Saturday, September 27, 2003
IOWA VS. MICHIGAN STATE
Jeff Utech has a good post on this weekend's game.
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DEATH PENALTY DIVERSITY
Yin blog notes there is a considerable amount of diversity among the Democratic candidates on the issue of the death penalty.
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Friday, September 26, 2003
WHAT I LEARNED FROM THE DEMOCRATIC DEBATE
My new column at the American Prowler.
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PRESCRIPTION DRUG REIMPORTATION—A BAD IDEA, BUT THE REGISTER LIKES IT
The Des Moines Register is overjoyed about Governor Vilsack’s proposal to re-import drugs from Canada:
If the state of Iowa could pay less for paper clips by switching to a different distributer [sic], wouldn't Iowans expect the state to do so? Government has an obligation to be fiscally responsible with tax dollars. Plus, the new paperclips are exactly the same as the old ones. They're just cheaper.
So it goes with prescription drugs. Gov. Tom Vilsack said he's going to study how much the state could save by purchasing prescription drugs from Canada for state employees and retirees. Following in the footsteps of Illinois Gov. Rod. Blagojevich, Vilsack is the second governor in the country to look to the north where drugs sell for a fraction of their U.S. cost.
As usual, the Register doesn’t know what it is talking about. But you already knew that, didn’t you?
Iowa taxpayers pay a portion of the health care for about 70,000 state employees, retirees and their families. The cost last year for drugs alone was $54 million. If there's a better deal to be had, Iowa should go after it. The better deal is clearly in Canada, where the government leverages down the price of drugs.
Leverages? Price controls is more like it. The Canadian Government uses the force of law to keep drug prices low. They are smart enough to make the price just high enough so that drug companies can make a profit, but drug companies need a far less regulated market, like the one in the U.S., to recover the huge R & D costs.
Pharmacists and pharmaceutical manufacturers don't like it when Americans buy drugs from Canada. Drug companies want to maintain large profit margins on the U.S. sales in order, they say, to finance research on new drugs. Pharmacists say drugs in Canada aren't safe, yet there is no evidence to support that.
It's time for the United States to pay less attention to the drug industry's wishes and more attention to the needs of Americans.
Oh isn’t that clever? You can’t refute the opposing side’s argument, so go straight for the “needs of Americans” line. And to think the left often accuses the right of mindless patriotism.
As for no evidence that drugs from Canada aren’t safe, there is at least circumstantial evidence. This piece by Merrill Mathews, Jr. quotes an article from the Wall Street Journal:
“Canada is boosting security at its seaports following stinging criticism that they are rife with crime and could be used to smuggle weapons of mass destruction into North America.” According to the story, this action is the result of a Canadian Senate committee which said that “crime groups including Asian Triads, the Russian mafia and the Hell’s Angels motorcycle gang are active at Canada’s ports, using them to smuggle illegal drugs, weapons and refugees into North America.”
Furthermore, since when has the Register needed evidence to support a policy?
Finally on this point, the Register assumes (obviously) that the wishes of the drug industry and those of Americans are mutually exclusive. Here’s why they are not: If America re-imports drugs from Canada or any other country where they are cheaper, it will cut into the bottom line of drug companies. As their bottom line suffers, they will cut back on the R&D that is so crucial to drug innovation. Once that happens, the flow of new drugs to the market will slow considerably. Ultimately, that means less life-improving drugs on the market in the future. Does that sound like something that will satisfy the “needs of Americans”?
Second, it will also hurt the interests of those folks abroad. If it is legal for America to re-import drugs from other countries, drug companies will stop selling to other countries in order to stop the flow of cheaper drugs coming back into the U.S. I know the ,i>Register didn’t mention the interests of other nations, but given how important those interest are to them on Iraq policy, surely they must be of concern to them on drug policy. (For more on this, see this piece by Richard A. Epstein.)
Drugs are a crucial part of health care, and they've too often become unaffordable. Even people with employer-based insurance pay higher and higher co-payments for prescriptions. There's no drug coverage in Medicare. More than 40 million uninsured people pay out of their pockets for drugs. Why would these people pay $319 for the breast-cancer drug Tamoxifen in the United States when they can pay $52 for it in Canada? Or 75 cents a pill a diabetic pays for Glucophage here compared to 36 cents in Canada?
They probably wouldn’t pay those rates, except that in the U.S. drugs operate under a market system and in other countries they live under a system of price controls. It’s not that we’re paying too much, but that other places are paying too little. Joe Lieberman suggested as much in the debate yesterday. (I learned that too.) And as for drugs being unaffordable, again let’s go to the Consumer Expenditure Survey. The average American spends about $449 on prescription drugs a year, or less than 1% of his income. For those over 65, it is $884, or about 3.2% of their income. Oh, and they spend more, on average, on eating out and entertainment.
Likewise, why should the taxpayers of Iowa pay more for the drugs?
Is that not the biggest bit of phoniness you’ve seen in quite some time? Funny, concern for the Iowa taxpayers didn’t make it into the Register’s recent editorial lamenting the lack of funding for human services. Or, why should the Iowa taxpayers pay more in taxes? How come we never see the Register address that question?
Obtaining drugs from Canada is the fiscally responsible thing for Iowa to do. Vilsack should go beyond studying the idea. Assuming the savings would be significant, he should follow through by actually doing it - with or without the federal government's approval. That would send a powerful message to Congress that states are fed up with the high cost of prescription drugs.
One little, teeny, tiny detail: Without the Feds’ approval, it’s illegal. I believe what the Register is doing here is best described as lack of long-term thinking. Actually, how would that differ from most other days?
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Thursday, September 25, 2003
HOW TO CREATE A CRISIS 101
Here are the three basic steps the political left uses to create a crisis. 1. Focus on a common demographic characteristic. 2. Claim that characteristic no longer works as well as it once did. 3. Link it to a “disturbing” trend.
Exhibit A—as if you needed to guess—is a recent editorial in the Des Moines Register called “The Unhappy Median”:
A new report by federal housing authorities lists the median income for a Des Moines family at $46,590, firmly in what most Americans might consider the "middle class." So how well does that median-income family live?
Not well enough, of course:
It costs a lot to live. It costs even more to live with children.
Living within your means is difficult when there aren't enough means to cover basic expense.
Here is how the Register calculates living expenses to come up with its bleak assessment:
Taxes - 7000
Housing - 15000
Groceries - 5000
Child-care - 10,500
Health care - 3000
Car - 4000
Utilities - 2458
Total - 46958
The expense for utilities was not actually in the editorial; I merely calculated it using the percentage spent on utilities by an average family of four in the Consumer Expenditure Survey (CES). It fits because the expenditures exceed income, which is the point of the editorial.
Now let’s look at those expenditures. To get the housing number, the Register multiplied the income by 36%, which it states is the maximum amount that experts say “should go toward housing.” But that number is too high according to the CES. The average amount spent on housing is about 27%. The Des Moines family would then spend $12,580 annually assuming it spends the average.
Next, let’s tackle the child-care expenditure. Some very dubious assumptions went into the calculation that yielded $10,500. First, how many families making $46,590 have two full-time earners? According to the Census Bureau, the median household with two earners made over $64,000 in 2001. Second, how many families have four people in them? The average family size in America in 2000 was just over 3. It’s reasonable to assume that the household may have only one child, and the second earner may work only part time or not at all. So, I’m going to take the liberty of reducing that child-care number about 60%, to $4,200.
I’m also going to bump up the amount for a car to $7,454, which is closer to the percentage that the average family spends on transportation in the CES, and do a slight correction for food since $100 a week is $5,200. So, the re-calculated numbers are:
Taxes - 7000
Housing - 12580
Groceries - 5200
Child-care - 4200
Health care - 3000
Car - 7454
Utilities - 2458
Total - 41892
Well, now that family is almost $4,700 in the black. Plenty for other expenditures and to put some away for savings. Not much of a crisis is it? And when you consider that a lot of expenses, like cars and food, continue to get cheaper, it doesn’t seem like a crisis at all.
Once the Register had its made-up crisis, it then revealed the link to the disturbing trend:
The result is more bankruptcies and credit-card debt.
Last year, 92 percent of the 1.6 million bankruptcies were filed by middle-class Americans. The three top reasons given were medical bills, job loss and divorce. Credit-card debt for middle-class families averages more than $5,000. Families likely are using those credit cards to bridge the gap between what they earn and what they need to live.
A family of four with a $46,590 annual income is considered by most a middle-class family. Yet the rising cost of everything from health care and higher education to housing means that a supposedly middle-class income may no longer buy a middle-class lifestyle.
Victims, victims, victims all! We’re going broke not because we spend too much. It’s surely not a matter of personal responsibility. It’s due to circumstances beyond our control, by all those greedy business owners who aren’t paying us what we deserve. Capitalism is failing! Time for government action!
Sigh.
Last thought: Finally, I want you to consider the $7,000 for taxes, which only includes payroll and income taxes. First, consider that $3,500 of that is income taxes. Guess how much of that comes from federal taxes, and how much from state taxes? Again, assuming a family of four, the Heritage tax calculator says that about $1,060. So the bulk of it comes from state taxes! We should also examine what percentage of the income is going to pay taxes. $7000 is more than 15% of $46,590, or more than 1 dollar in 7. According to the CES, about 2.7% of income goes to property taxes. So that family in Des Moines pays another $1,257 in property taxes. If we also assume in sales tax, which is 6% in Iowa (7% if you live in an area with a local option sales tax), and that the family has $10,000 worth of taxable expenditures, that’s another $600. So total taxes are $8,857, or 19%. Almost 1 dollar in 5! Guess the Register has been pretty prescient griping about “all those tax cuts” in Iowa in recent years, huh?
UPDATE: Oops! The sales tax rate in Iowa is 5%, not 6%. Sorry, I got a bit confused because in Burlington, where I live, it is 7%. In Iowa, the state levies a tax of 5%, and then both cities and school boards, with approval of the voters, can each levy an additional 1% sales tax. Many areas of the state do. And when you consider that I didn't include gasoline tax and all the little taxes on phone and utilities bills, that $600 is probably still correct.
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Wednesday, September 24, 2003
THERE THEY GO AGAIN
The Register is having a field day with the “no connection between Iraq and al Qadea” line.
President Bush said this week there's no link between Saddam Hussein and the terrorist attacks on Sept. 11, 2001. "We've had no evidence that Saddam Hussein was involved," Bush said.
and,
Now what will the administration do? Without a link between terrorism in the United States and the Iraqi dictator, how will it justify the war?
Perhaps as a humanitarian mission.
National Security Adviser Condoleezza Rice offered another idea. She said one reason Bush attacked Iraq was because Saddam posed a threat in "a region from which the 9-11 threat emerged."
What? The region?
Saddam wasn't involved in Sept. 11, but he lives in a suspicious neighborhood?
Members of the administration should stop while they're only this far behind.
The Register editorialists would make light of such an argument since they don’t have a clue when it comes to foreign policy. What Condoleeza Rice means is that the continued existence of Hussein’s regime would further destabilize the region, which would in turn lead to more terrorism. In fact, that was an argument the Bush Administration made from the beginning. Here is Bush’s U.N. speech from last year:
Events can turn in one of two ways: If we fail to act in the face of danger, the people of Iraq will continue to live in brutal submission. The regime will have new power to bully and dominate and conquer its neighbors, condemning the Middle East to more years of bloodshed and fear. The regime will remain unstable -- the region will remain unstable, with little hope of freedom, and isolated from the progress of our times. With every step the Iraqi regime takes toward gaining and deploying the most terrible weapons, our own options to confront that regime will narrow. And if an emboldened regime were to supply these weapons to terrorist allies, then the attacks of September the 11th would be a prelude to far greater horrors.
Oh, and the humanitarian reason was also part of the justification. Again, the U.N. speech:
Last year, the U.N. Commission on Human Rights found that Iraq continues to commit extremely grave violations of human rights, and that the regime's repression is all pervasive. Tens of thousands of political opponents and ordinary citizens have been subjected to arbitrary arrest and imprisonment, summary execution, and torture by beating and burning, electric shock, starvation, mutilation, and rape. Wives are tortured in front of their husbands, children in the presence of their parents -- and all of these horrors concealed from the world by the apparatus of a totalitarian state.
As always, you could look it up. But why would the Register op-ed page do that when there are cheap political points to score?
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Tuesday, September 23, 2003
MORE ON EDUCATION
Ok, Michael Fujioka posted some long comments on education last week on my blog (Mike, embrace the saying “brevity is the soul of wit”!) Anyway, here are some quotes, with my responses:
The article which the tusk and talon post refers to quotes an anual OECD report that shows American spending on education per student to be in excess of all other OECD countries while average performance of elementary and secondary students lag behind the OECD average. What is not mentioned however is that the per student spending cited in the article is total public and private spending for students from elementary level to university/college. The inclusion of private spending and university level spending is very misleading as close to 98% of non university education is public, while over 50% of university spending is private, and per student spending on the university level is much higher than at the secondary/elementary level. Thus it is of course ridiculous to compare total spending on all students, elementary through university, public and private to just average performance of pre university students.
Yes, OECD does look at both private and public school funding. But if we break out the public part, as this paper by the American Federation of Teachers does, we can see that the U.S. still spends more than most other developed countries. (The data is a little dated—1996—but we can probably assume spending rates haven’t changed drastically since then.) In Table 4, near the bottom, you’ll see that U.S. per pupil spending is fifth only Norway, Canada, Switzerland, and Sweden—and it’s first if you include capital spending. Thus, there are at least 12 nations that spend less than us on public education. Now, if we go back to the tables from the OECD report, we find that for 15-year-olds in math, Japan, Ireland, Finland, the U.K., Belgium, Austria, and Australia all score better than the U.S.—and all spend less money on public eduction than the U.S. In reading, all of those coutnries save Belgium have a lower percentage than we do of 15-year-olds reading at level one or below level one. Thus, money is by no means the only factor in determining student performance.
I admit that my statement relies on casual evidence, and I do not believe that public universities are strictly better than privates. Although it is true that most of the "elite" universities are private, it should also be remembered that public university tuition is really only a fraction of most private schools. So there is a cost vs. quality argument to be made in terms of not what it cost the government to provide the education, but costs to students, and the availability of quality education made available to students as a result. But in any case it is difficult to argue generally against the quality of American public universities. But it is also interesting to note that the government provided financial aid system for university students can in some ways be thought of as a voucher system for higher education.
I think you’ve hit on part of the reason why higher education in America is so superior. Much scholarship and grant aid acts as a “de facto” voucher system. But there are other reasons. Unlike public elementary schools and high schools, public universities do not receive all of their funds from taxpayer dollars. Students still have to pay tuition, and if public universities do not perform adequately, students can take their dollars to a private institution, or even another public university.
And that’s another reason public universities perform better: they operate in the ultimate system of open enrollment. Just because I live in the southeastern part of Iowa does not mean that I have to attend the nearest university, which would be Iowa. I could choose Iowa State, Northern Iowa, or a community college. I could even choose a public university out of state. Yes, there is still out-of-state tuition, but I can take a year off, set up residency and pay the lower rate. Even the out-of-state rate is usually lower than a private college. Anyway, the point is that public universities have to compete for students. If you live in a state without an open enrollment law, then public elementary and high schools don’t have to compete. Your folks live in a certain area, you have to attend a certain public school.
Now, although it is obvious from this blog that I’m in many ways libertarian, I do not believe that government spending on education is a bad investment. There is a lot of statistical evidence showing education spending does boost economic development. But I also think there is a point of diminishing returns; each new dollar spent contributes little to a student’s education, and instead contributes to the education bureaucracy which does so much to perpetuate ineffective schools. So New York and Washington, D.C. can spend some of the highest amounts per pupil in the nation and still have crummy schools. Here in Iowa, we spend near the U.S. average per pupil, and have some of the better public schools in the nation. Why? There are many reasons, but I suspect a big part of it is that, yes, we have open enrollment.
To sum up: Money is not the only factor in education. Other things, like more freedom of choice, are necessary to achieve better results.
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Monday, September 22, 2003
MORE ON MSAs
Tusk and Talon has more on the Register’s take on medical savings accounts. By the way Chad, here’s the link to the editorial.
Oh, and Jeff, I haven’t heard from Condi yet.
More to come later in the day.
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