Sunday, May 20, 2012

Compassion And Health Care As A Right

Compassion can't be given by requiring someone else to pay for the act. There is no compassion in mandating that other people pay for health care. Otherwise, just give me your wallet and I'd be the most compassionate being ever alive. I'd ask everyone what they want and give them triple what they answer. Of course you'd probably have to get another job, but what do I care about how much you work when I'm so compassionate? In fact, my compassion demands you work 20 hours a day, no less. There is just so much good I want to do, so many people to help. I hope you get my point. True compassion comes from you giving your own money or volunteering your own time and labor to help people in need. It can't come from forcing others to. Compassion has nothing to do with national health care or any other social program. Unfortunately, what people want, need, or deserve is constrained by reality. There can be no right that depends on someone else's labor, money, or work to provide it. Therefore food, clothing, shelter, water and health care can't be rights. Why? What if everyone demands these "rights", who is going to work to provide them? If someone can go up to a farmer and demand his crops because he is hungry and has a right to food, what happens when the farmer decides to stop working the farm, since all of his produce is being taken away, and demand HIS right to food? Who will provide that food? Reality has veto power over any proposed right. If you want to reduce health care costs, health care must be limited and rationed. Right now, the value equation is missing from health care decisions. What do I mean by value? Is it worth $100,000 to give a treatment that, on average, extends life by 6 months? If you are that person, AND someone else is going to pay for it, then the answer is going to be yes. So we have to ask this difficult question in a more neutral way. Today, this question isn't asked. Doctors do not deny care based on "value". Doctors are trained only to diagnose and treat, regardless of cost. To limit costs, someone has to decide if the costs of the treatment are worth the benefits and deny care if they aren't. I won't pretend I know the answer to the "value" question, but this is the root of our problems with the health care system.

UC Tuition Increases: The True Cost of Providing Education

An important question that must be asked is what is the COST of providing an UC education? And why is the cost rising so much faster than inflation? I've found a blog post that deals with costs and is very detailed using the UCOP budget office's own report on the cost of providing education. I will only repost a summary, the blog post is worth reading in detail.
I have not edited any of these figures, and so we learn that the UC’s estimation of the direct instructional cost is actually lower than my calculation of $9,000. The question then is why is their total cost estimate so much higher, and the answer is that they assume that the indirect instructional costs make up over 60% of the total cost; in fact, they argue that the university pays almost the same amount for faculty salaries as it does for departmental support.
From my perspective, this report shows that students and the state are paying for the enormous increase in administrative costs on the campuses, and thus the economic solution is not to reduce enrollments or raise tuition; rather, the solution has to be to decrease the cost of non-instructional services. Faculty, citizens, students, and workers concerned about instruction and research should question these budgetary policies.
A UC Berkeley professor tried to come up with his own estimate of what the costs are to educated per student at Berkeley in 2005. He found that actual costs should be only $7000. Again, readers should check out his post for the details.
The top budget officer of my school, the University of California, says that the current annual Cost of Instruction is about $16,000 per student. I have done a detailed calculation, using official accounting reports and an official faculty time-use study, to conclude that, averaging over all UC programs, undergraduate education costs this institution just under $7,000 per student per year. (See the details of this calculation at ) Thus, current levels of undergraduate student fees now cover the full actual cost of their education at UC! That is shocking. Various experts have said that my result must be wrong; and a few have manufactured rather hilarious reasons to discredit it. (See ) None have given any objective basis for faulting my analysis, although I continue to seek that sort of academic dialogue. I have a list of many small details in the calculation where better data, discussion or analysis could lead to a more precise answer.
My tentative conclusion is that a huge amount of money is being spent on programs and stuff that does not have anything to do with educating students. Administrative costs are a prime example, though not the only one. I have a good friend who is a Cal-State university professor. He says that the reason administrative costs are not cut is because administrators are the ones who make the decision where to cut. They aren't going to cut their own jobs! Nor do will they want to layoff their staff or reduce their own budgets. Yes this is only a small segment of the larger picture, but one that deserves attention.

Krugman's Keynesian Stimulus Theory is Marred By Reality

The financial crisis ended the artificial boom in housing, when that happened, government revenue growth fell or stagnated, but government spending, which had risen in tandem with the bubble, did not. THIS is the cause of the Eurozone crisis, unsustainable government deficits and spending. Government spending, much like property prices, must return to more reasonable levels. Krugman's cyclical stimulus theory is deeply flawed due to real world problems. In theory, governments should fire workers and reduce its contribution to the economy in good times. The fired workers will easily find employment in the private sector and the reduction in spending will be more than countered by general economic prosperity. The opposite then should be done in recessions. Does this ever happen? Does government ever eliminate social programs and start laying off people in good times? No. What happens is that government grows and adds more permanent social programs and employees. When a deep recession occurs, the economy can no longer support such a bloated government. And with deficits and debt so high, there is simply no more room to expand government spending even more. The theory calls for temporary government spending that can be adjusted to counter cyclical economic trends. The reality is that the vast majority of government spending is permanent, in the form of social programs and promised benefits. With each economic cycle, government grows bigger and bigger until a crisis point is reached where it becomes evident that such spending cannot be supported or sustained. Europe has reached such a point and the United States is set to follow very soon. Krugman and his followers should have been rioting in the streets, calling for less government spending during the housing boom if they took his theories seriously. Instead, all I heard were calls for even more government and a greater growth in spending. This is why the theory is garbage. It seems that the only way to stop the growth of government is a reality check, which is exactly what is happening in Europe. This crisis is the equivalent of an intervention for a drug user. The drug user can throw a fit and "riot", but he has hit rock bottom and the drugs will be cut off no matter what.

Saturday, May 19, 2012

Paul Krugman's Wrong When it Comes to Austerity

What doesn't Krugman understand? The crisis stems from governments spending much more than they take in. Those governments must reduce their spending to bring it in line with what they can afford. That means resources and employment MUST be shifted from the public sector to the private sector. Since this does not happen overnight, there MUST be unemployment and a reduction in living standards and GDP. THIS IS UNAVOIDABLE! The only cure would be prevention, stopping government from getting so out of control to the point where it is 40-50% of GDP as it was in Greece. That is exactly what certain wise Americans are advocating today. Once deficits are no longer supportable, there is no way to avoid the pain. Krugman's idea of more government spending would just prolong and deepen the crisis. It cannot be a solution because an overly large public sector is the problem! This is very similar to drug addiction. An addict can't be cured by giving him a larger dose of drugs. His withdrawal symptoms can be removed for a while, but he cannot be free of drugs without feeling pain and the larger the doze of stimulant, the worse the recovery will be. Giving an addict more drugs to get high is NOT a cure!

Income Inequality is Not the Same as Racial Discrimination

It's quite a jump to claim that poor people are discriminated against in the same way Blacks were before the Civil Rights Era. It's in fact, an incredible leap off a cliff, but it's exactly what some people claim. They attribute income inequality to some form of unfair discrimination. The poor are assumed to be discriminated against in the same way Blacks and other minorities were in the past. But just how do you identify a poor person? I'm sure many here have their assumptions, but no, you can't identify a poor person by the clothes they wear or the car they drive. As described in the book, The Millionaire Next Door, many of the rich drive older model cars like Camrys and Accords. I know one multi-millionaire that has never bought a new car in his life and he's in his late 60's now. Likewise, you can find a poor person driving a flashy car. The same applies with clothing. It seems to me that instead of attributing unequal outcomes to discrimination and some sort of unfairness, the most logical explanation is that unequal outcomes arise from unequal skills and attributes. If we examine any skill or base of knowledge, we would see a wide range of proficiencies amongst the general populace. If a fair system rewards those with greater skills and knowledge in areas of demand, then we would EXPECT to see income inequality. Only in an UNFAIR system would we see equality in income.