Two Cheers for the Welfare State

April 16th, 2011 at 4:28 pm David Frum | 224 Comments |

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This is the final installment in David Frum’s series on Yuval Levin’s “Beyond the Welfare State.” Click here to read the entire series.


In the interval since I started this response to Yuval Levin’s important piece in National Affairs, the Ryan budget plan has been approved by the House of Representatives on a near-total party line vote. Ideas like those endorsed by Yuval Levin are now the formal position of the Republican party. My guess is that the party’s presidential nominee will attempt to tip-toe away from that position in 2012, but who knows? Anyway, it will not matter. President Obama’s billion-dollar campaign will ensure that Republicans are thoroughly identified with it.

So Yuval Levin’s proposition is the proposition that Republicans will take to the country. Perhaps that is as it should be. Since the economic and electoral disasters of 2006-2009, Republicans have veered in a sharply libertarian direction. Why not put that new direction to the test of democracy? Perhaps Paul Ryan is right, and Americans (or anyway: voting Americans) have abruptly changed their minds during this economic crisis about their expectations from government.

I’ll admit: I’ve also changed my mind during this crisis, but in the opposite direction.

There’s an interesting rotation of ideologies here between Yuval Levin and me. Yuval Levin is one of the brightest rising stars in the intellectual tradition of Irving Kristol. Kristol famously championed a conservative welfare state, and especially programs of social insurance for the elderly.

I, on the other hand, got my political start urging a doubling-down on the economic libertarianism of the Reagan years. On the eve of the last Republican congressional triumph, 1994, I published a book urging ideas very similar to those now being urged by Yuval Levin and Paul Ryan and many others.

I won’t try here to explain why the conservative mainstream has turned so sharply to the right, although I have my theories.

As for my own turn away, that I can explain:

The radical free-market economics I embraced in the late 1970s offered a trade:

Yes, there would be less social provision. In return, Americans would receive an economy that was simultaneously more dynamic and also more stable.

There would be less inflation (because the Federal Reserve would have one job: price stability).

There would be fewer and milder recessions (because the Federal Reserve would no longer have to extinguish the inflation it did not create).

The financial sector could finance faster growth with less risk (because risks would be cushioned by diversification rather than prohibited by regulation).

Economic growth would accelerate (because the reduced tax burden would induce entrepreneurial innovation).

Faster growth would raise incomes for all (because a rising tide lifts all boats).

More opportunity in the private economy would abundantly offset the curbing of welfare benefits (because the best social program is always a job).

More opportunity would end the caste-like isolation of the poorest of the poor by drawing them out of the underclass into paid employment (because all human beings respond more or less rationally to positive incentives).

This was the trade, and it was engineered jointly by Republicans and Democrats: in fact some of the most important elements of the trade were adopted during the Clinton years.

Some of the terms of that trade were honored. From 1983 through 2008, the US enjoyed a quarter-century of economic expansion, punctuated by only two relatively mild recessions. In the late 1980s, the country was hit by the savings & loan crisis, the worst financial crisis to that point since the 1930s – and although the S&L crisis did deliver a blow, the country rapidly recovered and came up smiling. New industries were born, new jobs created on an epic scale, incomes did improve, and the urban poor were drawn into the working economy.

But of course, other terms of the trade were not honored.

Especially after 2000, incomes did not much improve for middle-class Americans. The promise of macroeconomic stability proved a mirage: America and the world were hit in 2008 by the sharpest and widest financial crisis since the 1930s. Conservatives do not like to hear it, but the crisis originated in the malfunctioning of an under-regulated financial sector, not in government overspending or government over-generosity to less affluent homebuyers. Fannie Mae and Freddie Mac were bad actors, yes, but they could not have capsized the world economy by themselves. It took Goldman Sachs, Merrill Lynch, AIG, and — maybe above all — Standard & Poor’s and Moody’s to do that.

In the aftermath of the catastrophe, the free-market assumption and expectation that an unemployed person could always find work somewhere has been massively falsified: at the trough of this recession, there were almost 6 jobseekers in the US for every unfilled job. Nothing like such a disparity had been seen since the 1930s. The young faced the worst job odds. But some of the most dismal outcomes were endured by workers in their 50s, laid off from middle-class jobs likely never to see middle-class employment again.

GK Chesterton once wrote that we should never tear down a fence until we knew why it had been built. In the calamity after 2008, we rediscovered why the fences of the old social insurance state had been built.

Speaking only personally, I cannot take seriously the idea that the worst thing that has happened in the past three years is that government got bigger. Or that money was borrowed. Or that the number of people on food stamps and unemployment insurance and Medicaid increased. The worst thing was that tens of millions of Americans – and not only Americans – were plunged into unemployment, foreclosure, poverty. If food stamps and unemployment insurance, and Medicaid mitigated those disasters, then two cheers for food stamps, unemployment insurance, and Medicaid.

Which does not mean that I have become suddenly indifferent to the growth of government. Not at all. Paul Ryan is absolutely right that the present trend is unsustainable and must be corrected. The free marketeers of the 1980s were right that taxes on enterprise must be restrained to leave room for private-sector-led expansion. Over-generous social insurance has all kinds of negative consequences. Private saving must be encouraged. Work must pay better than idleness. The job of designing the right kind of social insurance state is hugely important and hugely difficult, and the conservative sensibility – with its respect for markets and less sentimental view of human nature – is the right sensibility for that job.

Yet that same conservative sensibility is also properly distrustful of the fantasy that society can be remade according to a preconceived plan. We have to start from where we are, and we have to take people as we find them. Ronald Reagan liked to quote a line of Tom Paine’s, “We have it in our power to make the world new again.” George Will – although a great Reagan admirer – correctly complained at the time, “No, we don’t.”

I strongly suspect that today’s Ayn Rand moment will end in frustration or worse for Republicans. The future beyond the welfare state imagined by Yuval Levin will not arrive. At that point, Republicans will face a choice. (I’d argue we face that choice now, whether we recognize it or not.) We can fulminate against unchangeable realities, alienate ourselves from a country that will not accede to the changes we demand. That way lies bitterness and irrelevance. Or we can go back to work on the core questions facing all center right parties in the advanced economies since World War II: how do we champion entrepreneurship and individualism within the context of a social insurance state?

Those are words I would not have written 15 years ago. I write them now, conscious that I am very far from the first person to write them.  Irving Kristol made the point most memorably at the very onset of the conservative ascendancy:

The idea of a welfare state is perfectly consistent with a conservative political philosophy – as Bismarck knew, a hundred years ago. In our urbanized, industrialized, highly mobile society, people need governmental action of some kind… they need such assistance; they demand it; they will get it.

Conservatism’s task is to shape that social insurance state, not repeal it.

Yuval Levin knew this truth when I did not. I’ll preserve it here in safe keeping for him and all his friends until they are ready to remember it again.


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224 Comments so far ↓

  • JimBob

    The point is that there is no health care model, whether privately or publicly financed, that can offer unlimited access to medical services while containing costs. Ultimately, such a model arrives at a cross roads where it has to either limit access in an arbitrary way, or face uncontrolled cost increases. France and Germany, which are mostly publicly funded, are increasingly marching down the first road. America, which is half publicly and half privately funded, has so far taken the second path. Should America offer even more people such unlimited access through universal coverage, it too will end up rationing care or facing national bankruptcy.

    The only sustainable system that avoids this Hobson’s choice is one that is based on a genuine free market in which there is some connection between what patients pay for coverage and the services they receive. That is emphatically not what America or any Western country has today. Looking to these countries for solutions as Obama and other advocates of universal health coverage are doing will lead to false diagnoses and false cures.

    http://www.forbes.com/2009/07/28/health-care-reform-obama-opinions-columnists-shikha-dalmia.html

    • ottovbvs

      France and Germany, which are mostly publicly funded, are increasingly marching down the first road.

      Jimbo… France and Germany are running universal healthcare systems at HALF the cost of ours. Sure they have the same cost pressure as we do but at only HALF the intensity and they are covering EVERYONE while we’re NOT covering everyone and you never stop telling us it forcing US into bankruptcy.

    • think4yourself

      You are right that all countries face this dilemna of increasing health care costs, longer life spans, our desire to have those costs covered and limited way to pay for them.

      Where I disagree is the idea that cost containment (or reduction of costs) will occur by requiring the individual to bear all of the respsonsibility of negotiating those costs themselves. As those who are self-employed as I am (isn’t that the essence of Libertarianism – not depending on anyone, gov’t, big company etc. to pay your way?) have found, an individual has no negotiating power with and against big corporate interests. That is one of the reasons we have 40 million people in this country without health insurance. For 12 years, I have had health insurance for myself and my family that had premium increases an average of 20% per year. For 12 years, I have been blackballed from insurance with a reasonable premium and the best solution available was to have my family on a separate insurance policy so only I was charged double for worse coverage. My crime is that I have asthma all my life. Other than routine medical checkups and medication adjustments I have had to go to the doctor for my asthma for over 25 years, but I cannot get an insurance policy with decent coverage. I did have fair coverage in the early ’90′s but the insurance companies changed the rules. Why; because I refuse to go work for a big company, who has the negotiating power to deal with the insurance companies.

      So when you say that the free market provides the best alternative, I disagree, because it’s not a free market. It’s a market dominated by a few players against individuals have no chance to succeed. The problem with Ryan’s plan for Medicare and Medicaid is that it now shifts the negotiating power from the gov’t (large entity) to individual seniors, (no power and often not in a position to evaluate and make good decisions for themselves). This is a great deal for the insurance companies as they can now make decisions that are financially beneficial to them by finding creative ways to exclude those clients who create high costs.

  • JimBob

    A Free-Market Guide to Healthcare

    http://mises.org/daily/3737

  • ottovbvs

    A Free-Market Guide to Healthcare

    We have the most free market healthcare system in the developed world and it’s the MOST expensive.

    • JimBob

      We don’t have a free market in heath care Otto. Where in the world do you get such rubbish. Paul Krugman??

      • ottovbvs

        We don’t have a free market in heath care Otto

        Er I didn’t say that. I said:

        We have the most free market healthcare system in the developed world and it’s the MOST expensive.

        If it was freer it would almost certainly be MORE expensive. All these other countries DON’T have health markets as remotely free as that in the US and they’re costing half as much. Jimbo’s solutions is to make all their markets much freer and then they can spend as much as us. Kapok Brain speaks.

        • JimBob

          Yes, it’s the most expensive and the best. Arab oil barons don’t go to France when they need important surgery.

          If we want to bring down costs in this country we need to establish a market and make people more responsible for their care. They’ll begin to shop around. With my 12 thousand deductible I always look around and ask what it will cost. You’d be surprised how much Doctors like me. Willing to pay cash. I only wanted catastrophic coverage.

          Expand health savings accounts. But Obama care is going to make it very difficult now.

        • ottovbvs

          Yes, it’s the most expensive and the best. Arab oil barons don’t go to France when they need important surgery.

          Actually it’s one of the worst in overall performance although we score well in cancer treatments…. I think the OECD ranks us 17th in outcomes. But trust you to make Arab oil barons your benchmark…arab oil barons….gawd what’s next plastic surgery for movie stars.

  • ottovbvs

    I never cease to be amazed at the naivete and lack of knowledge of some folks here. We got folks who think it’s communism when the govt sets price ceilings when it’s commonplace; we got folks who never stop telling we’re going bankrupt because of the deficit and think Germany and France have got a bigger health cost than us when in fact they’re spending half as much as we do. Amazing.

    • JimBob

      Look Buffoon, don’t hand me that 17th rank crap. The facts remain the same. People come here because we have the best. Even Canadian big shots choose the United States over their crappy single payer bull siht.

      http://washingtonexaminer.com/blogs/beltway-confidential/canadian-official-comes-us-surgery

      • armstp

        JimBob,

        You believe all the talking points being feed to you over the years.

        The U.S. healthcare system is best described as islands of excellence amongst a sea of expensive mediocrity.

        Sure Saudis come to the U.S. to get access to some very good Doctor and hospitals. They also go to many countries in Europe. That means absolutely nothing. On average the U.S. system is failing and failing big time versus most other OECD countries.

        I would also update you on the U.S/Canada patient flow. Some Canadians like Saudis come to pay for some good doctors and hospitals in the U.S., but polls in Canada show that most, by a very large margin, Canadians think their system is far better than the U.S. system. Also, you would surprised at how many Americans are actually going to Canada these days for treatment. Many Americans are going to Canada for things like eye surgery because it is much cheaper.

  • msmilack

    David
    I admire the flexibility of your thinking and your honesty.

  • PatrickQuint

    “WTF do you think the VA is doing when it sets the price at which it will buy drugs or Medicare when it sets the price for a prostate biopsy? My god communism is rampant in the VA.”

    That’s negotiation, because the drug producer can say “no” and choose take their business elsewhere. If you mandate that no CT scan in the country shall cost more than $100, it stops making sense to do CT scans in America. The people who make the machines sell them elsewhere, the hospitals who use them shut them down or sell them to buyers out-of-country, and everyone who needs a CT scan gets one across a border or an ocean.

    If the government *negotiated* on CT scans *bought by Medicare* then you have something (I call that a step toward a free market). However, that’s not what you said. You advocated a legislature deciding that the price of a drug should cost $XXX, take it or leave it.

    Obama talked about negotiating, but it obviously didn’t make it into the ACA. A large part of that is obviously big Pharmaceuticals. There are a number of reasons I don’t tend to vote Republican.
    http://www.politifact.com/truth-o-meter/promises/obameter/promise/73/allow-medicare-to-negotiate-for-cheaper-drug-price/

    Note that Medicaid doesn’t negotiate, but rather sets prices at 95% of what is charged to the private sector. Since the program is such a large part of the market, pharmaceuticals simply increased their prices to the private sector to unreasonable numbers to artificially increase prices of drugs sold to Medicaid. That’s not good enough to control prices.

    • ottovbvs

      That’s negotiation, because the drug producer can say “no” and choose take their business elsewhere

      Yes, negotiation from a position of strength. Sure Merck is going to walk away from the VA business. Sheesh what planet do you live on?

      Note that Medicaid doesn’t negotiate, but rather sets prices at 95% of what is charged to the private sector.

      I’m not sure what criteria they use. But you’ve just admitted, the principle is already established. Communism is abroad.

      However, that’s not what you said. You advocated a legislature deciding that the price of a drug should cost $XXX, take it or leave it.

      I said the govt (not the legislature) and THAT is what is happening now (as YOU have just admitted). We’re just debating where the price ceiling is set. The cat scans are just an E-X-A-M-P-L-E of two extremes. I don’t know what the figure is in France or Germany but it’s probably in the middle somewhere. But it’s this high cost of drugs and procedures that is at bottom why were spending twice as much as anyone else. Is this really that hard to understand?

  • nhthinker

    In the 1950s, the percentage of the global economy that the US made up was huge.
    The US is still the largest but it is no longer overwhelming.
    Labor markets are global now- Competition is real. What unskilled workers can expect to have in return is now getting more balanced globally.

    The good old days of the 50s and 60s are not coming back. The issue is that markets in the US are much freer than markets globally. Cartels like the OPEC would be illegal under US law.
    Cartels distort the markets. Sherman Anti-trust laws were good for American competitiveness and it would be good for the world as well.

  • ottovbvs

    In the 1950s, the percentage of the global economy that the US made up was huge.

    That’s because most of the developed world was on it’s butt after the war. As Europe and Japan recovered there was no way we could retain this share of world output and during the sixties there was some rebalancing. Actually the U.S. share of world GDP has been relatively constant for the last 40 years, and was actually slightly higher in 2009 (26.7%) that it was in 1975 (26.3%).

  • valkayec

    Since everyone is arguing about health care and costs, there’s an opinion in WaPo today that you should read. It’s written by a pediatrician. He writes about saving $$$.

    How patients can help doctors practice better, less costly medicine

    http://www.washingtonpost.com/opinions/how-patients-can-help-doctors-practice-better-less-costly-medicine/2011/04/15/AFiAg1kD_story.html?fb_ref=NetworkNews

  • SpartacusIsNotDead

    Ottovbvs, I am sincerely amazed at your patience.

  • sdspringy

    In almost every business, cost-conscious customers and consumers help keep prices down. But not with health care. That’s because the customers and consumers who are receiving the care aren’t the ones paying the bill.

    http://www.cbsnews.com/stories/2010/08/05/60minutes/main6747002.shtml?tag=contentMain;contentBody

    Very reasonable explaination of what drives healthcare costs. None of which are remedied by ObamaCare/Medicare/Medicaid as they currently exist.

  • ottovbvs

    That’s because the customers and consumers who are receiving the care aren’t the ones paying the bill.

    Also true of all those other countries who are spending half what we are. So that can’t be the explanation can it Springy? Do you really think it’s ok for the US to be paying more than twice as much as the rest of the world for it’s drugs? Sure say’s springy. Then in the next breath he’ll be screaming about deficit. Not very good at joining the dots are you springy?

  • SpartacusIsNotDead

    sdspringy: “In almost every business, cost-conscious customers and consumers help keep prices down. But not with health care. That’s because the customers and consumers who are receiving the care aren’t the ones paying the bill.”

    Wrong. Dead Wrong.

    The purchasers of healthcare services (i.e. insurance companies) have every conceivable incentive to be cost-conscious even though they are not the actual end-users of those services. Each dollar saved on healthcare costs is a dollar that either stays in the insurance companies’ pockets or, to some extent, gets passed on to the insurance companies’ customers (i.e. the consumer). And, of course, insurance companies are much more effective at negotiating better prices for medical services than are individual consumers because the insurance companies have greater purchasing power and more expertise and experience in doing this than any consumer.

    As ottovbvs has explained a gazillion times, the main problem is the actual cost of providing medical services. If you want that cost to go down, then you need a really large single purchaser who can negotiate better prices (see the VA, a public option, Medicaid and, to a lesser degree, Medicare).

    • JimBob

      It is the consumers of health care that have no incentive to be cost-conscious because someone else is paying for it. Third party payment.

      • ottovbvs

        It is the consumers of health care that have no incentive to be cost-conscious because someone else is paying for it. Third party payment.

        But it’s exactly the same in Europe so why are they spending half what we do Jimbo? Tell me.

  • sdspringy

    Otto’s attempt to compare the healthcare system that serves over 300 Million people to one as small as Germany, of around 80 million is similar to comparing a Abrams M1 Tank to a VW Volkswagon.

    You need to show alittle more intellectual curiosity Otto. This is a conservative blog and your simple Huff post explanations don’t resonate here very well.

    • JimBob

      I’m convinced Otto has drawn his paycheck from the government his entire life.

      • ottovbvs

        Wrong as ever Jimbo. Apart from few years in the sixties I’ve never drawn a government paycheck and my first job was at 15 in the late 50′s.

    • ottovbvs

      I give you facts you give us baloney Springy.

      • sdspringy

        Your fact other countries pay less for healthcare, they must be better. Otto’s fact
        Other countries have warmer weather, they must becausing Global Warming. Springy’s fact

        Both meaningless. Similar to your argument.

        • ottovbvs

          Your fact other countries pay less for healthcare, they must be better.

          Well they obviously are better unless you’re numerically illiterate. And they have better outcomes by most measures. Springy obviously likes to pay top dollar for an inferior product. Springy the car salesman’s wet dream.

    • ottovbvs

      Otto’s attempt to compare the healthcare system that serves over 300 Million people to one as small as Germany, of around 80 million is similar to comparing a Abrams M1 Tank to a VW Volkswagon.

      The Germans got three heads then Springy? With more volume we should be doing it more cheaply or have Wal Mart got it all wrong.

      • sdspringy

        So you took my advice and got that job as a Greeter for WalMart. Nice to see you can still be productive with all your apparent problems.

        • ottovbvs

          No I’ve just got stock in the company and understand the business model as you clearly don’t.

  • SpartacusIsNotDead

    ottovbvs: “It’s like playing solitaire. Except in some cases the cards have more sense.”

    I know. I’m too easily fooled by these idiots. When and where I grew up, anyone who could afford a computer and was capable of stringing together several grammatically correct sentences was very often rather intelligent. I guess I should be glad to live in a time where even the most dull person can have his/her voice heard.

  • SpartacusIsNotDead

    JimBob: “It is the consumers of health care that have no incentive to be cost-conscious because someone else is paying for it.”

    Well, since the consumer has no input on the cost of medical services, you could only be referring to a consumer’s decision to either consume or forego service. So, how many consumers do you expect to forego a service that is recommended by his/her doctor?

    • JimBob

      “Well, since the consumer has no input on the cost of medical services, you could only be referring to a consumer’s decision to either consume or forego service. So, how many consumers do you expect to forego a service that is recommended by his/her doctor?”

      What an ignorant statement. I’m a consumer of health care and I have lots of input. I have a very high deductible so I pay cash for most of my health care. I shop around and ask lots of questions. Doctors love people like me. They’ll give me all sorts of discounts because I’m paying in cash. Just last week I went to my dermatologist to have some sun spots removed from the side of my face. I paid 150 dollars for the procedure. As always I asked what she would have charged someone paying with insurance and she said 350+.

  • stuartamills

    “If food stamps and unemployment insurance, and Medicaid mitigated those disasters, then two cheers for food stamps, unemployment insurance, and Medicaid.”

    If we did not have the social safety net, including Social Security ( that a number of people probably took earlier than planned) the disaster would have been far, far, worse. The safety net didn’t “mitigate disasters” – it prevented a catastrophe.

    Welcome to the Gray Side, David.

  • Rabiner

    Otto:

    “Of course it’s price ceiling, but I thought you didn’t want to go down that road? haha”

    You talking to me? I was simply correcting him, not that I approve of the price ceiling as a method of restricting the growth in costs of medical care.

    • ottovbvs

      I was simply correcting him, not that I approve of the price ceiling as a method of restricting the growth in costs of medical care.

      I thought you said you favored Medicare being able to buy drugs on the same basis as the VA? That would effectively impose a price ceiling. And if you don’t favor price ceilings then you’re effectively saying we can’t control the growth of Medicare costs because that’s the only way it’s ever going to happen.

  • Rabiner

    JimBob:

    “Yes, it’s the most expensive and the best. Arab oil barons don’t go to France when they need important surgery.

    If we want to bring down costs in this country we need to establish a market and make people more responsible for their care. They’ll begin to shop around. With my 12 thousand deductible I always look around and ask what it will cost. You’d be surprised how much Doctors like me. Willing to pay cash. I only wanted catastrophic coverage.

    Expand health savings accounts. But Obama care is going to make it very difficult now.”

    All that proves is that we have the best health care system in the world for rich people. Not everyone is rich and thus overall our system sucks.

    How does expanding health care savings accounts help poor or lower middle class people afford health care coverage?

    “It is the consumers of health care that have no incentive to be cost-conscious because someone else is paying for it.”

    It is the consumers of health care that have no incentive to be price sensitive since the alternative is death.

    • JimBob

      Our system is the best. Most people get insurance from their employer and are very happy with it. It is just expensive. Companies need to offer high deductible plans so people will shop and be cost conscious. Reward those that take care of themselves. Fat people need to be charged more simply because being fat leads to all sorts of health problems.

      There are all sorts of things we can do to establish a more market based system which will do a much better job of controlling costs.

  • Rabiner

    Otto:

    “I was simply correcting him, not that I approve of the price ceiling as a method of restricting the growth in costs of medical care.

    I thought you said you favored Medicare being able to buy drugs on the same basis as the VA? That would effectively impose a price ceiling. And if you don’t favor price ceilings then you’re effectively saying we can’t control the growth of Medicare costs because that’s the only way it’s ever going to happen.”

    There is a distinct difference between using Monopsony power to purchase drugs (similar to how insurance companies negotiate with hospitals for care) and using a price ceiling which would lead to a wide range of problems similar to when price ceilings where instituted in the 1970s on gasoline. So no, they are not very similar in method or means.

    • ottovbvs

      What’s the difference between saying I’m only going to pay 100 bucks for this drug and 100 bucks for this procedure? Medicare use their monopoly power to set prices now. In fact insurance companies use the same power to set prices. All that’s being debated is where the price is set. Basically insurance companies don’t have a long term strategic interest in forcing prices down because 30% of $200 is more than 30% of $100. I know this because I’ve heard a senior insurance co exec admit it.

  • ottovbvs

    Rabiner, this was my detailed response on the subject of price ceiling and benchmarks that got lost in the sludge.

    While I’m not a fan of the Reductio ad absurdum method of arguing, your simplistic use of the government telling private industry what they’ll pay and then forcing it upon them (since hospitals can’t turn away patients) is something I’d rather a road I’d not want to go down. The VA gets better prices for medications than Medicare because its in the law that Medicare cannot negotiate drug prices. That should be changed.

    Er.. you just went down that road in arguing that Medicare should extract the same prices as the VA who are also going down that road in setting prices for drugs they purchase . In fact the whole schedule of prices that Medicare agrees to pay for procedures is going down that road, as indeed are the prices insurance companies are willing to pay for procedures. So how is it simplistic? It’s simply someone with monopoly or quasi monopoly power setting price ceilings. Obviously as I acknowledged there is a balance to be struck (the govt doesn’t want to force all the doctors and hospitals out of business) but the only institution with an interest in holding down prices is the govt. The insurance companies certainly don’t. You’ve swallowed the camel why are you struggling with the gnat?

  • SpartacusIsNotDead

    I guess we lost JimBob and SdSpringy now that they can’t explain why “consumer choice” is completely ineffective at controlling costs.

  • Rabiner

    Otto:

    A price ceiling would apply to everyone purchaser of health care. Medicare negotiating rates for the care they’ll pay for is the same method that any insurance company does now. What you are suggesting is Medicare not negotiate with hospitals but rather to mandate prices and forcing them to provide those services thereafter. There is a distinct difference between the two methods and the relationship between the hospital and Medicare under your vision and mine. The VA doesn’t set prices, they negotiate on what they’ll pay during a negotiation with drug companies which is forbidden currently for Medicare to do the same I believe when Part D was passed.

    Btw, once you mentioned ‘a balance’ then you were arguing my entire point. Once you bring in that ‘balance’ it is no longer a price ceiling but rather a price negotiation.

    • ottovbvs

      What you are suggesting is Medicare not negotiate with hospitals but rather to mandate prices….Once you bring in that ‘balance’ it is no longer a price ceiling but rather a price negotiation..

      Perhaps you don’t understand the real world significance of my qualification about a balance needing to be struck. All these countries with healthcare systems operating at half the cost of ours use monopoly power with varying degrees of agressiveness to impose price ceilings on the goods and services they buy for the operation of their systems. It’s the major single reason why their costs are lower. And yet all these countries have thriving medical systems producing in the main better outcomes than us. These are not lab tests. They’re working role models encompassing hundreds of millions of people. In reality, setting the price ceiling is obviously a negotiation but a negotiation which reflects purchasing power. Which is to say it’s not much of negotiation. You obviously know what a monopsony is and we already have several in the US healthcare industry of both the private and public variety. You’re fooling yourself if you don’t think so. What your argument amounts to is we mustn’t extend the practise, even though it would make a real contribution to bringing down costs and works elsewhere. You’re obviously not a subscriber to the communism hysteria but at the end of the day the policy implications aren’t very different.

  • JimBob

    John Stossel and the Case for Free Market Health Care

    http://www.youtube.com/watch?v=dzm5jhguYJ0

  • Slide

    ottobvs it was quite enjoyable watching you eviscerate every moronic and simplistic argument put forth by the “usual suspects”. Especially rich was JimBob’s childlike analysis that because some Arab oil barons come the US for medical treatment then we MUST just have the best health care in the world ! Mindbogglingly stupid I know, but it is one of the major “talking points” of the right that we get to enjoy over and over again.

    Ditto heads, as their self-proclaimed moniker suggests, don’t do a whole lot of independent thinking, they just regurgitate what their Mensa leaders tell them.

    I await the next JimBob in-depth analysis of our Health Care System. Fun, fun.

    • JimBob

      Well you can refute anything except provide the usual Moveon Huff-N-Blow response.

    • ottovbvs

      Ditto Jimbo immediately demonstrates his capacity for independant thought by posting a link to Stossel who is a right wing shill. It’s so funny.

      • JimBob

        Stossel is a libertarian. And you can’t refute anything he says. Just more bloviating.

  • sparse

    two cheers for david frum!

    oh, what the hell, three!

    three cheers for david frum!

    • Smargalicious

      Unions destroyed GM. Management signed off on union contracts that doomed the company. Today GM is nothing but an old age pension company. The United States is the largest manufacturer of autos in the world, but it is foreign companies that are thriving. They all locate in Right to Work states to avoid the unions.

      And unions are trying to suck taxpayer’s treasuries dry as well.

      Thank God for Gov Walker!

      • aml_reads

        yes, because it was the unionized workers – with no representation on the board of directors or in the executive suites – who decided to design products no one wanted and pay the execs exorbitant sums for that privilege. personal responsibility for thee but not for me. and so it goes…

        • zephae

          Smarg: “Unions destroyed GM. Management signed off on union contracts that doomed the company.”

          This is a self-contradictory statement. Was it the union that did it or incompetent management?

  • sarcastico

    I am like Frum in that my political views have changed in response to the last 10 years. In the early Reagan years GM was the nations largest private employer. They provided good jobs-blue collar-white collar-engineering-managerial- skilled trades Employees could afford to buy a house a car and put their kids through college. The factories themselves were a training ground with apprenticeships, internships, co-op positions, and tuition benefits for motivated people from diverse backgrounds. They provided a strong tax base that supported local communities. Now the nations largest private employer is Wal Mart- a company that seems little more than the retail arm of China’s growing manufacturing base. A lot of the floor level employees are part time with low wages and few benefits. Many still qualify for, and need, government assistance to make ends meet. The Bush era was an economic disaster. Go back and re-read the Heritage foundation predictions for the Bush Tax cut plan
    http://origin.heritage.org/Research/Reports/2001/04/The-Economic-Impact-of-President-Bushs-Tax-Relief-Plan?LOL

    compare those to the reality of the last ten years. You cannot maintain a leadership position in technology and economic production when your leading private employer is Wal Mart and the only growth industry is bank fraud and hedge fund manipulation.

    Conservatives need to take a hard look at the results of the policies we championed and realize we cannot blame this countries problems on 1/2 term of Obama.

    • JimBob

      Unions destroyed GM. Management signed off on union contracts that doomed the company. Today GM is nothing but an old age pension company. The United States is the largest manufacturer of autos in the world, but it is foreign companies that are thriving. They all locate in Right to Work states to avoid the unions.

  • Bulldoglover100

    While some here appear to enjoy showing their “take” on the economy and the facts (which are suspect regarding who one chooses to listen to) I think that Mr. Frum speaks LOUDLY for those of us who live in middle America and while we do our best to stay abreast of the current facts and state of the economy, it is so intricate and changing that we often take a simpler look at how to vote, who to listen to and according to the lives we lead, which ones make the most sense to us.

    As a 40 year Republican I am sickened by the idiocy I see as rampant in this country these days. It does not take a rocket scientist to see the harm caused by the Palins/Becks/Limbaughs et el. I know when someone is caught lying time and time again. I know when someone is being racist regardless of how they couch their words and I know how it makes me feel when someone (hint a politician who is in Big Business pocket) lies to me regarding what their polls tell them is a majority.

    These things I do know. My party was responsible for the crash. My party deregulated so that Big Business could grow and they ignored the warning signs. Not letting the spineless Democrats off here as they sit and do nothing while Rome burns BUT I, and trust me millions of other Americans, know duplicity when it hits home and we will vote accordingly.
    I WANT National Health Care because we have been providing it in one form or another for 60 years. It needs to be streamlined and cost contained and when we had the chance to work with President Obama to do so, we instead kept screaming about some birth certificate that is nonsense. After being tossed our on our rears we demanded that the current administration do things our way. Obama won ALL the marbles and yet we kept saying he did not have a mandate but we will back 1/3 of Govt. and try to say WE have a mandate. Really people? Do you think that millions are blind to the way the GOP has gone the last 2 years? WE SEE THE HYPOCRISY.
    The majority in this country want what we were promised. Medicare and Social Security. Period. We worked for years to ensure it would be there. It is NOT a political tool and if my party refuses to realize this then we will lose the House in 2012 and have no chance of regaining the White House.
    I could go on and on and on with more of the above but I hope you get my point. Stop the back and forth, stop the lying. Remember that we MUST help our fellow man and that the only to fix this is to work together because it must be fixed. America demands it and will continue to elect people who are trying to fix things, not tear them down.

    Listen or ignore at your own peril or keep fighting back and forth because in the end? Sites such as this, while a good outlet for our vast, or little amount of knowledge, are good the real test is at the voting booth and then we shall see who among the previous posters had it right.

    • JimBob

      Yep, as a 40 year Democrat I’m outraged at the damage the Chicago Street Hustler Barry Hussein, Nancy Pelosi and Harry Reid have done to the country.

    • Primrose

      Bulldoglover I’ll reply directly, since the rest seems mainly to be trolls and troll baiters.

      My father always said: “Fool me once, shame on you, fool me twice, shame on me.” Well, Americans have let themselves be fooled twice because they found hippies odd once upon a time. Hopefully, they won’t let themselves be fooled again.

      I do have to speak up for my party though, everyone says we are spineless, when we are really just carry the weight of the blue dogs around us. Fine people but not actually democrats. Some people said we should have risked more those fall months, but didn’t out of fear. The thing is that we got a lot done, a lot in our short stint in congressional power, and a lot after, and with only marginal power. Even strong backs have to take a break, and with blue dogs running scared, I can see why Pelosi decided not to push that particular rope.

  • Bulldoglover100

    Well said Sarcistico. You are correct in this comment ” Conservatives need to take a hard look at the results of the policies we championed and realize we cannot blame this countries problems on 1/2 term of Obama.”

  • ottovbvs

    From when I voted for Johnson in 64 (the first time I voted) until Clinton in 96 I always went for the Republican. IMO the serious rot set in when Gingrich took over. That’s when I started questioning the rather desultory beliefs of a lifetime. And it’s been downhill ever since. The Republican occupancy of congress in the 90′s was kept in check because of Clinton’s political skill and there were still enough old timers around to make deals. The Bush presidency combined as it was with control of congress up til 2006 was without question the most disastrous period of government in my lifetime and one of the worst in US history. When one views the wreckage left behind it’s breathtaking. And the GOP seems to have learned nothing. At least DF has the intellectual honesty to revisit his belief system much of which he finds wanting. Until Republicans are willing to do the same they are not to be trusted with government.

  • LauraNo

    How in the world could a person consider a health care system that allows 45,000/ year of it’s citizenry to die for lack of health insurance be considered ‘the best in the world’ and what does that say about the person who thinks so?

    • ottovbvs

      Well it’s first in class when it comes to killing people off. Jimbo is not entirely wrong.

  • WillyP

    Was the 3rd cheer reserved because we’re inching toward collapse, thanks to the welfare state?

    S&P cuts U.S. rating outlook to negative
    http://www.marketwatch.com/story/sp-cuts-us-rating-outlook-to-negative-2011-04-18

    Tick-tock, tick-tock,
    Soon chimes the debt clock.

    Or is Humpty Dumpty a better rhyme?

    • jamesj

      WillyP: I’m a bit confused by your post. With much respect, we know with 100% certainty that our recent middle eastern wars, the recent “Bush Tax Cuts”, Medicare Part D (completely unfunded), and the recent downturn in federal receipts due to the near collapse of our economy collectively account for just about every penny of current yearly budget deficit. Correct? We know, with 100% certainty, that only 10 years ago we had a decent yearly federal budget surplus. Correct? So how does one such as yourself come to the conclusion that our debt problems are due to “the welfare state”? Aside from Medicare Part D, it doesn’t appear to impartial observers like our current problems have been caused by welfare programs. To impartial observers, people like you who trumpet the failure of the “welfare state” look similar to hobos at Penn Station yelling about asteroid apocalypses. Even a broken clock is right twice a day (we all want to reduce public debt), but I’d rather rely on meaningful analysis of our current situation instead of extreme dogmatic rhetoric. Wouldn’t it be wisest to deal with the actual causes of our immediate budget disaster first? Then we can turn to dealing with the long term viability of welfare programs from a solid footing.

      • WillyP

        Thank you for parroting Obama.

        I believe this site is infested with paid Democrat hacks. Astroturf, as Madame Speaker used to say. You are no doubt one of them.

        Did “the caucus” tell you to call those who adhere to common sense lunatics? I’m in Penn Station quite a bit, thank you. I know what a crazy person looks, sounds, and smells like. I am not crazy.

        You’re a rather loathsome individual. You’d sooner sell out your country than make one ounce of sacrifice.

        “Extreme” is the position we’ll soon find ourselves in if Obama wins. Extreme duress, that is.

      • LauraNo

        When someone blames our woes on the welfare state and then cries chicken about financial ruin, I don’t usually pay them any attention. They do not care about solving problems, they are engaged in a war against ‘others’. Which is unwinable, which makes them all-around very unpleasant people. I wonder if we will ever see a decent republican in office again, you know a Bush the first, or Ford, etc. Bush the second was an ideologue and that’s all I see on the horizon.

        • WillyP

          Aren’t you a Republican from CT? Or, weren’t you?

          This isn’t “crying chicken.” S&P just cut our debt rating. You want to sit around and wait to see what comes next?

          It’s called massive tax hikes, and a break from our traditions. No more America as we knew it.

  • jamesj

    I agree with David’s insight into the “tradeoff” expected when advocating smaller government, less regulation, and lower tax rates decades ago. The people who started those movements in the US weren’t doing it out of dogmatic idealism. They were doing it because they honestly thought it’d make life better for the majority of Americans. And you can only go so many years and see so many empirical contradictions to your policies before you start to question them (in a good way)… unless of course you don’t really care about the welfare of the majority of Americans and you are instead playing some kind of sterile intellectual game of chess where victory of ideals is your ultimate goal.

    Another important point that parallels David’s thought is that libertarian policy is a victim of its own success in a way. We DID structure taxes in a beneficial way for the wealthy and investors. We DID reduce regulation in many large sectors of the economy. We DID venture from the path of Western Civilization and keep our healthcare system mostly privatized. We DID foster a culture where greed is seen as an American virtue. We DID allow business to play a huge role in financing and influencing our politics. We DID dismantle unions and middle class workers’ bargaining rights. But the children of the children of the originators of these policies lack perspective. They are fighting the same ideological battles their grandparent’s fought, but the context has completely changed. If unions were running wild, investors couldn’t make a decent buck, and healthcare was privatized there would be a healthy place for staunch libertarian philosophy.

    But we’re in the exact opposite position. We’re in the thick of the results of a few generations of libertarian movement in comparison to the rest of Western Civilization. It brought us many advantages over other nations. But its also resulted in many serious drawbacks (including the stagnation of living standards and real wages for the bulk of the population). We need a counterbalance. The majority of the population is crying out for a balance. I don’t see how it can be “Conservative” to ignore the real gains in standard of living that the rest of Western Civilization attained while the US fell behind. Quality of life is what really matters. I don’t think “Conservatism” is about ignoring that hard data. I think it is simply about being cautious and viewing human nature in its ugly realism. That is not in necessary conflict with a vision of “welfare”. David is right. People demand “welfare”. What vision of “welfare” will Conservatives put forward? Surely, it can’t be our best effort to propose dismantling what little semblance of security and “welfare” middle class folks have left.

  • miked1949

    I so wish that you and your ilk had taken up theoretical physics rather than theoretical economics. You could have tested your theories on movements of space objects rather than on my world and how it works. I’m sure that physics would have required a lot more study but the theories would not put our country at risk. One thing I am sure of; you, and your brethren in fevered thought, will not suffer one day of deprivation if your theories don’t work out. You’ll huff and puff and strut your stuff but you are so outside of the mainstream economically that you are risking nothing but other people’s lives and a reputation for more theories than actual work.

    • WillyP

      To whom is your post addressed:
      The welfare state nannies, or those who favor traditionally limited American government?

  • Assorted links — Marginal Revolution

    [...] not obliged to use honorifics, or rather, is prohibited from using them, is the emperor.”3. David Frum on the welfare state.4. The culture that is Mexico.5. Edward O. Wilson changes his mind on altruism.6. Dilbert on [...]

  • ottovbvs

    Don’t feed the trolls, fill your time with useful pastimes like composing Limericks.

    [i]There was a young Dittohead called Jimbo
    Who didn’t know his ass from his elbow
    So what, said he, these numbers mean nothing to me
    Since when was I interested in economic real-ity

    But you’ll look like a fool
    Said a voice from above
    That’s nothing to me
    It’s a role I love, and anyway, it fits like a glove.[/i]

    • WillyP

      To Otter von Bismarck:

      Why don’t you leave the limericks to the poets, and the budget discussions to the adults?

    • JimBob

      Buffoon, you don’t live reality. The Welfare state is collapsing. It is called demographics and medical technology. People live much longer.

      We can no longer afford the New Deal and Great Society.

      • WillyP

        JimBob,
        Of course, you’re 99% correct. The only thing is, although the welfare state we know is collapsing, we do not yet know what they seek to replace it with. Welfare statism was always an awkward (and ultimately transient) fit with our Constitution.

        The courts will rewrite the meaning of everything. It’s a lot easier than altering the Constitution formally.

        I should make it clear that I don’t believe this is yet a foregone conclusion. We (the Tea Party) need to organize and hold Republican feet to the fire. Our message is popular, and our enemies are easily exposed. S&P just handed us a big talking point, by pointing out the obvious. Our debt is unsustainable, and for that we can thank Obama and his radicalized Democrat party.

        • SFTor1

          WillyP:

          The vast bulk of the national debt belongs to the Republicans. Fact.

          That makes you a liar.

        • kuri3460

          I should make it clear that I don’t believe this is yet a foregone conclusion. We (the Tea Party) need to organize and hold Republican feet to the fire. Our message is popular, and our enemies are easily exposed. S&P just handed us a big talking point, by pointing out the obvious. Our debt is unsustainable, and for that we can thank Obama and his radicalized Democrat party.

          Willy, you’ve successfully hit every Republican talking point, but I think that’s about all you’ve done successfully.

          The world is far more complicated than what the Tea Party seems to be suggesting, which is that high taxes + waste + unions + welfare moms/illegal immigrants = the cause of all of our problems.

          All you win is the support of all the people who were going to vote Republican anyway.

  • ottovbvs

    There was a young buffoon called Jimbo
    A dedicated medical techno
    I’ll live forever said Jimbo
    If we’d just stop spending on wetbacks from Mex-ico

  • WillyP

    regressing into 4th rate limerick-making is a sign of dementia.

    otter just doesn’t know what to say now that Obamer has started a 3rd war and bankrupted the nation. we’d feel bad for him if he weren’t such a devious individual.

    of course, he’s a side show freak: curious to observe, but to be left in the circus.

    the real challenge here is spreading the message locally in our own districts, so we can win elections and clear out this marxist mush.

    • ottovbvs

      There was a young Austrian called Willy
      Whose ideas were generally silly
      His Willy was small, but that wasn’t all
      He was deeply in love with Rand Paul.

      When your willy is small
      It’s a mistake to fall
      For young politicians at all
      Particularly, when they’re off the wall.

      • WillyP

        As with the other freaks paraded out for spectacle by their sleazy masters, one can only stare at the limerick-making, pea-brained weasel for so long before re-entering the world of regular humans.

  • Sinnombre

    Let’s give credit where it is due. In terms of expansion of the national debt, the guy who stands in first place is no other than the great W. The lowly Obama doesn’t come close. And while we are at it, let’s not forget the saint himself, Ronnie.

  • WillyP

    right, sure, i’m sure…

    2007 Bush budget: $2.8 trillion

    2011 proposed O budget: $3.7 trillion

    Another trillion in 4 years? Yes, how “lowly.”

    Delusions, delusions!

    • ottovbvs

      Said Willy P, when your willy is small
      You have to be satisfied with anything at all
      And when it’s over
      You can also go for a walk, with Rover.

      • WillyP

        so says the uber-sophisticated “oxford educated CEO of a mid sized company.”

        liar liar. pants on fire.

        care to tell us who you really are, or who you work for? no?

        could it be because you’re a bought and paid for hack?

        • ottovbvs

          Of course Willy if you’d had a decent education yourself you’d know that noted Limerick writers included Lear, Kipling, Twain, H. G. Wells, Auden, Galsworthy, Joyce, Lewis Carroll, Updike, Huxley, and Shaw. And wasn’t Auden professor of poetry at Oxford and Carroll a professor of mathematics at Oxford? High intelligence and an ability to laugh at the ridiculous (ie. you) aren’t incompatible. And btw I never said I went to Oxford.

        • WillyP

          I have nothing against limericks or poets. I have something against weasels.

          As for having a decent education: as these things go I had one of the better formal schooling experiences in the world. Yet I maintain that schooling can only get you so far – education is a personal matter, and a mush-brained weasel of letters is still a mush-brained weasel.

  • snowdeal.org - The 400.

    [...] the richest 400 people in the country are worth nearly as much as the poorest 57 million households. former economic speechwriter for President George W. Bush, david frum says conservatism’s task is to shape that social insurance state, not repeal it. [...]

    • JimBob

      Frum is no conservative. He’s a liberal with an Israel first foreign policy agenda.

  • jwbeeno

    Wow, I never thought about it like that before. Makes sense

    http://www.total-privacy.int.tc

  • ottovbvs

    WillyP // Apr 18, 2011 at 3:21 pm

    as these things go I had one of the better formal schooling experiences in the world.

    Your parents should demand a refund.

    • WillyP

      “‘Otter the Terrible.’” The man spoke aloud outside a tent in rural Oklahoma, reading the sign pitched above. Next to the words was a portrait of a disfigured man, covered in mangy fur, with what appeared to be a long snout, whiskers, and a fish, still flapping in the sharp teeth of his narrow jaw. Turning to his associate, he said “Haven’t we seen this act before?”

      “Yes, we have,” the associate replied, sounding bored. “He was the traveling feature at Coney Island’s famed Freak Show a few years back.”

      “Oh right, now I remember. The crowd gasped in horror at the sight of his ugly head when they brought him out. He was hideous, and clearly not house broken. They expected him to lash out at his trainer like some wild jungle beast. But his bark was worse than his bite, and a sharp snap of the whip sent him cowering into the corner. The crowd was disappointed.”

      The associate rolled his eyes. “Exactly. There’s little thrill in watching a lion tamer command a timid cub. Likewise, a simple deformed man that resembles a weasel with a penchant for bluster is a fleeting attraction. Rumor is this is his last show… suffice to say they won’t be putting him out to stud, or anything like that. Probably just knock him in the head and throw him back in the river where they found him.”

  • nuser

    “The pebbles are squabbling” (Musgrave)

  • WillyP

    squabbling indeed. what else to do when the debate is over?

    you must admit i paint a pretty vivid picture of otter.

    • ottovbvs

      There was a young man called Willy
      His thought of himself as just brilly
      When others were slow, his genius to laud
      He said I’m the greatest, honest to gawd.

  • nuser

    “Candy is dandy, but liquor is quicker.” (Ogden Nash)

    • ottovbvs

      Definitely my preference. I’m enjoying a martini at the momento. Perhaps it will sharpen still further my limerick writing skills.

  • WillyP

    Otto: You shut your mouth! You shut it now! Why I oughta… I’d slap you if my wrist wasn’t so limp.
    http://www.frumforum.com/europes-newest-budget-bust#comment-266660

    • ottovbvs

      Willy P was as mad as hatter
      He said I’ll teach that Otto, he’s just a ratter,
      Trouble was, Willy’s wrist was weak as his mind
      So when he tried to batter, otto bit him in the asser.

      • WillyP

        imitation is the purest form of flattery

        hahahahaha perfect illustration of your estimable abilities!

        • ottovbvs

          Willy P’s willy doesn’t work
          So he try’s to compensate by going berserk
          Despite these intermittent displays of madness
          The final impression is one of sadness.

  • JimmyBobby

    So Frum wants the social safety net to be there when it’s needed, but not when it isn’t. Kind of like, I only want my seat belt on the moment before I have a car crash — otherwise, no, because it restricts my freedom.

    Right.

    Also, the idea that the Fed “causes” inflation is baloney, along with a number of other things he takes as “given.” Like, recessions are all created by inflation which is created by the Fed. Utter nonsense. We just had a huge recession with ZERO inflation.

    There isn’t time to blow holes in a lot of the other things he says.

    At the end of the article, he does ask the right question — how do we champion individual effort in the context of a “state” that provides social welfare. Well, if you ask me, that’s what we’ve been doing ever since the social welfare state was born — the U.S. has been the most dynamic, creative and innovative place on Earth long after FDR and LBJ.

    What’s the complaint, again?

  • weiner

    Honestly, this is a really brave and impressive article. Very quietly it may be the most important American conservative article of this generation. It deserves more attention. Congratulations to you Mr. Frum.