Category Archives: Why Americans don’t trust their Government.

Sore Winners and Sore Losers from Obamacare.

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Medicare provides health insurance for 98 percent of Americans aged 65 and over.

Who lacked/lacks health insurance before/since the Affordable Care Act (ACA)?

Group                                                  Before ACA               Today              Difference.

All Americans under 65                      16.4 percent                11.3 percent    -31 percent.

Hispanic-Mexicans                              26.2 percent                16.5 percent    -37 percent

Blacks                                                             24.1 percent                16.1 percent    -33 percent.

Whites                                                14.1 percent                10.0 percent    -29 percent

Asians                                                             13.6 percent                 9.7 percent    -29 percent

Aged between 18 and 34,                   21.6 percent                14.2 percent    -34 percent[1]

Aged 35 to 44                                     16.4 percent                11.2 percent    -32 percent

Aged 45 to 54                                     15.0 percent                10.6 percent    -29 percent

Aged 55 to 64                                                 12.7 percent.               9.1 percent    -28 percent

Poorest 20 percent of neighborhoods 26.4 percent                17.5 percent    -36 percent

Next poorest 20 percent                      21.6 percent                14.3 percent    -34 percent

Middle 20 percent,                              17.6 percent                11.9 percent   -33 percent

Next highest 20 percent                      13.4 percent                 9.4 percent    -30 percent

Richest 20 percent                               6.5 percent                6.5 percent    ————–

 

Overall and within almost all groups, the ACA has reduced the uninsured by about one-third. Still, two-thirds of those who were uninsured before the ACA remain uninsured today.

Why hasn’t a plan intended to provide almost all Americans with health insurance come anywhere near to achieving that goal? In large measure, the failures of this part of the ACA go back to its design. The ACA originally sought to coerce the states into expanding Medicaid to cover many of those who are uninsured today. In 2012, the Supreme Court rejected that component of the plan. States were left free to expand or not expand Medicaid. So far, twenty-seven states have chosen to expand Medicaid, while twenty-three have rejected it.

Why did many states reject Medicaid expansion? One answer would be Republican wrecking tactics directed against the center-piece of President Obama’s agenda. However, not all Republican-led states rejected expansion and not all Democratic-led states accepted it.

It is possible that rational calculation played a role. The states that rejected expansion had an average uninsured rate of 18.2 percent before the ACA, while those that accepted expansion had an average uninsured rate of 14.9 percent. Federal subsidies for expanded Medicaid are scheduled to be reduced in a few years. States will have to increase their share of the expanded costs. Many of the states that rejected Medicaid expansion pursue a low-tax strategy to attract business. Other parts of the ACA were not completely thought through. Perhaps the failure to make the complete Federal subsidy permanent is another such “glitch.” It will take a Democratic House, Senate, and White House to fix it.

Even in states that expanded Medicare, 9.2 percent of people remain without insurance.   Why? Ignorance? A libertarian resistance to coercive good intentions? Most Republicans have an ideological opposition to an “entitlement” that was forced on them by Democrats. Unlike post-war Europe, there is no consensus on this issue.

Kevin Quealy and Margot Sanger-Katz, “Obama’s Health Law: Who Was Helped Most,” NYT, 29 October 2014.

[1] Understates the gain because it doesn’t include the three million people who are allowed to remain on parents’ insurance.

Eye in the Sky.

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Some time ago the courts decided that no one has a right to privacy when they are on the streets or in public places. Initially, this applied, in part, to the many surveillance cameras installed by banks and stores and apartment buildings. Then the development of digital cameras made surveillance video available to watchers in real time and it made it simple to transfer the images between widely separated computers. Then computer geeks developed face-recognition software and programs that detected “anomalous behavior.” All of these were great crime-fighting tools, at least according to the police who sing the non-specific praises of the cameras as deterrents and crime-solving aids.

With this doorway open, since 9-11 the Department of Homeland Security has been making grants to cities to fund the installation of security cameras targeting public places. These cameras supplement the already existing security cameras installed by banks, stores, and office buildings. Madison, Wisconsin—a bastion of Mid-Western liberalism–is putting in 32 cameras; Chicago and Baltimore—hotbeds of urban crime which actually don’t give a rip about Islamic terrorism—are installing thousands of cameras and are linking them to the existing systems of private cameras. The most elaborate system is that of the Lower Manhattan Security Initiative: by 2010, 3,000 cameras will be in place throughout Wall Street and the World Trade Center area. In addition, the system includes license plate readers connected to computers that cross reference the numbers of suspect vehicles and which share images with the Department of Homeland Security and the EffaBeeEye.

Now there is a new layer of observation: police, government, and private drones. The police are hot to use drones. In the 1980s the Supreme Court held that the police don’t need a warrant to observe private property from public airspace. [NB: What is “public airspace”? So far as I can tell, anything at a height of 500 feet or above is clearly public airspace; anything 83 feet or below is private airspace; and what is in-between is a little murky. Are you allowed to shoot drones under 83 feet like skeet?] Drones can be fitted with high-resolution cameras, infra-red sensors, license plate-readers, and directional microphones. They are quieter and smaller than helicopters, reducing the chance that people will know that they are being observed without a warrant. If you keep your shades pulled down, can they “assume” you’re running a grow house?

Are there problems with this program? In the eyes of individual rights advocates on the left and right, the answer is definitely yes. While government agencies will watch millions of people in public places in hopes of catching a few terrorists before an attack, it is more likely that they only will be able to figure out what happened after the attack. Will people just become habituated to being watched in public places? In a generation, will they accept the possibility of being watched in semi-public places? What happens when surveillance images leak from the government agency to the public sphere? See: http://www.youtube.com/watch?v=8zYRYh6cQ2g The clip is fun to watch, except that it is a public traffic camera with the film leaked to provide private entertainment. What if a mini-drone lands on your bathroom window sill one morning and catches you in the shower? Some Peeping Tom at home or cops finding a fun use for the technology paid for by the DEA or property seizures from teen-age druggies driving their Dad’s BMW? In the eyes of most Americans, however, more surveillance cameras are just fine. (“The drone over your backyard,” The Week, 15 June 2012, p. 11.)

Freedom from Farmers.

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Back in the 1920s and 1930s almost half of Americans lived in communities of fewer than 2,000 people and a full quarter of them lived in rural areas. Massive over-production of basic crops led to an agricultural depression long before the onset of the Great Depression. The larger collapse of the American economy in 1929 eventually led to an effort to address the agricultural problems. The New Deal’s Agricultural Adjustment Act tried to push up farm incomes. The Act linked desirable prices to their highest recorded level, then combined subsidies with payments to not grow crops as a way to meet desirable incomes for farmers. Generally, it worked. The program had been intended as a temporary “emergency” measure, but Congress made it permanent in 1949.

Since then the program has grown while the number of farmers has been reduced. Until recently, the government made direct payments to farmers and picked up almost two-thirds of the cost of insurance against weather-related problems. All farmers, great and small, have benefitted from this program: the average farmer made $87,000 a year in 2011, largely thanks to federal welfare, compared to the national average income of $67,000. At the same time, the “family farm” has become largely imaginary. American farming has become concentrated in the hands of a few giant “agribusinesses.” Since most of the beneficiaries of these programs are in a minority of “Red” states, Republicans bought off the Democrats by including the food-stamp program in the Farm Bill.[1] Probably not what Thomas Jefferson had in mind. Or maybe it was.

In 1973 and again in 1979 oil supplies from the Middle East were interrupted and gasoline prices soared. People eager to insulate the American economy from such price shocks urged the development of alternative fuels. One of the most prominent alternatives was ethanol—alcohol derived from plants. In particular, Middle Western farm states pushed for the conversion of corn into ethanol. However, other adaptations provided a first response. Not until 1995 did the United States government begin to subsidize the production of corn-based ethanol. This program grew tremendously over the next decade as Congress. In 2007 the United States produced about 5 billion gallons of ethanol from corn. It seems likely to grow even larger: in 2007 Barack Obama told an Iowa audience that he favored raising ethanol production to 65 billion gallons by 2030.

So far, so good. Is there a down-side to this pursuit of ethanol as an alternative fuel? Yes, there are several. First of all, corn-based ethanol is incredibly inefficient compared to other forms of fuel. The “energy balance” of any fuel is the ratio between the amount of energy produced and the energy consumed to produce it. Gasoline produces five times the amount of energy needed to produce it. Sugar cane-based ethanol yields eight times as much energy as is needed to produce it. Corn-based ethanol, however, produces only about 1.3 times as much energy as is needed to produce it. In short, you get virtually no benefit for the energy expenditure. Second, ethanol absorbs water. As a result, it cannot be shipped by existing gasoline pipelines and it cannot be mixed to more than a 1:9 ratio with gasoline because it would corrode engine parts. In turn, this means that ethanol has to be shipped by less energy-efficient tanker trucks and that it can only reduce oil-based gasoline consumption by 10 percent. Third, because the energy balance of corn-based ethanol is so low, it takes huge amounts of corn to produce much ethanol. About one-fifth of the existing corn crop is devoted to ethanol. (To reach President Obama’s goal of 65 billion gallons of ethanol by 2030 would require using thirteen times as much corn as is used currently—or about 250 percent of current total corn production. Since corn is used for many different things, the existing 80 percent devoted to producing corn for those purposes would have to remain in cultivation. This means that the real level of corn production would have to go well above triple the present level.)   Devoting corn to ethanol drives up the price of all other corn-derived products: Mexican tortillas, corn-fed beef, anything sweetened with corn-syrup or fried in corn-oil. Shifting land from producing something else to producing subsidized-corn then drives up the price of other goods.

If the energy balance of ethanol is poor, that of campaign contributions is not. One agribusiness giant made $3 million in campaign contributions between 2000 and 2013, but received subsidies for producing ethanol worth $10 billion.

[1] Although, in 2013, in one of those fits of insanity that have become their hall-mark, Republicans decided to shred the food-stamp program. President Obama threatened to veto any bill that didn’t fund food-stamps. “A welfare program for agribusiness,” The Week, 16-23 August 2013, p. 13.

 

The economic mess

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Every–bored-to-tears–schoolboy knows who propounded the idea of a “social contract”: Thomas Hobbes and John Locke.  The idea of a social contract on the distribution of income has formed one of the pillars of “neo-capitalism” since 1945.  However, that basic idea has witnessed several successive versions.  From 1945 to the Reagan Administration in the 1980s, the US combined high tax rates on the wealthy with the channeling of the gains in productivity to employees.  Eventually, business people pushed back against what they saw an an unfair deal.  A new social contract emerged in which much higher incomes for the wealthy were accepted so long as the real incomes for the middle class continued to rise.  (All this is just my opinion.  In all likelihood, many of my historian friends would rain-down good-humored abuse on this interpretation.)  The financial crisis and the “Great Recession” then ruptured this second version of the social contract.

In 2007-2008 we had the financial crisis and the “Great Recession.”  In 2009 we started back up the road to prosperity.  American Gross Domestic Product (GDP, OK, cue Mort Sahl here) is up 6.7% over 2007.  Per-capita disposable income rose 4.2% between June 2009 and June 2014.  Well, some of us started back toward prosperity, but not all of us did.  In June 2009 the median family income was $55,589; in June 2014 it was $53,891 (in inflation-adjusted dollars).  That’s a 3.1% decline.

How can that be?  Well, the stock market is doing very well.  If you’re the kind of person who puts their  savings  into Vanguard accounts, then your the kind of person who probably has profited from the recovery.  (On the other hand, you’re also the kind of person who took a bath in the recession.  Not that the people at the New York Times give a rip about your experience.)  If you’re the kind of person who depends on wages or salary and your home is your chief investment, there is good reason to feel like the “recovery” is a joke.  (Like a bucket of water propped on top of a partly-open door.  “Hey, can you come in here for a minute?”)  Worse still, the 1999 peak in real household income was a little higher than the 2007 (pre-recession) peak in income.  Five years into the “recovery” and we aren’t even back to the 2007 level and the 2007 level wasn’t as high as the 1999 level.  In sum, we’ve actually had fifteen years of things not working right, rather than five or seven years of things not working right.  There’s probably something in the Bible about this.

One great challenge of the day is to figure out a new version of the social contract.  There has to be a way of achieving broadly-shared economic growth.  There isn’t much political consensus about what to do.  George W. Bush and Barack Obama, Republicans and Democrats all had or have high disapproval levels in public opinion polls.  A big chunk of voters seem to have swung from supporting Obama and the Democrats in 2008 to supporting the Tea Party faction of Republicans in 2010.  The 2014 mid-terms loom next month with no certain outcome.

Saying that there is no political consensus on action isn’t quite the same as saying that professional economists couldn’t come up with some solutions.  It’s just that neither the right or the left seems much interested in listening to what they have to say.  The flight from Keynesian solutions to the recession actually was widely shared.  It is inexplicable in rational terms, especially by Democrats who were going to be left holding the bag in future elections.  Yet it happened.  Probably the same goes for constructive policies aimed at building a better American future.

Paul Krugman, “How to Get it Wrong,” NYT, 15 September 2014.

Neil Irwin, “A Crisis of Faith in the Global Elite,” NYT, September 2014.

Neil Irwin, “Why the Middle Class Isn’t Buying the Talk About a Strong Recovery,” NYT, 22 August 2014.

Why don’t Americans trust their Government? I

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“Enemy of the State” (1998, dir. Tony Scott[1]). The NSA has been pressing for legislation that will allow it to slip the leash, but a Congressman is in the way. A top NSA official organizes his killing—meant to look like a suicide—only to discover that a remote camera dedicated to another, innocuous purpose, recorded the killing. HA! The hunt for the video record is on. The wildlife observer who had set up the remote camera—this is hilarious: he is astonished to find that government officials in a democracy are just as savage as wolves in the wild—ends up dead in an “accident.”   He had passed a CD of the scene to an unwitting acquaintance (played by Denzel Washington). So the full weight of the government’s information apparatus—all the CCTV cameras, phone taps, internet intercepts–falls on the acquaintance. It turns out that the government not only can listen to what you say and watch what you do, it can also plant information in the computer records of your life. Soon, the guy played by Denzel has been fired from his job, had his bank account frozen, and been tossed out of the house by his outraged wife. Eventually, a former government tech surveillance guy turned outlaw (played by Gene Hackman) saves the day by using the techniques of the NSA against the bad guys.

“Shooter” (2007, dir. Antoine Fuqua). Government agents get former Marine sniper Bob Lee Swagger (played by Mark Wahlberg) to come out of retirement to consult on a supposed plot to kill an important figure in Philadelphia. Turns out that they are setting up Swagger as the fall guy for a government-sponsored assassination done at the behest of big corporations—which own the US government. (See: “Citizens United” in the mythology of Democrats.) Swagger turns out to be hard to kill and hard to catch—Semper Fi—and he hunts answers. A newbie FBI agent (played by Michael Pena) gets staked out as sacrificial goat because he didn’t believe the stuff the bosses were saying, but Swagger turns him into an ally and they find the truth. After much shooting, the Truth comes out—within a restricted circle in the know. The rest of us are left in the dark, although it is implied that Survivalism isn’t as crazy as it sounds.

“The Bourne Legacy (2012, dir. Tony Gilroy). As anyone who has seen the earlier installments in the series knows, the US government created a bunch of psychologically-enhanced assassins to put a sharp edge on American action in the world. In this installment, a new generation of agents has also been chemically-enhanced into near-Marvel Comics characters. Scandal forces the government to burn down the program, but one of the agents, Aaron Cross, escapes and goes in search of answers. In pursuit of him, the US commandeers all sorts of surveillance systems from weather satellites to toll-booth cameras to CCTV security cameras in airports to credit card records to airline seating charts. In the end Cross (played by Jeremy Renner) and a rogue scientist from the program (played by Rachel Weisz), sail away, sail away, sail away on a fishing boat bound for the southern islands of the Philippines. Still, they’re careful to stay under an awning all the time, just in case of, you know, drones.

The conventions of these paranoid fantasies require a renegade product of evil covert government actions, a basically decent participant in those actions who is appalled to discover what s/he has been doing, and government officials who have been carried away in their pursuit of their duty to protect the dough-headed citizens of a fat, lazy America. (See: “Margin Call”; see: Edward Snowden—I mean “Edward Scissorhands”!)

[1] He purportedly committed suicide in 2012.