The worst of both worlds

President Bush is insisting that Social Security is in a crisis. It's a problem, to be sure, but a relatively fixable and distant one. Social Security won't even have a deficit until 2018. Medicare, on the other hand, is already in the red. It's Medicare, not Social Security, that threatens our economy the most, as Fareed Zakaria argues in a recent column.

There are two philosophically opposed models of health care: socialized and privatized. They each have upsides and downsides. It's possible to have elements of one model in a system dominated by the other. But America's particular blend of socialized and privatized health care is extremely dysfunctional and obscenely expensive by its very nature.

Canada's health care system is largely socialized. The big downside of that is how Canadians don't have much incentive to restrain their use of medical services (or even to shop around for better prices), because they're not spending their own money. But the upside is that as an enormous single purchaser of health care, the Canadian government has great bargaining power to get low prices.

America's system has Canada's downside, but not its upside. A great many Americans receive socialized health care through Medicare, Medicaid, and state programs. They, like Canadians, have a lack of incentive for restraint (although this is not complete because of co-payments and other measures). This problem has been made worse by President Bush's addition of prescription drug benefits to Medicare, and his threat to veto any attempt to pare it down. Also, unlike Canada, America can't take advantage of its monopsony position (the opposite of a monopoly), because, as Zakaria observes, "in America the government cannot (often by law) exercise its clout as a buyer to drive down costs."

In a system more like an "ownership society," citizens would pony up their own money for health care. These citizens would have every incentive to spend that money wisely. Health care providers would then have to compete for the money of very discriminating customers by lowering prices and improving quality. The upside is that health care as a whole would become cheaper and better. The downside is that, no matter how much prices drop, there will always be some people too poor to afford to pay.

America doesn't have the benefits of a free market in health care because it's largely socialized and anti-competitive. And, since even our socialized health care isn't universal, it still leaves some completely without health insurance. Again, it's all downside and no upside.

As I see it America has two good health care policy choices. It could have a monopsony-strengthened socialized system, tempered with "privatization" measures like co-payments. Or, (and this is my strong preference) it could have a competition-strengthened privatized system, tempered with "socialization" measures like a "welfare-to-work" version of Medicaid. The system's current blend is a lose-lose situation. As more and more baby boomers qualify for Medicare, unless the system is wisely reformed, it will soon present a true crisis.

What "Sin" means to me

I saw "Sin City" in Hanford, California, because what the hell else was I going to do in Hanford, California? While it is closer to good than great, Robert Rodriguez's adaptation of Frank Miller's comic series is grisly and gorgeous. It was worth every penny of the price of admission, which is quite an accomplishment to me, given that most Hollywood movies make me feel ripped off of even the time invested.

Mickey Rourke was excellent in the role of a psycho-killer brick of an anti-hero. Bruce Willis was in top form as yet another, if edgier, permutation of his Die Hard character. Clive Owen was compelling as ever as he continues to take Rupert Everett's place in Hollywood.

The three actors mentioned are the leads of three connected, but independent stories which make up the film. While each character has a different profession (Rourke's low-life do-gooder, Willis' ailing cop, Owen's private investigator), they are all essentially the same character. Not only that, but the character template they share is the same which has dominated film and literature storylines ever since being distilled by Hemingway. The "Hemingway hero" is experienced, no-nonsense, quiet, noble, hyper-competent, and male. He is usually accompanied by women who are much more prone to emotion and mistakes. The kick-ass hookers of "Sin City" are a notable exception. Fortunately the homogeneity of the heroes is in no way distracting in "Sin City". There is a good reason for the success of the "Hemingway hero"; he is eternally compelling to men, because he's what we all want to be on some level.

Besides, the real draw of the film is what Peter Travers of Rolling Stone calls it's "bold, uncompromised vision". That vision is the result of the skill and creative spirit of Robert Rodriguez and his fidelity to the style of Frank Miller's source material. Together they have created a world that is as dank as Middle Earth according to Peter Jackson is majestic. The film has a climate of perpetual menace that stuck with me long after I left the theater.

That "Sin City" is a hit indicates some truths to me. One truth is that America is not as puritanical as many claim. Some values-voters quite like gratuitous sex and violence as long as it doesn't have "any of that queer stuff".

It also proves to me how wrong-headed the conglomerates who own comic book companies are. They demand that their comic-book publishing subsidiaries turn a decent profit, which is usually a reasonable expectation. In the case of this industry, that means turning out large numbers of titles revolving around the established, iconic characters: Superman, X-men, etc. These are strong characters to be sure, but such a strategy is very limiting creatively. So a lot of the top talent tell the stories they want to tell at independent labels. Meanwhile, the big labels still can't make big profits, even with their hard-nosed strategies. What makes it all worthwhile are the successful movies that are based on comic-book characters. Many of these lately have been from the scrappy independents, including "Sin City", "Hellboy", and "Ghost World". Even the successful "known quantity" movies (Spider-Man, Batman, etc) are based on stories told back when the big labels were small and scrappy themselves. If I were in charge of Marvel or DC Comics, I'd make the comics-publishing business a money-losing breeding ground for great stories, the best of which would be licensed for movies, cartoons, and other media that actually have a strong inherent profit model.

And finally, the success of "Sin City" proves to me how unforgivably stupid Disney (the parent company of Miramax which produced "Sin City") is. Every success that keeps this giant company afloat seems to be in spite of its management. Disney's string of traditional animation flops contrasts sharply with Pixar's perfect record. So you'd think Disney would cling desperately to their profit-sharing deal with Pixar. Instead they're on the verge of losing Pixar, because Michael Eisner refused to make nice with Steve Jobs. When the upcoming head of Disney Bob Iger was responsible for ABC, he tried to deep-six "Desperate Housewives" and "Lost" before they went on the air. He even went so far as to fire the executives who were promoting the two shows, which later became ABC's only saving graces of the new season. And finally, there's Miramax. Disney bought out Miramax with the idea that Miramax would continue to make low-budget artsy movies. Instead, Harvey and Bob Weinstein showed Eisner that it's not about high- versus low-budget. It's about high- versus low-quality. Miramax put out an unprecedented string of Oscar-conquering epics like "The English Patient" and "The Aviator". Eisner got mad, because they were competing with his simple-minded shlock like "The Alamo" and "Pearl Harbor". Now the Weinsteins are being forced out and both Miramax and Disney are much poorer for it. The success of "Sin City" is like the Weinstein brothers giving one last jab in the gut to the Walt Disney Corporation: Hollywood's big, fat, stupid, rich kid on the block.

Worse than starving?

I just attended a speech by Robert Reich, a very prominent pundit and Secretary of Labor under President Clinton. He opened by asking the audience to suppose he was a genie. As a genie, he could snap his fingers and automatically create a new world order in which there is more inequality of wealth, but everyone, even at the lowest level, is more wealthy than they otherwise would have been. He asked the audience if they would want the genie to bring that about. Being an audience in Berkeley, a very small minority (including myself) raised hands. This scenario, he argued, would be dangerous because people generally care more about their wealth in comparison with others than about their absolute level of wealth. So resentment over inequality would fester, and eventually would burst.

After his speech I went up to the stage to talk to him. I asked him to consider his genie scenario on a global scale. In the third world there are millions of people on the brink of starvation. For them, a change in their absolute level of wealth could be a matter of life and death. I asked him, "Isn't actual starvation in the third world more important than resentment over inequality in the first?" He responded that there are real ways that inequality can harm a person. Before he could continue, I asked, "Are they worse than starving?" Mr. Reich was uncharacteristically speechless, momentarily. Then, my friend who, unbeknownst to me had come up to the stage too, blurted out, "Well, yes, in some cases." Then some others in the crowd said some things, and instead of answering my question, Robert Reich said, "I'll let you guys argue it out," and moved on to other audience members.

I was extremely frustrated. Robert Reich is one of the most influential economic thinkers on the left. He's on National Public Radio every week, and he's regularly featured in the New York Times, the Wall Street Journal, and innumerable other publications. If economic policy drastically lurches to the left, it will largely be because of him and other thought-leaders, like NY Times columnist Paul Krugman. So, for him it's not necessarily an academic question. If he convinces enough people from his media pulpit, he could actually bring about a huge change. And the change he wants is to reduce absolute wealth for the sake of greater equality. Since absolute, not relative, poverty is a matter of life and death to millions of people, such a change would push a great many people off the starvation brink. Given the stakes involved, and given his position, Robert Reich should have had a ready answer to my question.

Spitzer dope-slaps the Journal

Some in Wall Street are now using New York Attorney-General Elliot Spitzer's name as a verb. Your car breaks down? You got Spitzered. You accidentally hit Reply-All for a sensitive e-mail? You just Spitzered yourself. You've been indicted for deliberately misleading investors? You were probably Spitzered by Spitzer himself. Now the Wall Street Journal, that paragon of publications, has been Spitzered (subscription required), in its own op-ed pages no less. And boy, was it satisfying to observe.

I've had a subscription to the Wall Street Journal for over a year. For the most part I'm pleased with its quality. I especially like when its articles discuss entrepreneurs, innovation, and market trends. I'm also a big fan of Walter Mossberg, the Journal's personal technology correspondent. But my stomach consistently turns whenever I venture to the back pages of section A, where its op-ed material resides. While, I am fervently pro-business and side with Republicans on many issues, the WSJ editorial columns take it to an ugly extreme.

For one thing, they are extremely partisan. Of course newspapers are not supposed to be impartial on their op-ed pages. But there is a difference between partiality and partisanship. The columns are so invariably in favor of Republicans and disdainful of Democrats, and so shrill in their tone, that they read like they were written by lobbyists instead of editors with strong, reasoned opinions. This compares poorly with other conservative publications, like The Economist, which will freely denounce conservatives, whether they be Republican or Tory, if they are acting corrupt, bigoted, or otherwise unseemly.

The Journal op-ed pages are also blindly supportive in their promotion of business interests. I believe strongly in letting businesses freely pursue profit, just as I believe in letting individuals freely pursue happiness. And I'm staunchly opposed to governments meddling in those pursuits excessively. However, businesses, just like individuals, are capable of stealing; and stealing is not okay. The Securities and Exchange Commission and other federal watchdogs have been lax in their enforcement of white collar crime; although they've improved after the Enron scandal. Elliot Spitzer has picked up the slack by prosecuting investment banks for tainted stock research, mutual funds for illegal trading practices, and now the insurance industry for price-fixing and improper accounting (just to name a few). On behalf of honest business-people and deceived investors everywhere, The Wall Street Journal should be aghast at the criminals and thankful to the Attorney General. Instead they accuse him of "overreach", and excuse the wrongdoers for just conducting business as usual. Spitzer finally struck back in a letter to the Journal, which to their credit, the editors printed today. He had four broad points:

"First, rather than "killing the goose that laid the golden egg,"...enforcement of the rules has helped level the playing field for honest corporations and has encouraged competition based on performance and value, not impropriety. The evidence is clear that the companies involved in these scandals were well aware of their wrongdoing. In fact, they had consciously decided to descend to the lowest common denominator based on the belief that competitors would violate the rules even if they didn't It was only when government stepped in to enforce legal and ethical boundaries that this downward spiral was stopped and true competition was restored.

Second, enforcement of the rules has helped prevent continued misallocation of capital. One of the less obvious effects of the investment banking scandal was the harm done to large, well-established corporations. The stocks of these companies languished in the face of competition from unfairly hyped dot-com stocks. These companies were reporting honest numbers and playing fairly, but they just couldn't attract the capital they needed to grow and create jobs. That wasn't good for them or for the economy overall...

Third, enforcement of the rules has helped maintain investor confidence. If people think the market is rigged, if they feel victimized by fraud and anticompetitive behavior, they simply won't invest. They'll pull out of the markets as quickly as they can...

Fourth, balanced enforcement has strengthened individual companies as well as the markets. This may seem counterintuitive, but many of the companies that were the targets of enforcement actions by my office in the last several years have emerged stronger after reforms were implemented."

While government shouldn't put undue constraints on business, we do need it to, as Spitzer wrote, "ensure that there is integrity, transparency, and fair play in the markets." There is a strong precedent for this. Spitzer compared his enforcement today with the trust-busting of Theodore Roosevelt at the beginning of the 20th century. Heck, even Adam Smith, the father of modern capitalism, thought governments should prevent monopolies and other market-distorting maladies. So why is the Journal so quick to defend the insurance industry's price-fixing?

The Wall Street Journal op-ed department needs to break out of its "team sports" attitude toward public discourse. We already gets enough of that from cable news (read Fareed Zakaria's excellent column on the matter). Meanwhile, the London-based Financial Times is looking more and more appealing.

Arrogant and out of control

Reuters AlertNet - DeLay vows judiciary changes after Schiavo case

Tom DeLay reached the summit of hypocrisy yesterday when he called "the judiciary" (which presumably means the entire judicial branch of the U.S. government) "arrogant" and "out of control" (words which could be used to title his biography).

This is gruff stuff, even coming from a legislator known as "the hammer". Not satisfied with demolishing checks and balances within the Texas and U.S. legislatures, DeLay turned his hammer on the separation of powers by trying to force his will on the courts. Now he wants to hold the courts accountable for having dared to stand in his way as he attempted to trample the Constitution.

I for one am relieved that the judiciary remains (for the time being) "out of control". Should the courts ever fall under the sway of the Executive or Legislative branch, an essential safeguard against tyranny will be eliminated.

Tom DeLay needs to freshen up on his high school civics. He needs to understand that a Republican government majority with a strong streak of religious populism must not trump the separation of powers, or moreover, the rule of law. I personally think the judiciary made the wrong decision in the Schiavo case. But courts don't make decisions based on opinion polls; nor should they. Judges are held indirectly accountable to the democratic process, because they are either appointed by elected officials or elected themselves. However, they are intentionally sheltered from public opinion. I and much of the rest of the public may be correct in differing with the courts in this case. But we will not always be right, especially given the complexities of the law and frequent swings in the public mood.

Republicans not stricken with myopia might envision a future with fiercely independent conservative judges defending rights they hold inviolable against an arrogant and out of control Democratic President and Congress. Let those Republicans come to the fore. And let Mr. DeLay be pressured to resign by a bi-partisan Congressional ethics committee. That would be just lovely.