Pursuit of Truthiness

my gut tells me I know economics

Operation Paperclip

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I just finished the great book of the same name by Annie Jacobson. I had heard of the program that brought Nazi scientists to America, but didn’t realize how big it was- several hundred scientists- or just how complicit in the holocaust many of the scientists were- from the slave labor that built Werner von Braun’s rockets, to medical experiments on unconsenting prisoners, to high positions in the SS, to straight up murder.

Nazi science shows the amazing things that can be accomplished with tons of money, no bureaucracy, no morals, and an endless supply of slave labor. Rockets, chemical and biological weapons all went from ideas to mass production in a few years. Most of the medical “experiments”, though, seem more like simple torture than attempts to learn anything.

The Paperclip program is classic example of Crisis and Leviathan- war (WWII) and the threat of war (Cold War) lead to bigger government and more relaxed moral standards. If we don’t do it, the Russians will.

I definitely didn’t realize the interaction between a lot of the craziest shit our military / intelligence / industrial complex was doing at this time. Paperclip scientists were involved in MK-ULTRA, Bluebird and Artichoke, dramatically accelerating the US chemical and biological weapons programs, and in dispersing pathogens in the US.

It was Richard Nixon that unilaterally shut down the US chemical weapons program in 1969- well done. Nerve gas is scarier shit than I realized. Even Hitler never used it, though they had thousands of tons of tabun. This makes Saddam Hussein, and our support of him during the Iran-Iraq war, look even worse.

One big lesson that I take from the book, though the author never mentions it- the importance of institutions. Almost all of the scientists who did the worst things in Nazi Germany ended up being successful, ethical scientists in the US, once they were placed in a system with very different incentives. In fact, the Paperclip scientist who did some of the worst things for the US, Fritz Hoffmann, was one of the only anti-Nazis in the program; but he was working in weapons areas where the US military had the fewest moral qualms at the time.

Annie Jacobson does a great job turning history and original historical research into an informative page-turner. My one disappointment with the book is in its moral dimension. Jacobson claims to dodge the question, saying that the morality of the paperclip program is up for each individual to decide. But she is always implying that it was a bad idea, while avoiding a real discussion. In particular, she never brings up the obvious analogy to the everyday criminal justice system. In one sense, Paperclip was an amazing rehabilitation program; there was almost no ‘recidivism’ among the scientists. But it certainly failed to exact retribution on bad actors, and may have created a deterrence-reducing moral hazard effect (perhaps knowing of such a program will lead others to commit crimes they would otherwise be afraid to). How valid was the argument that ‘if we don’t take them, the Soviets will’? Would the US and the world really be a better place if we had hung Werner von Braun and co as war criminals instead of letting them join NASA and help get humanity to the moon?
Science is power- both for what it allows humanity as a whole to do, and for scientists themselves. When governments realize the power of your ideas and abilities, you can get away with a lot. Nazis, Soviets, Americans, British, French all realized this- more than they do today. You’d think we would at least have standing visa offers to all scientists who aren’t war criminals, after expending so much money and effort to get those who are.

Written by James Bailey

August 5, 2015 at 3:03 pm

Did the Affordable Care Act Reduce Job Lock?

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In a paper just published in Contemporary Economic Policy (ungated here), Anna Chorniy and I find that the answer is no- at least for one piece of the Affordable Care Act. The piece we study is the dependent coverage mandate, which since September 2010 has required family health insurance plans to cover young adults up to their 26th birthday, rather than just their 19th. The ability for young adults to go on their parents health insurance plans gave them a major option for insurance that wasn’t tied to their jobs. I expected this to reduce the “job lock” problem- people staying in a job because switching jobs would mean losing their current employer-based health insurance.

But this effect is just utterly absent from the data. I’ve never seen a result turn out so robustly insignificant in every single way we slice up the data or vary the analysis.

Perhaps the job lock problem is overblown in general, though many papers have found evidence of it; or perhaps 19-25 year olds were simply too young and healthy to really care. Certainly many journal referees thought the result was too obvious to be worth publishing (obvious after reading our paper, at least). Thanks to CEP editor Brad Humphreys for being willing to publish a “negative result”; the fact that so many editors and referees are unwilling to do so is a major source of publication bias and not-so-ethical behavior in response.

Negative results aside, I think we really do have an interesting point to make: that the effect of job lock should differ by age, going from non-existent for young adults to substantial for older adults. This is indeed obvious once we point it out. But it was ignored by a large previous literature on job lock, which has tended to lump all working-age adults together and pronounce what “the” job lock effect is (or to focus on a single age group without pointing out how their age makes them unusual). Always be on the lookout for how people respond differently to the same thing.

Written by James Bailey

July 18, 2015 at 4:44 pm

Win-Win Medicaid Reform

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In my recent post on a way forward after a ruling for the plaintiffs in King vs Burwell, I suggested Republicans use the opportunity to do a sort of Medicaid privatization along the lines that Arkansas has done. While my post was just obsoleted by the fact that the Supreme Court ruled the other way, I now think that the case for states to do their own reforms is even stronger.

In order to make the ACA Medicaid expansion politically palatable for Republicans, Arkansas did a sort of privatization of Medicaid- using Medicaid funds as “premium assistance” to allow recipients to choose a private plan from the ACA exchanges.

While the Obama administration wasn’t crazy about this idea, they (and some progressives) decided it was better than no Medicaid expansion, and so granted a waiver from the usual Medicaid rules to allow this to proceed.

There are some real potential problems with the Arkansas full privatization approach.

First, Arkansas hopes to save money- or at least not lose it- by privatizing.  This is actually a condition of the federal waivers allowing their experiment. This may or may not work out- private plans might operate more efficiently and reduce costs through cost-sharing, but they also make higher payments to providers.

Second, while Medicaid is in some ways bad insurance (because many providers do not accept it), in one way it is better for recipients than just about any private plan- it requires little to no cost-sharing. In many states, Medicaid plans have a $0 deductible and $0 co-pays for all covered services. Federal Medicaid rules prevent deductibles and co-pays from getting anywhere near as high as normal plans, the thought being that Medicaid recipients are too poor to afford them.

These costs, of course, are offset by benefits- especially the greater access to providers through private plans. Do the benefits outweigh the costs? After years of studying what happens in Arkansas, we will get some idea of whether privatization is more or less expensive than traditional Medicaid, and of whether the provider-acceptibility benefits outweigh the poor-people-paying-deductibles costs. But we don’t have to wait to see what the average person thinks- we can just let each individual choose.

Tell each Medicaid recipient that they can either get traditional Medicaid, or choose a plan from the ACA exchange. If you are worried about how much this will cost the state budget, estimate how much traditional Medicaid spends per enrollee and limit the choice of exchange plans to those that cost less than that.

This is a win-win-win: taxpayers save money, Medicaid recipients that value traditional Medicaid’s low cost-sharing can keep their plans, and Medicaid recipients that are willing to put up with some cost-sharing in order to get providers to actually see them can do so.

This should have been bloody obvious. It took me months after hearing about Arkansas to think of it. But apparently people in Iowa are ahead of the curve, and seem to be doing exactly this.

After the King vs Burwell ruling, it is clear that the ACA exchanges are here to stay. It is time to stop trying to fight them and start seeing the incredible pro-poor, pro-market possibilities for reform they create.

Written by James Bailey

June 28, 2015 at 5:35 pm

How should Republicans respond to King v Burwell? The Judo solution for the ACA.

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Any time now the Supreme Court will rule on the legality of Affordable Care Act subsidies through federal health insurance marketplaces.

A ruling for the administration means we keep the status quo (barring some weird saving construction), so there is nothing for Republicans to respond to.

But what should they do if the court rules for the plaintiffs, and 37 states lose their ACA subsidies?

Cave

The caving option is to do a straight renewal of the subsidies; some Congressmen are discussing doing this at least temporarily. But this means giving up a great bargaining position.

Kick Over The Stool

The die-hard conservative option is to do nothing, and hope the ensuing chaos reflects worse on the Democrats. As Jon Gruber has said, the key components of the ACA stand together like a three-legged stool. Without the subsidies, the individual mandate becomes a cruel tax on the poor, and without the mandate (or if people choose to ignore it and pay the fine, as many will without the subsidies) guaranteed issue and community rating mean people can game the system (wait to sign up for insurance until you get sick), creating the mother of all adverse selection problems. If Democrats get more of the blame for the wreck that the health insurance system will become with ACA-minus-subsidies, then Republicans might get the votes to repeal the ACA entirely. But I doubt this would be the case.

One-for-One Trade

The more responsible solution is a compromise- reinstate the subsidies legislatively in return for getting rid of a different part of the ACA they find more offensive. But what would this be? Gruber is right that the major parts of the ACA hang together, and removing one major part by itself is worse than either repealing or keeping the whole thing. Removing only the individual mandate, or only guaranteed issue, or only community rating would be very bad ideas.

I think the employer mandate is the best candidate for one big piece that could be safely removed- and it is the one Democrats are unlikely to go to bat to fight (indeed, we’ve seen the absurd spectacle of the Obama administration trying to delay this part of their own health bill while Republicans sue them to implement it). But would this be such a big victory? It would help business and labor markets, but the employer-based system is still by far the largest alternative to government insurance, and politically it may be unwise for Republicans to weaken it- especially if they continue to attack the parts of the ACA that support the market for individual insurance.

One-for-Many Trade

Rather than killing one other big piece of the ACA in return for reinstating subsidies, Republicans could find more success by making many marginal changes to the ACA. Make the subsidies a bit less generous (it is kind of absurd that they currently go up to 400% of the poverty level), cut back a bit on the Medicaid expansion (as most Republicans at the state level have been doing anyway)- reduce Federal contributions a bit, and cut eligibility a bit. Allow a bit more rating in health insurance, especially for health behaviors that are partly in peoples control (like weight).

Add Instead of Subtract

Even better, in the unlikely event that Republicans are willing to spend this chance to do something constructive rather than go after a partial repeal, would be to move forward a new health policy proposal. This could be one of the oldie-but-goodie conservative health reform proposals, like making it easier to sell insurance across state lines, or equalizing the tax treatment of individual and employer insurance. It could be a random new proposal, like getting rid of innovation-hampering Certificate of Need laws. But, if I can be allowed to dream for a moment, they could take this chance to move forward the free-market elements of the ACA.

Judo Flip

The fact that many of the ACA ideas were first advanced by the conservative Heritage Foundation and enacted by Mitt Romney has become a political talking point for the left, but it wasn’t simply a coincidence or a big mistake. Before the ACA, the market for individual insurance was largely broken. It is a tough economic question how to apportion the blame for this across markets vs misguided government regulations- but the judgement of voters was clear, and the flaws of the market for individual insurance were a consistent impetus for left-wing solutions up to and including single-payer.

Despite the ACA’s many flaws, it has succeeded in making the market for individual insurance functional enough. Individual insurance could be more convenient, it could certainly be cheaper, but now it basically works. And this changes everything.

Why should the government operate a Medicaid program directly, providing insurance that many doctors refuse to take and that recipients hardly value, when for a similar cost they could give away vouchers for gold-level private insurance plans that doctors will actually accept? Arkansas realized this early on, and got permission from the feds to let Medicaid recipients choose real private plans, freeing them from a low-quality government monopoly.

Republicans should support this privatizing potential of the ACA, and change federal Medicaid rules to allow all states to do this. Or if they really want to push the envelope- and I’d want to study the Arkansas experience much more before supporting this- they could make vouchers for individual plans the new default for Medicaid, and require states to get waivers to do anything else. This would judo flip the ACA into a tool for a huge reduction in the role of government in health insurance.

Written by James Bailey

June 23, 2015 at 10:49 am

The Real Media Bias

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The most common accusation I hear about media bias is of “the liberal media”. It is true that every poll shows an overwhelming majority of the US media to be liberal Democrats, and I think they would have to be superhuman to completely prevent this from biasing their reporting.

But there is an even stronger institutional imperative for the media- keeping their jobs. This means selling papers, or keeping ratings high, which in turn means telling readers what they want to hear. One of the most powerful biases coming out of this is “if it bleeds, it leads”. This bias is widely recognized, but people have not recognized the extent to which it counteracts liberal bias.
The classic “it bleeds” stories are about crime, terrorism, and dangerous foreign leaders. With a few exceptions, the more worried or scared people are about crime and terrorism, the more conservative they get.
A truly liberal media would conspire not to cover these things- but it is hard for me to think of local outlets that don’t focus on crime (the weekly paper that is all about music?), or national ones that never mention ISIS. I conclude that “if it bleeds it leads” is the stronger bias.

Written by James Bailey

June 20, 2015 at 12:10 pm

Wolf in White Van

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People were always saying how ugly Southern California was, especially when they came back from their summer vacations. They said it looked plastic or fake or whatever, and talked about all the cool things they saw in Ohio, where their grandparents lived. Or in Pennsylvania. The wall behind the arcade was made of giant sparkling white bricks, just like all the other buildings connected to it. There was graffiti on it, indecipherable gang writing. It was dark now and getting a little cold and then the super-bright lights they have behind stores to keep bums from sleeping by the dumpsters came on, and I thought, people who don’t think Southern California is the most beautiful place in the world are idiots and I hope they choke on their tongues.

John Darnielle, lead singer of The Mountain Goats, has successfully made the rare transition from songwriter to novelist with his new book, “Wolf in White Van.” The book’s protagonist has halfway grown up from being a misfit teen with troubled relationships and an obsession with the dark and fantastic. Pushing through mental illness, seeking solace in things like satanic rock and hitting the arcade with a girl also fleeing her family- it is not hard to draw connections between the world of the novel and songs like This Year, Amy AKA Spent Gladiator, and The Best Ever Death Metal Band in Denton.

As you might expect from one of the best lyricists around, the book is strongest at the level of sentences and paragraphs, which are often beautiful and revealing. But the larger structure of the story, which jumps back and forth through time while largely flowing backward, does work. Darnielle sets up mysteries and gradually, slowly reveals answers, with a few still left to work out by the end.

Recommended.

Written by James Bailey

June 6, 2015 at 4:25 pm

Dennis Hastert and the Wisdom of James Madison

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If I understand the history correctly, in the late 1990s, the President was impeached for lying about a sexual affair by a House of Representatives led by a man who was also then hiding a sexual affair, who was supposed to be replaced by another Congressman who stepped down when forced to reveal that he too was having a sexual affair, which led to the election of a new Speaker of the House who now has been indicted for lying about payments covering up his sexual contact with a boy.  –Orin Kerr

It turns out that during the late ‘90s both parties were lead by lying philanderers. My first reaction is to mock the idea of “public service”, and say we have seen one more example of how the worst get on top. But upon further consideration, I’d say this is evidence of just how well our political system works- as Madison said, we want a system of government that can deal with the fact that men aren’t angels. The late ‘90s featured leaders very far from angels, yet it is remembered as a golden era for the country- peace, balanced budgets and a booming economy.

Written by James Bailey

May 31, 2015 at 2:57 pm

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