Forbes has published my latest column, “How ObamaCare Creates Ethical Conflicts For Physicians And How Patients Can Protect Themselves“.

Here is the opening:

Do you trust your doctor? Most patients assume their doctor is working in their best medical interests whenever he or she orders a diagnostic test or recommends a particular treatment. Customers might wonder whether an unscrupulous auto mechanic is being truthful when he recommends a brake job or a new transmission. But most patients trust that their doctor isn’t recommending unnecessary surgeries merely to line his pockets.

The vast majority of doctors take their ethical responsibilities very seriously. Prior to ObamaCare, only a relatively few “bad apples” have chosen to compromise their professional ethics for financial gain. However, ObamaCare creates new ethical conflicts for doctors. We’ll examine some common physician conflicts of interest before and after ObamaCare, and discuss how patients can best protect themselves…

Prior to ObamaCare, physicians faced perverse incentives for overtreatment. Physicians might also be tempted to pad their income through inappropriate self-referral or business relationships such as “physician owned distributorships”.

After ObamaCare, physicians will face perverse incentives for undertreatment, especially with “bundled payments” and government “appropriate use criteria”.  The new “narrow networks” required by many ObamaCare exchange plans will exacerbate these issues:

To cut costs, many ObamaCare exchange plans also require “narrow networks” of providers, where patients may only receive treatment from a short list of approved hospitals and doctors. President Obama has repeatedly promised, “If you like your doctor, you can keep your doctor,” but many patients are learning the hard way that this isn’t true.

Such “narrow networks” also mean that many doctors will lose long-standing relationships with patients they’ve seen for years. Instead, doctors will be increasingly reliant on the government-run exchanges for new patients. This will create a powerful incentive for physicians to adhere to any treatment guidelines mandated by the government or by government-approved insurance plans.

I also discuss several ways patients can protect themselves from these old and new physician conflicts of interest.

For more details, see the full text of “How ObamaCare Creates Ethical Conflicts For Physicians And How Patients Can Protect Themselves“.

[Crossposted from the FIRM blog.]

Amanda Palmer on The Art of Asking

 Posted by on 25 November 2013 at 11:00 am  Economics, Tip Jar
Nov 252013

I don’t know anything about Amanda Palmer or her music, but I really enjoyed her TED talk on funding her music through crowdsourcing. “Asking makes you vulnerable.” Indeed.

So much of this resonates so much for me personally — most obviously given that Philosophy in Action Radio is available for free, but supported by contributions from fans. That does give me a great sense of trust and vulnerability… and immense gratitude too.


On Sunday’s Philosophy in Action Radio, Greg and I will answer the following question on social effects of economic inequality.

Is an egalitarian society a better society? The 2009 book “The Spirit Level” by Richard Wilkinson argues that income inequality has a broad range of negative effects on society. According to the summary on Wikipedia, “It claims that for each of eleven different health and social problems: physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, trust and community life, violence, teenage pregnancies, and child well-being, outcomes are significantly worse in more unequal rich countries.” Are these egalitarian arguments wrong? If so, what’s the best approach to refuting them?

These arguments are more philosophically interesting than I expected, as they’re basically an empirical version of Rawlsian egalitarianism. The statistics are also more compelling than I imagined at the outset: apparently, even wealthy people are better off in societies with less disparity between incomes.

If you’d like to familiarize yourself with these arguments before Sunday’s broadcast, check out this TED talk by the author of The Spirit Level: Why Greater Equality Makes Societies Stronger, Richard Wilkinson:

This episode of internet radio airs at 8 am PT / 9 MT / 10 CT / 11 ET on Sunday, 20 October 2013, in our live studio. If you miss that live broadcast, you can always listen to the podcast later.


Tonight, I’ll interview Pacific Legal Foundation attorney Timothy Sandefur about occupational licensing — how it works, what it’s supposed to do, and what it’s real-life effects are. We’ll also talk about “Certificates of Need” (CONs) regulations that allow existing businesses to squash any newcomers. I kid you not.

If you’re not familiar with CONs, check out Sandefur’s 2011 article, CON Job: State “certificate of necessity” laws protect firms, not consumers. Here are the open paragraphs:

When St. Louis businessman Michael Munie decided to expand his moving business to operate throughout the state of Missouri, he thought it would be a simple matter of paperwork. After all, he already held a federal license allowing him to move goods across state lines. But when he filed his application, he discovered that, under a 70-year-old state law, officials in Missouri’s Department of Transportation were required to notify all of the state’s existing moving companies and allow them the opportunity to object to his application. When four of them did file objections, department officials offered Munie the choice of withdrawing his application or appearing at a public hearing where he would be required to prove that there was a “public need” for his moving business. The law is not clear on how exactly he would do this — “public need” is not defined, nor are there any rules of evidence or procedure in the statute. And even if he managed to prove a “public need,” the department would take anywhere from six months to a year to make a final decision. In the face of such complications, Munie chose to withdraw his application and ask instead for limited permission to operate within a portion of St. Louis. His competitors had no objection to that, and he was given the restricted license.

Bizarre as this law might seem, it is only one of dozens of such requirements, generally called “certificate of necessity” (CON) laws, that exist across the country, governing a variety of industries, from moving companies and taxicabs to hospitals and car lots. A legacy of the early 20th century, CON laws restrict economic opportunity and raise costs for products and services that consumers need. Unlike traditional occupational licensing rules, they are not intended to protect the public by requiring business owners to demonstrate professional expertise or education. Instead, these laws are explicitly designed to restrict competition and boost the prices that established companies can charge.

Go read the whole article.

May 062013

Dr. Beth Haynes of the Benjamin Rush Society has a nice OpEd in the Huffington Post, “Almost All Americans Lack Health Insurance“.

She adds much-needed conceptual clarity in the discussion over health policy by discussing the nature of genuine insurance, as opposed to our current system. From her piece:

What is insurance? Think about your auto, life and homeowner’s insurance. Each of these is designed as a means to pay for unexpected, unpredictable, very expensive occurrences outside of the control of the policyholder. Insurance is a means of financially protecting people from the risk of unlikely but high-cost events. To build up sufficient funds, the insured pays a premium calculated on their specific chance of experiencing a covered event. Insurance companies can only stay solvent if what they take in as premiums is greater than what they pay out in claims (plus business expenses and a competitive profit).

So what is it we have that we call health insurance but isn’t? We have the prepayment of medical expenses. We expect our “insurance” to cover predictable, relatively inexpensive events like health maintenance checks, minor illnesses and injuries — and to pay for them with minimal out of pocket spending. Under Obamacare, these expectations will be mandated by law. The new law actually makes it illegal for insurance companies to charge individuals premiums equal to their risk of making claims. It’s like having a law requiring homeowner’s insurance to pay for lawn care, house painting and water heater replacement, while at the same time prohibiting the companies from operating an actuarially sound business.

Instead of genuine insurance, we are moving towards a system of bad pre-paid care.

For more details, read the full text of “Almost All Americans Lack Health Insurance“.

And by the way, under Dr. Haynes’ leadership, the Benjamin Rush Society has been sponsoring an excellent series of debates on important health policy issues. Go check out their website for details and videos!

Interest Rates and Hard Currency

 Posted by on 2 May 2013 at 10:00 am  Economics, Free Society
May 022013

Just before my March radio discussion of how government control encourages short-range thinking, Tim Lee sent me the following example, which I blog with his permission:

The Federal Reserve has taken control of the future by dictating interest rates. The capital budgeting decision essentially depends on an interest rate tied to reality, an interest rate that connects actual savings to loanable funds. The now vs. later decision involves a discounting of future cash flows using an interest rate that functions as a reference. Whether it makes sense to build a factory or not depends ultimately on the specific interest rate at which capital can be borrowed. But since the Fed arbitrarily sets interest rates, that means business owners have been denied the basis on which to plan. Moreover, since the practice of driving interest rates below the natural rate has the consequence of generating the boom/bust cycle, an added level of uncertainty is added that not even the Fed can predict.

A restoration of the gold standard and naturally determined interest rates is required to make long range planning possible.

This article discusses the economic crisis and how interest rate manipulation caused it: Interest-Rate Targeting During the Great Moderation by Roger W. Garrison

That’s an excellent example, unfortunately. (FYI: I’ve not read the article in question, and I don’t have the technical background in economics to judge it.)

On a related topic: Objectivists and other free-market advocates often talk of the need to return to a gold standard. That seems wrong to me. Yes, our current system of fiat currency should be replaced by hard currency. (By “hard currency,” I mean commodity-backed currency, not merely stable currency.) However, that need not entail the gold standard.

In a truly free market, the government might choose to accept only gold-backed currency, but that choice shouldn’t be imposed on anyone else. Banks might choose to issue silver-backed or platinum-backed currency. Heck, a bank in a free market could issue currency backed by any fungible good, from crude oil to large eggs. The best option, it seems to me, would be money issued by banks backed by a “basket of commodities.” That would help stabilize prices in cases of major changes in the supply or demand of a single commodity.

So, for those of you who advocate for the gold standard: What do you mean by that? Do you mean that the government would issue legal tender backed only by gold? If so, how is that consistent with free market banking? If not, then why advocate for a “gold standard” rather than hard currency?

I’m not being snotty here. I’m not any kind of expert in economics, and I want to know if I’m missing something!

Aug 232012

My latest OpEd is now up at Forbes, “If You Want Human Progress To Stop, Institute A Maximum Income“.

In this piece, I discuss the importance of making a moral defense of those who have earned wealth honestly, not just an economic defense.

Here is the opening:

Suppose a young medical researcher, Dr. Smith, discovered a safe, reliable vaccine for breast cancer. If a woman took a single pill at age 30, she’d never develop breast cancer. But the pill costs $1,000. How many American women would take that deal?

Most women would likely jump at the opportunity. For $1,000, a woman would be forever spared the expense and inconvenience of future annual mammograms. She’d never have to worry about her doctor calling to say, “Your mammogram showed a suspicious spot; please come in for a biopsy.” The 12% of women who would have developed breast cancer during their lifetimes would be spared the pain and risks of surgery, chemotherapy, and radiation therapy.

Each woman would gain an enormous value in terms of money saved, peace of mind, and potential added years of life, far exceeding the $1,000 cost. Roughly 2 million American women turn 30 each year. Assuming Dr. Smith made a 10% profit from each sale, he would earn $200 million a year. Most people would regard that as a completely fair outcome.

But not Hamilton Nolan…

(Read the full text of “If You Want Human Progress To Stop, Institute A Maximum Income“.)

I’m also delighted to announce that Forbes has invited me to be a regular contributor, after my prior guest OpEds.  My focus will be primarily on health care, economics, and related issues, from a free-market perspective.

You can find my earlier Forbes OpEds here:

The Federal Government’s War On Medical Innovation” (8/8/2012)

Is President Obama’s Prostate Gland More Important Than Yours?” (7/5/2012)

The Dangerous Synergy Between The Nanny State And Universal Health Care” (6/18/2012)

Just Who Should Control Your Healthcare Spending?” (5/15/2012)

I’d like to thank all my regular readers for their support and encouragement — it means a great deal to me.

And thank you all for circulating my work by Facebook, Twitter, blogging, and e-mail!


The Forbes website has published my latest OpEd, “Just Who Should Control Your Healthcare Spending?

The theme is that America needs market-based health reforms such as Health Savings Accounts which reduce costs while preserving quality medical care, not government-mandated “bundled payments” which will harm patients and literally set a price on human life.

Here is the opening:

What simple health care reform has reduced medical costs by up to 30%, while preserving quality of care? Hint: It’s not government price controls or mandatory health insurance. Rather, it’s letting patients decide how to spend their own health care dollars…

(Read the full text of “Just Who Should Control Your Healthcare Spending?“, May 15, 2012.)

I’m honored to appear on the Forbes website, and I’d like to thank readers who have shared this piece via Facebook, Twitter, blogging, e-mail, etc.

[Cross-posted from the FIRM blog.]

Jan 192012

The 1/17/2012 edition of Real Clear Markets has just published my latest OpEd, “Why Is Creating Value Good, Profits Bad?

It’s not directly related to health care policy, but rather the broader theme of defending the virtue of the profit motive in a free, capitalistic society. (I do use insurance as an example of how value is created). Here is the opening:

“Profit” is a dirty word. Profit-seeking businessmen are stock villains in Hollywood movies. “Occupy Wall Street” protestors demand, “People not profits” (whatever that means). Companies reporting healthy profits are automatically assumed to be exploiting customers and can only atone for this by “giving back” to their communities. “Making a profit” has an unsavory, morally suspect taint.

Yet simultaneously, Americans have a far more positive view of the concept of “creating value.” The mainstream press lauds visionary businessmen who “create value,” such as the late Steve Jobs of Apple. The business literature routinely emphasizes the importance of “creating value.” So many organizations wish to be seen as “creating value” that it has become a business cliche, like “best practices” and “thinking outside the box.”

But in a free society, “creating value” and “making a profit” are just two sides of the same coin…

(Read the full text of “Why Is Creating Value Good, Profits Bad?“)

Those who earn honest profits by creating value should be proud of this fact.

I’d like to thank attorney-blogger Doug Mataconis for providing the Tweet which I cited later in the OpEd, as well as pointing me towards the Wall Street Journal piece on Bain Capital that I cited.

Dubai: Slave Society

 Posted by on 11 January 2012 at 8:00 am  Culture, Economics, Ethics, Law, Middle East, Slavery
Jan 112012

Last week, I ran across a fascinating article on the society and economy of Dubai: The dark side of Dubai by Johann Hari. (It’s from 2009, but no less interesting because of that.)

The whole shining metropolis — recently featured in MI4 — is built on a horrifying foundation of slave labor:

Sahinal Monir, a slim 24-year-old from the deltas of Bangladesh. “To get you here, they tell you Dubai is heaven. Then you get here and realise it is hell,” he says. Four years ago, an employment agent arrived in Sahinal’s village in Southern Bangladesh. He told the men of the village that there was a place where they could earn 40,000 takka a month (£400) just for working nine-to-five on construction projects. It was a place where they would be given great accommodation, great food, and treated well. All they had to do was pay an up-front fee of 220,000 takka (£2,300) for the work visa – a fee they’d pay off in the first six months, easy. So Sahinal sold his family land, and took out a loan from the local lender, to head to this paradise.

As soon as he arrived at Dubai airport, his passport was taken from him by his construction company. He has not seen it since. He was told brusquely that from now on he would be working 14-hour days in the desert heat – where western tourists are advised not to stay outside for even five minutes in summer, when it hits 55 degrees – for 500 dirhams a month (£90), less than a quarter of the wage he was promised. If you don’t like it, the company told him, go home. “But how can I go home? You have my passport, and I have no money for the ticket,” he said. “Well, then you’d better get to work,” they replied.

Sahinal was in a panic. His family back home – his son, daughter, wife and parents – were waiting for money, excited that their boy had finally made it. But he was going to have to work for more than two years just to pay for the cost of getting here – and all to earn less than he did in Bangladesh.

Then, at the air-conditioned luxury of the mall:

I approach a blonde 17-year-old Dutch girl wandering around in hotpants, oblivious to the swarms of men gaping at her. “I love it here!” she says. “The heat, the malls, the beach!” Does it ever bother you that it’s a slave society? She puts her head down, just as Sohinal did. “I try not to see,” she says. Even at 17, she has learned not to look, and not to ask; that, she senses, is a transgression too far.

That kind of evasion is bad enough. Even worse is the evasion required by the Westerners who actively participate in this slavery:

…one theme unites every expat I speak to: their joy at having staff to do the work that would clog their lives up Back Home. Everyone, it seems, has a maid. The maids used to be predominantly Filipino, but with the recession, Filipinos have been judged to be too expensive, so a nice Ethiopian servant girl is the latest fashionable accessory.

It is an open secret that once you hire a maid, you have absolute power over her. You take her passport – everyone does; you decide when to pay her, and when – if ever – she can take a break; and you decide who she talks to. She speaks no Arabic. She cannot escape.

In a Burger King, a Filipino girl tells me it is “terrifying” for her to wander the malls in Dubai because Filipino maids or nannies always sneak away from the family they are with and beg her for help. “They say – ‘Please, I am being held prisoner, they don’t let me call home, they make me work every waking hour seven days a week.’ At first I would say – my God, I will tell the consulate, where are you staying? But they never know their address, and the consulate isn’t interested. I avoid them now. I keep thinking about a woman who told me she hadn’t eaten any fruit in four years. They think I have power because I can walk around on my own, but I’m powerless.”

The only hostel for women in Dubai – a filthy private villa on the brink of being repossessed – is filled with escaped maids. Mela Matari, a 25-year-old Ethiopian woman with a drooping smile, tells me what happened to her – and thousands like her. She was promised a paradise in the sands by an agency, so she left her four year-old daughter at home and headed here to earn money for a better future. “But they paid me half what they promised. I was put with an Australian family – four children – and Madam made me work from 6am to 1am every day, with no day off. I was exhausted and pleaded for a break, but they just shouted: ‘You came here to work, not sleep!’ Then one day I just couldn’t go on, and Madam beat me. She beat me with her fists and kicked me. My ear still hurts. They wouldn’t give me my wages: they said they’d pay me at the end of the two years. What could I do? I didn’t know anybody here. I was terrified.”

One day, after yet another beating, Mela ran out onto the streets, and asked – in broken English – how to find the Ethiopian consulate. After walking for two days, she found it, but they told her she had to get her passport back from Madam. “Well, how could I?” she asks. She has been in this hostel for six months. She has spoken to her daughter twice. “I lost my country, I lost my daughter, I lost everything,” she says.

As she says this, I remember a stray sentence I heard back at Double Decker. I asked a British woman called Hermione Frayling what the best thing about Dubai was. “Oh, the servant class!” she trilled. “You do nothing. They’ll do anything!”

The psychological contortions required to willingly relocate to a slave society, then actively participate in such slavery, is just mind-boggling. As one woman was quoted in the article, “All the people who couldn’t succeed in their own countries end up here, and suddenly they’re rich and promoted way above their abilities and bragging about how great they are. I’ve never met so many incompetent people in such senior positions anywhere in the world.” That mentality — delusional and incompetent yet ambitious — seems to be fertile ground for embracing the practice of slavery.

I’ve already quoted too much of the article, but so much else in it is deeply fascinating — and heartbreaking. So go read the whole article. You won’t be sorry to know what “exploitation of the workers” and “environmental destruction” really means.

Finally, my friend Kirez posted the following comment on Facebook, which I’m including here with his permission:

I recall reading this article when it was published. I witnessed many of these labor camps firsthand; it was a horrifying experience.

It’s not easy to see if you’re there simply as a tourist. But even when I wasn’t exploring where I wasn’t supposed to be, if I simply went into a grocery near one of these labor camps where the pakistanis and indians and burmese in large groups would go to buy their groceries, the racism (in these places even more than most others) was so palpable, it seemed a theatre spectacle: I would walk into a store, where gangs of pakistanis or indians were trudging along, and the (Indian) owners of the stores would come running, falling over themselves, bowing to me and calling me sir, and offering to help me with my shopping and finding me special products or deals… for no reason whatsoever except that I was white and had honored their store with my presence.

I first noticed the workers when I was acting as a tourist, and went out to the construction sites of the islands to look at the buildings (I saw a lot of really bad construction practices… not only safety issues, which were normal, but severely faulty lack of fortification and structural issues, like neglecting rebar through cinderblock walls, etc.) I saw buses full of pakistani workers coming to and from the work sites. I knew the city (Dubai) pretty well, but these workers didn’t live in the city; the buses went out of the city into the desert. At first I simply watched the buses coming and going and felt very sorry for the workers, because the heat was overbearing for us in an air conditioned luxury car… and I could see them slumped against windows, sleeping, in the burning sunshine. These images burned into my mind, and caused me to start noticing the shanty towns in the desert outside the city. Eventually I would visit several; later I would meet the workers as they worked on projects where I was working — later I even hired some workers to build pullup bars, squat racks, jump boxes and other equipment for me.

The cases of abuse were innumerable; it seemed to be the norm.

But I was overworked with my own projects… in a final, ultimately painful and frustrating insult to my powerlessness there, I learned that the mysterious traffic of men to the apartment underneath ours was explained by the slavery of a 9-year-old girl. They had kept her very effectively hidden from me for months, while I had watched men come to the apartment in singles or couples at all hours of the night, but I never saw them leave with bundles, never smelled anything, never saw weapons… I didn’t get it. I had only 72 hours left in the country when a pakistani tried to steal some of my exercise equipment (outside — this attempted theft was very unusual), and the woman who kept the girl, downstairs, came running out of her apartment to tell me, in arabic, that they were stealing my equipment… and the 9-year-old girl appeared in the door she had left open. I then got to watch local police detectives bumble the investigation, while I was completing my work, packing my household, selling my possessions and preparing to depart.


Suffusion theme by Sayontan Sinha