Tag: Megan McArdle

Baby, Were You Born Fat Way?

 

My grandma was a fat woman trapped in a thin woman’s body. Or rather, she was a woman for whom thinness required more mortification of the flesh than is usual, eating like an anorexic (they do eat — sometimes) simply to get her BMI down to normal. At times, this meant weeks of her eating nothing but carrot broth. More generally, it meant cooking deliberately unpalatable food (justifying it as “healthier”) for her whole family, to discourage “overeating”. She was also a hypothyroidic woman who came of age in an era when thyroid supplementation was not widely known.

Trouble keeping weight off isn’t the only sign of an underactive thyroid. The other signs — frizzy, thinning hair, the perpetual frog in the throat, catching chills — grandma had those, too. Not that you’d know it when you met her, since she wore a wig and retained just enough foreign accent to dress up her chain-smoker’s growl (in one who never smoked) as the smoldering alto tones of another Marlene Dietrich. My grandma was an elegant lady; built like a brick house even at her thinnest, but trim and sexy, very sporty; the kind of woman who’d pester the local rowing club into admitting women in the morning, then doll herself up for the evening in a dress looking far less shabby than it really was to go out on the town, dancing and pretending to sip fancy cocktails (not really sipping them, though — calories). My grandma had an iron will, not just iron but huge, rolling and inevitable, a steamroller. Her physical beauty was a manifestation of this, winning her several proposals when she was widowed before her time. For grandma, thinness was a moral issue.

My mother, inheritor of the same complex of maladies that had dogged my grandma (including but not limited to an underactive thyroid), felt differently. Once Mom took anatomy in high school, she learned about the thyroid gland and demanded to see an endocrine specialist. Mom was tired of years of being the fat kid, tired of being judged by her own mother as immoral (a liar, a sneak, weak-willed, etc, etc) for not slimming down on ever-more-restricted diets. The spartan eating habits that had worked for my grandma clearly weren’t working for Mom. Maybe my mom’s problem was weakness of will — compared to my grandma, that is. Compared to the rest of the population, Mom was also a steamroller. Just a fatter steamroller.

Why Are We So Dumb About Healthcare?

 

Screen Shot 2016-08-25 at 11.20.03 AMWhen Sarah Palin first started talking about “Death Panels,” I cringed: Not because the prospect of a government panel empowered to make medical decisions on citizens’ behalf wasn’t totally creepy (it was) but because private insurance does the same thing. Now, I’d argue that a system based on free-market, private insurance has, regardless, enormous advantages to the alternatives, but this doesn’t mean that private insurers don’t sometimes need to be cold-hearted bastards. The sad fact of life is that there’s no way to pay for top-end medical care for everyone, so some form of rationing (even the free-market kind) is inevitable.

But for some reason, nearly every society tries to pretend otherwise. Some of this can be explained away as leftism, but it always seems to hit healthcare the hardest? Consider, for example, how Senator Bernie Sanders made “Medicare for All” a major part of his platform, but not “SNAP for All.” Via Megan McArdle, part of the answer may be that human beings are hard-wired to see providing healthcare as a social good in itself, rather than treating the matter as service we trade for. From a paper by economist Robin Hanson, whom McArdle cites, this may explain many of our irrationalities regarding health care:

[H]umans evolved deep medical habits long ago in an environment where people gained higher status by having more allies, honestly cared about those who remained allies, were unsure who would remain allies, wanted to seem reliable allies, inferred such reliability in part based on who helped who with health crises, tended to suffer more crises requiring non-health investments when having fewer allies, and invested more in cementing allies in good times in order to rely more on them in hard times. These ancient habits would induce modern humans to treat medical care as a way to show that you care.

Bad Guys Will Still Be Bad Guys

 

Detroit_police_prohibitionMegan McArdle has an excellent post describing one of the best consequentialist arguments for ending the war on drugs:

… I consider the reduction of violent crime to be the main benefit. Deprived of the ability to enforce contracts through the relatively peaceful legal process used by other markets, black markets are accompanied by high levels of violence: Gangs fight for territory, enforce business agreements and try to defer defections. The more profitable the black market is, the more incentive there is to use violence to protect your profits, which may be one reason that the introduction of crack cocaine was accompanied by such a huge increase in violent crime. Legalizing drugs cuts into the profits and gives industry players legal means to settle their disputes, so in theory, this should reduce the prevalence, and the brutality, of violent gangs.

I find the logic of this nearly unassailable. Just as there’s no inherent reason why the alcohol trade should be violent, there’s little inherent reason why the market for other intoxicants should be. Give people the opportunity to work within the confines of the law — and to enjoy its protections — and the worst sorts of behavior become unnecessary. Deny them those confines and protections, and we quickly descend into a petty Hobbesianism that drives out all the nice guys and rewards the worst.

Why Tax Cuts Are No Longer Popular (And What to Do About It)

 

shutterstock_264397919In Bloomberg, Megan McArdle recently argued that tax cuts are no longer good politics for Republicans. She asserts that pro-growth politicians have incrementally painted themselves into a corner on this over the last three decades. In order to sell each particular tax cut to the middle class, conservative legislators sweetened each pot by cutting middle-class tax rates more than the tax rates of the rich. Because this has been done for each tax cut iteration, the overall effect has been to make the tax code even more progressive. In the end, the tax cutters had undercut their own message by solving the tax problems of the middle class. As a result, the issue no longer resonates today with them.

To counter McArdle, I suspect pro-growth economists will argue that tax cuts are, nevertheless, still effective at stimulating economic growth, which brings prosperity to all. For this reason, tax cuts are still in the long-term interest of the middle class even if they only directly affect the rich. They can point out that the tax rates of the rich have a much bigger impact on the economy than the tax rates for everybody else. This is because a larger percentage of their income is directed towards productive investment. The more it’s taxed away, the less it’s available for capital investment.

In contrast, poor people invest very little. If they are taxed more, they will definitely feel the pain more acutely, but — because they have no choice but to carry on as best they can — the overall effect of their tax burden would be small. Perversely, this means that the economic benefits of tax cuts have increased because the US tax code has become less hated.

Anatomy of a Market Failure

 

ShkreliDespite all the pushback Pope Francis has been getting from free-marketeers, two important stipulations are in order: markets are not equally good at solving all problems, and many of their best features can be undermined by the greedy or immoral. They can work miracles like nothing else, but they’re also somewhat dependent on flawed human beings

As David Sussman notes on the Member Feed, the Interwebs are currently awash with news of alleged price gouging by Turing Pharmaceuticals. The drug in question, Daraprim, was developed decades ago and is used to treat toxoplasmosis, a parasitic infection that’s a minor problem (at worst) for the healthy, but a serious one for the immunodeficient or babies whose mothers were infected while pregnant. The drug was developed decades ago and has a tiny market — currently, under 9,000 prescriptions per year. It had been available for as little as $50 per prescription as recently as five years ago. After being sold to another company, the price of the drug rose to $500 per prescription in 2011, then to $1,100 last year. Assuming everything remains constant, the same prescription under the newly-announced price would cost just shy of $63,000. I’m not sure about babies, but the Mayo Clinic reports that the immunodeficient may need treatment for life.

As Megan McArdle wrote a few weeks ago, drugs that are in fierce demand by a small number of people are an inherently difficult problem for markets — or, really, any system — to solve. When you also factor in the regulatory costs, the fact that most drugs are actually purchased by third parties, and the fact that drug manufacturing is relatively inexpensive, you’ve got what looks like a perfect storm of grossly unfair and exploitative price gouging. Even if it’s genuinely the best a market can do under difficult circumstances, it sure looks bad.

Econ 101 For Colleges

 

IMG_0484A commonly-held leftist meme is that conservatives hate education. The technical word for this is “nonsense”: conservatives value education just as highly as liberals, and it bears repeating that the majority of college graduates vote Republican. Conservatives do, however, have strong criticisms of academia, which is a related but distinct matter from higher-education itself.

Of late, a new criticism has grown regarding the rise of the government-educational complex, specifically regarding the positive feedback* loop between tuition prices and easy student credit. The more money the government offers at below-market rates, the more colleges raise the fees, prompting even more generous loans, and setting up another cycle of the same. When you further consider that the availability of the loans is completely divorced from consideration of the degrees’ potential value and that their value is almost uniquely protected from normal market pressures, you realize that we’re not dealing with a market failure, so much as a conscious and successful effort to prohibit the existence of one.

As usual, Megan McArdle puts it best. Writing about students trapped under mountains of debt for nearly useless degrees, she says:

Why Not Tax Tenure?

 

Over at Bloomberg Views, Megan McArdle writes a provocative reflection on the nature of wealth. An excerpt: “I’ve been reading Thomas Piketty’s Capital in the Twenty-First Century. You’ll have to wait on my thoughts on the book until they’re a bit more fully formed. As I’ve been reading, though, I keep returning to a question I heard at an economics conference a couple of months back: If we did implement a wealth tax, should it tax tenure?”

Professorial tenure is, after all, a valuable asset. As long as you show up and teach your classes, and you don’t make passes at your students or steal from the department’s petty cash drawer, you can draw a paycheck for the rest of your working life. And since the abolition of mandatory retirement ages, that working life can be as long as you like.