Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

12 August 2012

Paul Ryan as Sidekick: What it Means

Once in a while, a contender telegraphs both his tactics and his strategy to the whole world. Mitt Romney has done that in picking Paul Ryan as his running mate.

So far (you may have noticed) Mitt Romney’s campaign has had all the subtlety and nuance of a braying alpha ape. “Vote for me,” he has said in effect, “because I’m smarter than the President. In his 3.5 years in office, he hasn’t yet solved the problems that my party took two generations to cause. So he’s incompetent, and you need someone smarter, like me. Didn’t I say me!?”

As I’ve pointed out before, that self-love approach didn’t work so well for John Kerry, probably because Kerry was and is a much more modest man. Eventually, voters get tired of hearing a candidate talk about himself (or herself), just as they did with Hillary.

Self-love and self-promotion are not winning strategies. The rich folks who are bankrolling Mitt so they can continue raping our country and us are starting to get worried.

There’s also another reason for worry in the Mitt camp. Mitt got the nomination in part by pandering to the various extremist groups that now compose the GOP.

His pandering was hardly a smashing success. Most of the people who believe that outlawing abortion, crushing gays, and forcing everyone to go to church would solve all our problems are Mitt skeptics, to say the least.

And Mitt himself hasn’t helped. He has pointed out, again and again, that we don’t have enough jobs. (Under all that overweening ego, he actually is a fairly smart guy. His character is another matter.) So he couldn’t help also pointing out that jobs have something to do with elusive concepts of economics and business.

In banging the gong of jobs so relentlessly, Mitt has implanted in the dim minds of his likely supporters unfortunate notions of cause and effect. If economics and business create jobs, then stopping abortions, bashing gays, and going to church in ever-greater numbers probably won’t—unless you belong to the clergy. So Mitt’s current pitch to the general electorate, which is “jobs, jobs, jobs,” has made all his acrobatic flip-flopping on hot-button issues obsolete.

And that’s just the beginning of Mitt’s problems. Not only does he have no real issues besides jobs. He has no concrete plans to create them.

All he has is the GOP’s Little Red Book of obsolete dogma: less regulation, more pollution, and more freedom for bankers to make mistakes, which somehow always seem to enrich them and impoverish the rest of us. (And don’t forget that Mitt himself is an investment banker, of the private-equity subspecies.)

The closest thing Mitt has to a concrete “plan” for anything, besides provoking a trade war with China or a real war with Iran, is cutting subsidies for renewable energy and continuing them for fossil fuels.

Complaints but no plan, hot-button issues but no jobs. Ego, but no substance. As Texans like to say, Mitt is all hat and no cattle.

Enter Paul Ryan. Like most of the GOP, he’s not much good at solving problems or explaining anything complex. But he’s a brilliant demagogue. He has a single drum—the deficit—that he’s going to bang as hard as he can until November.

He’s going to do that consistently and obsessively for a simple reason: it’s the only real issue for which the GOP has even begun to think about real solutions. On all the other nine big issues that have festered for an average of 17.5 years, the GOP has come up dry.

Now banging the deficit drum has two substantive difficulties. The deficit is a long-term problem, and one that Dubya caused. (Remember Bill Clinton’s surpluses?)

Dubya gave us an economic collapse and two unnecessary wars. He funded the bankers’ rescue mostly off budget, through the Fed, and he funded both wars nearly entirely of off-budget.

When Dubya was in office, no GOP pol worried about deficits. Cheney famously said that Reagan proved deficits don’t matter.

From a political perspective, Cheney may have been right. Deficits don’t matter politically if you can demagogue them cleverly enough to blame them on your hapless opponents. And that, of course, is precisely what the GOP is trying to do.

Even more important, deficits can actually help you if you can use them as a political lever to achieve long-term ulterior goals. That is also exactly what the GOP is doing: using deficits as an excuse to cut back Social Security and Medicare—the GOP’s consistent goals since these programs were adopted.

Don’t get me wrong. Ryan is a clever, ruthless and monomaniacal demagogue. He has Ross Perot’s soul but a grizzled pol’s experience. For political PR, he’s one of the best. He even has a modicum of flexibility: when his “plan” to privatize Medicare utterly didn’t fly, he proposed a dual system in which Medicare would compete with subsidized private insurance.

The problem, as I’ve pointed out at length, is that competition and health insurance are contradictions in terms. For real competition, you need lots of small companies competing vigorously on an even playing field. For health insurance, you need firms big enough to have a huge pool of health risks that can lower premiums.

The smaller the number of competing health-insurance firms and the larger the risk pool in each, the better. But that’s not competition. This is what economists call an inherent and irreconcilable contradiction. (Other types of insurance, such as auto, fire and casualty, don’t have the same problem, because their range, number and size of insured risks is much smaller.)

The human body is prey to an almost infinite number of ills and injuries. So the more healthy people you have paying premiums, the easier it is for everyone to afford them. That, in essence, is the reason for “Obamacare” subsidizing 35 million new customers. That, in essence, is the reason for the “mandate” (or “tax,” if you prefer) that Chief Justice Roberts just upheld. And that, in essence, is the reason why every other developed nation has some sort of national health insurance, usually operating side-by-side with a private system for more affluent people.

What we have now is the worst of all worlds. We have our insurance pools balkanized by state, by employer, and by competing firm. So virtually all of our privatized pools are suboptimal in size, many wildly suboptimal. Yet at the same time, interstate barriers, state-by-state regulation and employer selection of policies thwart real competition.

With all of our expensive diagnostic and treatment options today, it probably takes a pool of ten million or more even to begin to provide reasonable premiums. But only seven of our fifty states (California, Florida, Illinois, New York, Ohio, Pennsylvania and Texas) have more than ten million population. So 43 likely have suboptimal pools, without even considering the further balkanization that employer-based private markets create.

This analysis solves the riddle of our exorbitant health-care system, which costs more than twice as much as any other in the developed world. The administrative expense of accounting for multiple, private firms with incompatible rules and computer systems (and their private profit) is probably not much more than 25%. The profit itself is probably not much more than 25%, due both to what competition we have and political pressure on state insurance regulators.

So both expenses together don’t get you to much more than 50%. Where does the other 50% come from? Suboptimal risk pools and more expensive technology. It’s hard to conceive of any other explanation.

Ryan wants to make all this worse. He wants to start with Medicaid, on the backs of the poor. There’s much more money in Medicare, but the poor are increasingly powerless in our society, and GOP vote-suppression efforts will soon deprive many of them of the right to vote. Good demagogue and practical pol that he is, Ryan wants to begin with low-hanging fruit.

But his real prize is Medicare. There’s real money there, and it has the biggest risk pool in the nation. Ryan wants to turn it into another privatized, balkanized, sub-optimal set of small pools. Then he wants to add private profit and increased administrative expense to boot.

He wants to do all this on the backs of seniors, who most need health care and whose strength to deal with economic reversals and “gotcha!” policy terms is waning. No doubt he hopes that, as seniors who remember Medicare die off, the electorate will forget about optimizing risk pools and see expensive private insurance, with all its “gotcha!” clauses, as inevitable, like death and taxes.

Ryan wants to do this, of course, while preserving the federal government’s power to finance rogue bankers with trillions of newly printed dollars and the military-industrial complex’s “right” to profit from trillions in obsolete Cold-War weaponry.

That’s the GOP’s “plan.” That’s what it’s been ever since Social Security and Medicare were adopted. The only significant change is a change in strategy. Instead of abolishing Social Security and Medicare outright, the GOP now wants to turn them into engines of private profit. The size of the risk pools and consequently the premiums be damned.

These folks are persistent, relentless and ruthless. And now, with Ryan, they have a much more skilled salesman. The only question remaining is whether Mr. Ego and he can pull the wool over enough voters’ eyes to pull off their master plan.

If they can, our middle class’ rolling decline will become a plummet. And none of this, please recall, will create a single industrial job. It will just advance the cause of making undeserving folk rich by shuffling paper.

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