What Is Seen and What Is Not Seen

“Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself.” — Mark Twain

The great French economist Frederic Bastiat observed that “In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

“There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”

The same is true in the sphere of public policy. The bad economist or the thoughtless politician (but I repeat myself) sees only the direct effect of a law; he doesn’t foresee the indirect effects. In many cases the politician may consider only the short-term effects that might help him win the next election; he may not consider at all the long-term effects.

Bastiat noted that “it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa.” So when a politician urges a great new solution to some problem – or typically, the same old ineffective solution to a problem – the long-term result very often is more harm than good.

One such example was alcohol Prohibition almost 100 years ago. The problem of alcohol may have been bad, but Prohibition made the problem much worse, to the point that Prohibition was later repealed. Another example was a luxury tax on yachts to “soak the rich”. Even a mediocre economist or a slightly thoughtful politician could have foreseen the disaster it turned out to be. The tax collected virtually nothing from the rich but did send many blue collar boat builders to the unemployment line. Two years later Congress repealed the law.

With the greatest intentions of reducing poverty, politicians have enacted policies that, in the short-term, help people survive one month until the next government check, but the unseen long-term effect is to trap people in poverty, sometimes for generations. If we truly care about helping people – and I think most of us do – then wouldn’t it be better to find long-term solutions that help people escape poverty?

As long ago as the 1980s, better economists and more thoughtful politicians saw the indirect effects of the welfare system – it “fostered a permanent underclass dependent on government handouts.” In 1996, a Republican Congress and Democrat President Clinton passed welfare reform with the goal of reducing the dependency trap and helping people escape poverty. Ten years later, The New Republic, a liberal magazine, looked back and editorialized that the reform “worked much as its designers had hoped [foreseen].” Since then, less thoughtful politicians seeing only the easily visible effects of welfare, and not seeing the long-term consequences, have undone most of the successful reform.

Our disability system likewise helps disabled people survive month-to-month but traps them in poverty. Wouldn’t it be better to find long-term solutions, using some amazing modern technology to help them overcome their disabilities, become productive, and no longer trapped in poverty?

Some short-sighted politicians want to extend the length of unemployment benefits beyond 26 months, but the long-term effect can be permanent unemployment. Studies have found that someone unemployed for more than six months has very little chance of ever getting a job.

Other bad economists and thoughtless politicians suggest raising the minimum wage. The immediate effect would be to slightly raise the pay for a small number of people – but cause others to lose their jobs. The long-term consequence would be to destroy many more entry-level jobs, making it harder and harder for teenagers to enter the work force.

When was the last time you saw a full-service gas station? That used to be a good first job for many young kids. Washing dishes was another good first job. Kids learned the self-discipline of showing up on time every time. While on the job they often picked up skills from the auto mechanics or cooks around them. But as the minimum wage rose, machines replaced those jobs. If it continues to rise, we will see machines taking orders for fast food, flipping burgers, and delivering the goods. The long-term effect of raising the minimum wage is disastrous for millions of young people.

Some politicians saw ObamaCare as a good idea; they did not foresee the terrible consequences. Today, some people think we will see good effects if we adopt the ObamaCare expansion of Medicaid. Not only do they fail to see the indirect, long-term terrible effects, they don’t even see the bad effects that have already occurred elsewhere. To put it simply, Medicaid is an inefficient, incredibly expensive program that provides even worse health outcomes than for people who are uninsured. Expanding it would cost even more than now predicted and would lead to much higher taxes.

To achieve better results – better economy, more good jobs, higher pay, less poverty, lower cost health care – we need to see not just the immediate effects of a policy, but to foresee the long-term effects.

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Real health care reform (not ObamaCare)

“Learn from the mistakes of others. You can never live long enough to make them all yourself.” — Groucho Marx

It’s no laughing matter – well, actually it is. The late night comedians have found lots to laugh about in what otherwise would be a tragedy. ObamaCare that is.

Most of us have heard the horror stories about the so-called “Affordable” Care Act. The least of the problems is the web site that doesn’t work. Much worse is the huge increase, sometimes even doubling or tripling, of premiums and deductibles for many people. Perhaps worst are the millions of people who have suffered cancellation of the health plans they liked.

ObamaCare is a disaster. This year when the employer mandate takes effect, tens of millions more people are likely to find that the plans they like are canceled to comply with the dictates of big government. But there is hope. Real health care reform is coming – not from politicians, but from doctors.

One surgeon wrote in the Wall Street Journal about a patient who needed a fairly simple operation. His bare-bones insurance would easily cover the cost of the surgeon, the anesthesiologist, and, they thought, for the operating room, nurses, etc. But when the patient went to check in, the hospital wanted an additional $20,000 from him above and beyond what the insurance would pay.

The patient canceled the operation and returned to the surgeon. Dr. Singer told his patient an open secret: that hospitals and other providers will usually negotiate a much lower cash price for people who don’t use insurance. The doctors are happy to take a lower fee now instead of paying office staff to wade through the insurance paperwork for reimbursement much later.

Dr. Singer made a few phone calls; the anesthesiologist accepted an upfront cash price, a different hospital charged a reasonable fee for its services. The patient had the operation the next day with a total out-of-pocket charge of a bit over $3,000. He saved $17,000 by not using his insurance.

Most people don’t shop around like this because they have no incentive to do so – their insurance picks up almost all of the bill. But with insurance deductibles becoming higher and higher, more people are beginning to shop around. That’s not easy to do because most hospitals keep their prices a secret.

One hospital that is very public about its prices is the Surgery Center of Oklahoma, a for-profit facility that offers first-rate care at low prices. About five years ago, they posted their price list for more than 100 common procedures. And those prices can be as low as one-tenth the prices at other hospitals.

Compare the cost of a “complex bilateral sinus procedure” performed at a nearby non-profit hospital, to the cost performed by the same surgeon at the Surgery Center. The other hospital charged $33,505, not including the surgeon’s or anesthesiologist’s fees. The Surgery Center charged just $5,885 total for the entire procedure.

The other hospital delivered a four-page bill with detailed cost items for such things as $360 for a steroid that wholesales for 75 cents, and a total of $630 for three pills that cost about $1.50. The Center’s bill was a single line with every cost item included in the published fixed price.

The Surgery Center is able to keep its prices so low partly because it takes cash upfront; it does not accept insurance. But what about people who can’t afford several thousand dollars for an operation? In many cases, the Center’s total price is less than just the co-pay and deductible would be at another hospital.

The Surgery Center pays “tons of attention” to making systems more efficient. One surgeon reports that he can perform twice as many surgeries per day at the Center because it operates so efficiently. At the other hospital, he spends half of his time waiting around for the patient to arrive and then for the equipment to arrive.

As one measure of efficiency, the Center has no administrative employees. At the other hospital, the eighteen top administrators are paid an average of $413,000. At the Center, all of the staff except a small clerical staff are involved with patient care. The head nurse does double duty as chief of human resources and building maintenance.

The Surgery Center of Oklahoma might have been the first to provide transparent pricing but they are far from the only ones. One commentator described the movement toward transparent pricing as a “fever pitch … pretty soon [all providers] will be fully transparent.”

The effect of published cash-upfront pricing is nationwide and even international. Canadians who could get “free” treatment at home are flying to Oklahoma to save months or even years on waiting lists. Other patients are taking a firm price quote from the Surgery Center along with an airline ticket for Oklahoma City, and are challenging the local hospital to charge a competitive price.

Much lower prices, higher quality, whether it is Direct Primary Care or surgery, physicians are producing real reform, effective reform. Politicians think reform means forcing more people to buy insurance they don’t like. Doctors know that real reform is to get insurance out of the way, to let nothing come between doctor and patient. My money is on the doctors.

Health Insurance is not Health Care

Tammy Bruce opines that ObamaCare is not just a train wreck, because after all, once a train wreck is over, it is over. It doesn’t keep on going. No, ObamaCare is more like a cancer, growing and destroying everything.

A California man bought insurance on the ObamaCare exchange, then called a doctor for an appointment. He called every single doctor who was listed as being in-network, but none of them actually was.

In the normal world, this would be called “fraud.” In Obama’s America, it’s called a “snag,” and on a national scale, the Obama regime labels it “Shut up, Fox News!”

After all, isn’t the goal getting everyone insured? Who cares if you can’t actually see a doctor or get health care, because everyone will get a terrific piece of paper that says “health insurance policy.” Equality, at last — everyone’s got the same thing; namely, nothing at all.

A woman cancer patient enrolled in ObamaCare, then went to see her oncologist, only to be greeted by a sign at the door announcing that they did not accept any of the ObamaCare plans. She says that she is, “a complete fan of the Affordable Care Act, but now I can’t sleep at night.”

When the Congressional Budget Office forecast that ObamaCare would cause 2.5 million people to lose their jobs, the White House responded that those people were just a “small percentage of the economy.”

Back here in New Hampshire, Jeanne Shaheen and Carol-Shea Porter say that they would vote for ObamaCare all over again if they could. Whose side are they on?

Guilty until proven innocent

“It is better 100 guilty persons should escape than that one innocent person should suffer.” — Benjamin Franklin

You and your spouse are eating breakfast in your home of nearly fifty years. Several vans pull up, armed police stream out and tell you that you have 10 minutes to grab your things and leave. Permanently. They are seizing your property. No notice, no warning, no court hearing, no due process of any kind. You might believe that could happen in a dictatorship, but can you believe that it happened in Philadelphia?

A police officer stopped a car and falsely stated that a taillight was out. The officer then claimed that the driver “looked like a drug dealer” and had him searched by a drug dog. The officers asked him if he was carrying drugs, guns, or money. He replied that he had $3,500 in cash. The officer seized the money, claiming that it must be proceeds of drug dealing. The man was never charged with a crime.

Terry Dehko and his daughter Sandy run a small grocery store. In January, 2013, the federal government seized all the money from the store bank account on the theory that his cash deposits might have been a cover for illegal money-laundering. No evidence, no due process. The Dehkos had done absolutely nothing wrong, but the government took their money. A year later, he is still trying to get his money back.

Welcome to the world of civil asset forfeiture, where people are guilty until proven innocent. If police have the slightest suspicion that property, including cars, cash, or even homes, was connected to a crime, then they can take the property, and dare the owner to try to get it back.

The theory behind civil forfeiture was to take the ill-gotten gains of major crime figures even if those criminals could not be caught and brought to trial. But now almost all the seizures involve minor criminals and all too often people who have committed no crime at all.

In most cases, the police act as judge, jury, and executioner. They seize money on the excuse that they think it was going to be used to buy drugs, they don’t charge the “suspect” with even a violation, they just send him on his way. There is no due process, no court hearing, the victim is given no information about how to get his money back.

There might not be even the slightest evidence of any crime but the victim has to sue the state, then prove his innocence to get his property returned. The cost of hiring an attorney is usually more than the amount of money seized so most people give up.

The police, and sometimes the DA, keep the money as their own, and spend it however they see fit, with no oversight in the executive branch or by the legislature. A district attorney in Texas spent forfeiture money on an office Margarita machine. Police in a small Florida town spent $23,704 on trips with first-class flights and luxury car rentals. The Milwaukee County Sheriff’s office used civil forfeiture funds to buy nine flat-screen TVs for $8,200, and two Segways for $14,500.

The late Congressman Henry Hyde exclaimed, “Civil asset forfeiture has allowed police to view all of America as some giant national K-Mart, where prices are not just lower, but non-existent — a sort of law enforcement ‘pick-and-don’t-pay.'”

The abuse of power, absence of due process, and harm to innocent people has created opposition across the political spectrum, from the ACLU on the left to the Heritage Foundation on the right. The non-partisan Institute for Justice has fought many forfeiture cases (all pro-bono) in the courts.

A former Justice Department forfeiture official became so dismayed by the injustice of the forfeiture system that he switched from prosecution to defense. David Smith explained, “We are paying assistant U.S. attorneys to carry out the theft of property from often the most defenseless citizens,” given that people sometimes have limited resources to fight a seizure after their assets are taken.

We do not know whether New Hampshire has experienced some of these abuses – the record keeping requirements are so lax that we cannot know. We do know that our laws are so weak as to allow these same kinds of problems to occur here. Many of us think we should reform the statutes to prevent future problems.

A bill, HB 1609, has been offered with bi-partisan support to reform our forfeiture laws.

The bill requires that a person must have his day in court. He must first be convicted of a crime in criminal court before his property can be forfeited. No one will lose his property on the mere suspicion of a police officer.

Any forfeiture proceeds go to the state’s general fund, not to a police department’s slush fund. This is the same as fines for other crimes – they go to the state, where legislators during the budget process decide how to appropriate them. Police departments and prosecutors cannot divvy up the funds for their own benefit.

If property such as a car or house is connected to a crime, but the owner(s) were neither involved nor had any knowledge of the crime, those innocent owners cannot have their property forfeited.

Why Not Common Core?

Extracts from an interesting article by Barbara Haney, PhD.:

If the objective of the K-12 education system in Alaska is to produce students who can excel in the areas of math and science, the Alaska State Standards and the Common Core will not produce that result. These standards are not more rigorous, they are simply ridiculous. They are developmentally inappropriate and do not specify outcomes. Standards specify outcomes, not processes. With rare exceptions, the Alaska State Standards and the Common Core specify processes, not outcomes.
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It is noteworthy that states have been fleeing the consortia and the common core. Michigan has paused and is re-writing their standards. Massachusetts has paused implementation. Maine and Florida left the consortia via executive order and they are fighting to get the common core out of their state with the assistance of both the governor and the legislature. Georgia left the consortia and is re-writing their standards. Alabama and Utah left the consortia, and there are active movements to get the common core out of that state. Pennsylvania has an effort to rescind the core as well, because oil companies like Exxon and Anadarko have thrown considerable support behind the core making the job of Senate Democrats difficult. (Note: Mike Hanley’s brother, Mark Hanley, is a lobbyist for Anadarko). New York State has what could be termed as a rebellion, and the rejection of the common core was decisive in the school board elections in Buffalo, New York as well as in the Mayor’s race in New York City. Governor Cuomo is a major advocate of the Common Core nationally, along with his anti-gun agenda.
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The developmentally inappropriate nature of the common core has had disastrous results in New York and in other parts of the country. The increase in suicides and clinical depressions that have accompanied the implementation of the common core are well documented. One researcher who has been tracking the impact of the standards on mental health is Mary Calamia. Her research shows a marked increase in self-mutilating behaviors, insomnia, panic attacks, depressed mood, school refusal, and suicidal thoughts during the state exam cycle last spring.

Our Status Quo Governor

Manchester, NH – Gubernatorial Candidate Andrew Hemingway released the following statement in response to Governor Maggie Hassan’s State of the State Address:

“Governor Hassan successfully spoke for nearly an hour without mentioning one accomplishment of her administration. Using the words “solution and innovative” repeatedly does not unto itself mean you have achieved or even proposed an innovative solution. The people of New Hampshire are smarter than that.

“Governor Hassan gave a lot of lip service to the business community, yet every policy she proposed would harm the very community she is praising. Study after study has proven that a hike to the minimum wage harms exactly the people it is trying to help. Increasing the minimum wage causes jobs loss, it drives more people to welfare, it drives up state budgets and raises the cost of doing business. The people harmed the most? Minorities and women.”

“Where exactly are her solutions? She failed to even mention the serious problem with our healthcare situation here in New Hampshire, even though it is arguably one of the largest concerns of our citizens. 22,000 people were kicked off their insurance thanks to Hassan-supported Obamacare; 12 hospitals were removed from the network for anyone on the Exchange, or anyone with individual insurance from Anthem; Anthem is the ONLY provider approved for the Exchange. Where is her plan to bring more insurance providers into the state?”

“On education, Governor Hassan praised Common Core. This bureaucratic mess lowers existing state standards and replaces parents with bureaucrats. Common Core is not right for NH. We have increased our spending on education by over a billion dollars in the past decade; our enrollment is down and our education has not improved. Governor Hassan believes differently than me. She thinks more government control is the solution to everything, I think individual freedom is.”

“We very much are in need of certain transportation improvements for our roads and bridges. I agree with the Governor there. But she failed to tell us how we can pay for that. Just as she failed to tell us how we can pay for her expanded natural gas pipeline, or extending broadband internet. A good idea is only a good idea if you tell us how to make that idea a reality. Governor Hassan didn’t do that.

“Our Governor says absolutely nothing. She maintains the status quo, because as her record has shown, she has no solutions. This ‘do nothing’ leadership is doing nothing to improve things for students, patients or workers.” –Andrew Hemingway, Candidate for NH Governor