and an application of the principles of human behavior. It is possible to design economic policies and plot economic data because human beings do have at least a modicum of predictability in their behavior. The fact that there has been so much human misery and historical disaster as a result of overly-idealistic or utopian economic theories is testament to the fact that economists and politicians do not understand this nearly as well as they should. All economic reasoning should begin (but does not) from what observation suggests is the fundamental principle of economics: Human beings are tool users. They use thier reason and ingenuity to exploit whatever resources are placed at their disposal, including laws, policies and programs. This is the genetic material of the law of unintended consequences, and a primary reason why enterprises of noble purpose and great promise are brought to grief.

The observation that humans are tool users should be one of the most obvious and revered principles of economic thought, because evidence for it is everywhere. People use religion for non-relious purposes; they use principles of public benefit to private advantage; they exploit loopholes in laws and allow institutions to assume responsibility for matters that had previously been individual burdens. As an economic principle, it is irrelevant that some of these exploitations may speak of bad character on the part of the actor, because it does not necessarily have to be. The key characteristic is that it is foreseeable and should be expected. No one should really be surprised that black markets arise when products are prohibited, or that business executives engage in imprudent behavior when they believe that government policy will insulate them from the risks. It should not come as a shock when patients try to cram all of their elective surgeries into the last few months of the year, after their deductibles are satisfied, rather that subjecting themselves to pay more from their own pocket.

Practical economics is concerned with how to encourage particular behaviors (investing or spending or capitalizing businesses or using green technology, etc.) in ways that increase certain types of efficiency, often at the expense of others. The interesting thing is that there is no concensus on what forms of efficiency are most desirable, or whether the proposed policies will achieve their aims. The fallacy of modern practical economics is the belief that policies that change what economies provide somehow changes what people want.