Commentary Magazine


Posts For: March 31, 2013

What Obamacare Isn’t

If you would like to know what insurance really is, and why Obamacare (and much private “medical insurance”) is not insurance at all, but an economic and humanitarian disaster waiting to happen, you cannot do better than Megan McArdle’s delightfully jargon-free article in The Daily Beast.

Insurance began in the 17th century when merchants wanted to protect themselves against the loss of a ship and its cargo. By paying a small amount upfront, they each protected themselves against the loss of a huge amount. This is called risk pooling, one of the truly great economic ideas. By spreading risk, it made it much easier to assume risk, and assuming risk is one of the prime drivers of an economy.

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If you would like to know what insurance really is, and why Obamacare (and much private “medical insurance”) is not insurance at all, but an economic and humanitarian disaster waiting to happen, you cannot do better than Megan McArdle’s delightfully jargon-free article in The Daily Beast.

Insurance began in the 17th century when merchants wanted to protect themselves against the loss of a ship and its cargo. By paying a small amount upfront, they each protected themselves against the loss of a huge amount. This is called risk pooling, one of the truly great economic ideas. By spreading risk, it made it much easier to assume risk, and assuming risk is one of the prime drivers of an economy.

Thus insurance, properly understood, is meant to protect against a catastrophic loss that would be financially ruinous, such as a lost ship. It didn’t pay for a parted topsail halyard. And that’s why if your grandson throws a baseball through a living room window, you call the guy who fixes windows, not the insurance company. It’s when the roof blows off in a storm that you call the insurance company.

But most medical insurance covers everything from hangnails to heart transplants. Have a sniffle? Your insurance company pays the doctor’s bill. This not insurance at all, it’s a prepayment plan.

Megan McArdle likens it to “grocery insurance”:

If you expect to buy $10,000 worth of groceries next year, [the insurance company] will not charge you less than that for a “grocery policy.”  And if we all drive up the costs of grocery insurance by consuming more, the insurer can do one of two things: raise everyone’s “insurance premiums” to cover a filet mignon budget, or create a list of “approved groceries” that it will cover, and start hassling anyone who tries to file an excessively expensive claim.

Sound familiar?

This is why Obamacare cannot and will not work: it flies in the face of economic reality and human nature. As Milton Friedman explained, “nobody spends someone else’s money as carefully as they spend their own.” So if the doctor is “free,” people will go to the doctor more often. If it’s not coming out of their pocket, they’ll opt for the filet mignon test rather than the Hamburger Helper test.

As the costs rise, political opposition to tax increases and bureaucratic inability to control costs will force the alternative, rationing of health care. Sorry, Grandma, but you’re too old to be treated for that disease. But don’t worry, we’ll make you comfortable.

The greatest tragedy is that it is all so avoidable.

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Easter in Palestine Means Blaming Israel, Not Muslims, for Christian Woes

Easter is an apt moment for the West to ponder the fate of Christians in the Arab and Muslim worlds but, as is usually the case on Christmas, the media tends to focus its attention on anything but the real problem. A typical example was this feature broadcast on CNN about the difficulties being faced by Palestinian Christians. The focus of the piece was how Israeli policies were negatively impacting Christians living in the West Bank.

But though Palestinian Christians, such as the Nablus family shown in the spot, are inconvenienced by security regulations intended to keep terrorists from slaughtering civilians, the discussion not only distorts that issue but also completely ignores the factor that is driving Christians out of the West Bank as well as other parts of the Middle East: Islamist intolerance.

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Easter is an apt moment for the West to ponder the fate of Christians in the Arab and Muslim worlds but, as is usually the case on Christmas, the media tends to focus its attention on anything but the real problem. A typical example was this feature broadcast on CNN about the difficulties being faced by Palestinian Christians. The focus of the piece was how Israeli policies were negatively impacting Christians living in the West Bank.

But though Palestinian Christians, such as the Nablus family shown in the spot, are inconvenienced by security regulations intended to keep terrorists from slaughtering civilians, the discussion not only distorts that issue but also completely ignores the factor that is driving Christians out of the West Bank as well as other parts of the Middle East: Islamist intolerance.

In a perfect world, Christians and Muslims from the West Bank would have free access to Jerusalem. Indeed, that was largely the case before the terrorist war launched by the Palestinian Authority in 2000 when not just worshipers but tens of thousands of Arab workers flocked to Israel to earn a living. The chief price of that wholly unnecessary conflict was paid in the blood of over 1,000 Israelis and many more Arabs who died as a result of a conscious decision of the Palestinian Authority to answer Israeli peace offers, including statehood, with violence.

Without the construction of a security fence, many more might still lose their lives. Yet CNN followed the lead of Palestinian propagandists in portraying its function as primarily a means for harassing innocent travelers and, on Easter, Christians who want to walk along the route that is thought to be that of Jesus.

Yet, as the broadcast throws in as a throwaway line, Israel has granted 95 percent of all requests by West Bank Christians to enter Jerusalem. This is consistent with the fact that the only period in its history in which all faiths have had free access to all of the holy sites has been in the years since Jerusalem was reunited under Israeli rule. That’s a fact that is curiously absent from the discussions in the media of Christians in the Middle East.

But as bad as that might be, it is not as great an omission as the complete disinterest on the part of the media in the most serious problem facing Palestinian Christians: the rise of an aggressive Muslim movement that has forced increasing numbers of them to leave the region.

While it is understood, though rarely reported, that Christians are now unwelcome in Hamas-run Gaza, the same is becoming true in areas of the Fatah-ruled West Bank, including the city of Nablus. Christian strongholds like Bethlehem have seen a dramatic population shift.

As is the case throughout the Middle East where an aggressive Islam has targeted all religious minorities—such as the Christian Copts of Egypt who are laboring under the burden of rule by the Muslim Brotherhood—Palestinian Christians are realizing that their future in a Palestine run by Fatah or Hamas is not one in which they will be allowed to flourish.

Yet Palestinian Christians don’t speak much about their woes at the hands of Arab Muslims and instead do their best to be as loud as possible in their complaints about Israel. Doing so gives them some legitimacy within Palestinian society, and foreign reporters who don’t understand what lies behind this dynamic follow along without asking pertinent questions.

There is something vaguely pathetic about the futile efforts of Palestinian Christians to prove their worth to their neighbors by being among the most outspoken enemies of the Jews, but it won’t alter the facts about what is really happening to them. Israel remains a haven of religious freedom while the areas under Palestinian control continue to sink in a morass of Islamist intolerance. But don’t expect CNN or most other media outlets to report that when blaming Israel for Christian problems remains a holiday tradition.

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Turkey on Flag Burning: Do As We Say, Not As We Do

In 1974, Turkey invaded Cyprus and to this day occupies one-third of the island nation. Northern Cyprus remains the only occupied territory in Europe. Nor is Northern Cyprus simply disputed. Unlike the West Bank and Gaza—which were not a recognized part of an independent country when controlled by Egypt, Jordan, or Israel—northern Cyprus was and remains as much occupied by Turkey as Kuwait was by Iraq.  

It is not surprising, therefore, that passions remain high in Cyprus, especially as the 40thanniversary of the Turkish invasion and occupation approaches. After reports surfaced that Cypriots snatched a Turkish flag waved at a rally and burned it, Turkey’s European Union minister Egemen Bağış demanded an explanation and investigation. “Of course, burning the flag is not their place. We expect the Greek Cypriot Administration of Southern Cyprus to give a very clear reaction to those who burned the flag,” Bağış reportedly said. Hürriyet Daily News continued, “Bağış indicated that protection of the Turkish flag’s honor must be an issue also for Greek Cypriots….”

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In 1974, Turkey invaded Cyprus and to this day occupies one-third of the island nation. Northern Cyprus remains the only occupied territory in Europe. Nor is Northern Cyprus simply disputed. Unlike the West Bank and Gaza—which were not a recognized part of an independent country when controlled by Egypt, Jordan, or Israel—northern Cyprus was and remains as much occupied by Turkey as Kuwait was by Iraq.  

It is not surprising, therefore, that passions remain high in Cyprus, especially as the 40thanniversary of the Turkish invasion and occupation approaches. After reports surfaced that Cypriots snatched a Turkish flag waved at a rally and burned it, Turkey’s European Union minister Egemen Bağış demanded an explanation and investigation. “Of course, burning the flag is not their place. We expect the Greek Cypriot Administration of Southern Cyprus to give a very clear reaction to those who burned the flag,” Bağış reportedly said. Hürriyet Daily News continued, “Bağış indicated that protection of the Turkish flag’s honor must be an issue also for Greek Cypriots….”

What nonsense. Against the backdrop of the incitement in which Bağış’s partisans frequently engage, Turkish protestors regularly burn American flags. See, for example, new stories here, here, and here. While the flag burning is of course offensive—as is the fact that some of the Turkish protestors were doing so in outrage over Osama bin Laden’s death—no American official would dream of demanding investigations or seeking to punish the perpetrators. Bağış is known throughout both Turkey and Europe as a bit of a blowhard, but his comments should remind Europeans just how unready Turkey is for the European Union. When it comes to respect of free speech, even Russia has a better claim to meeting European criteria.

As for Cyprus, even Bağış should recognize that it has far bigger concerns right now than genuflecting to an occupying army.

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Time to Correct Dysfunctional Navy Procurement

Pentagon bloat frustrates both Congress and ordinary taxpayers. Many on the left perceive of the Pentagon as a cash cow whose budget they can divert in order to fund ever more expensive entitlement programs. That strategy may delay a final reckoning about systemic economic issues, but it comes at a significant national security price.

Because of high seas and stormy weather, I had a bit of a Gilligan’s Island experience and was stranded for three days last week on a ship to which I was to lecture for only around four hours. Over subsequent days, I got to spend a good amount of time with the commanding officer, the executive officer, officers, and crew. While that ship appeared to be in better condition than most, there were problems with its electronics and computers. Indeed, stepping onto almost any U.S. ship is to step back in time when it comes to computers. Most computers are old and decrepit. If sailors and riders are lucky, they will handle at least Windows 98. Internet is spotty at best: It can take over an hour to send an email because of bandwidth issues, and even Google or Wikipedia can be difficult to access. It is one thing to complain about slow Internet access, but the sad fact is that slow computing is the symptom of a larger problem.

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Pentagon bloat frustrates both Congress and ordinary taxpayers. Many on the left perceive of the Pentagon as a cash cow whose budget they can divert in order to fund ever more expensive entitlement programs. That strategy may delay a final reckoning about systemic economic issues, but it comes at a significant national security price.

Because of high seas and stormy weather, I had a bit of a Gilligan’s Island experience and was stranded for three days last week on a ship to which I was to lecture for only around four hours. Over subsequent days, I got to spend a good amount of time with the commanding officer, the executive officer, officers, and crew. While that ship appeared to be in better condition than most, there were problems with its electronics and computers. Indeed, stepping onto almost any U.S. ship is to step back in time when it comes to computers. Most computers are old and decrepit. If sailors and riders are lucky, they will handle at least Windows 98. Internet is spotty at best: It can take over an hour to send an email because of bandwidth issues, and even Google or Wikipedia can be difficult to access. It is one thing to complain about slow Internet access, but the sad fact is that slow computing is the symptom of a larger problem.

Officers were ready with an explanation about why it is that pretty much every ship lags behind. When the Navy decides to order a ship, it essentially pre-pays because the budget is set at the start. Ships can take years to construct. Construction on the USS Gerald Ford, our country’s next aircraft carrier, began in 2005. When the ship is launched in 2015, its computers will already be a decade out of date. Technology certainly has advanced in the interim. When the Pentagon looks at the ship and decides it needs current capability rather than the capacity of yesteryear, it can cost tens of millions of dollars—if not hundreds of millions of dollars—to retrofit and redesign the original plans. It is not uncommon, therefore, for the Navy to be faced with a choice between a ship which is becoming obsolete almost as soon as it is launched, or one that will have exceeded its budget by 50-100 percent.

If there is a workaround, it is in contracting which mandates contemporary standards upon launching. It would be up to shipbuilding companies to gauge needs ahead of time rather than plan for the past. Such a change would require a new way of doing business in Pentagon acquisitions. Let us hope that Defense Secretary Chuck Hagel can find a way, because the cost of facing China or any other rising powers with a substandard fleet in this era of declining budgets will ultimately have an even higher cost.

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Twitter Crackdown Exposes Saudi Fear

Various news outlets are reporting that Saudi Arabia is seeking to end anonymity for twitter users. At first glance, the Saudi move appears to be just one more example of American information companies knuckling under to pressure from wealthy, autocratic countries. That Saudi Prince Alwaleed bin Talal holds a substantial stake in Twitter underlines how taking Saudi money (as both companies and many universities such as Harvard and Georgetown do) always comes with strings attached.

The Saudi move against Twitter has deeper roots, however. While American and European human rights activists have for more than two years rallied for justice and reform in Bahrain—Bahraini flags flew over the Occupy DC camp—and Bahrain is certainly in need of reform, the situation not only for Shi’ites but also for Sunnis in Saudi Arabia is worse.

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Various news outlets are reporting that Saudi Arabia is seeking to end anonymity for twitter users. At first glance, the Saudi move appears to be just one more example of American information companies knuckling under to pressure from wealthy, autocratic countries. That Saudi Prince Alwaleed bin Talal holds a substantial stake in Twitter underlines how taking Saudi money (as both companies and many universities such as Harvard and Georgetown do) always comes with strings attached.

The Saudi move against Twitter has deeper roots, however. While American and European human rights activists have for more than two years rallied for justice and reform in Bahrain—Bahraini flags flew over the Occupy DC camp—and Bahrain is certainly in need of reform, the situation not only for Shi’ites but also for Sunnis in Saudi Arabia is worse.

The Saudi move comes against the backdrop of debates about political reform and popular Saudi cleric Salman al-Awdah—who has more than 2.5 million followers on Twitter—mocking government attempts to crackdown on Twitter. Al-Awdah may have broken with Usama Bin Laden, but no longer being an al-Qaeda sympathizer is a pretty low bar by which to describe reformism. Al-Awdah may be a reformer in the Saudi context, but no one should conflate reform with liberalism.

Nevertheless, Al-Awdah has become increasingly strident in his calls for political change in Saudi Arabia. According to the Open Source Center, he warned on March 16 that the Saudi people “will not remain silent.” Ten days later, he followed up by suggesting that should the Saudi government ignore calls for reform, “the only solution would be to go out into the square and counter argument with argument.”

I speculated six months ago that Saudi Arabia could be next. The autocratic kingdom is strictly off-limits to most Western journalists. Those who get in seldom move outside Riyadh or Jeddah. But if a riot breaks out in the Saudi hinterland and no one is around to cover it, that does not mean that all is well. It will be interesting to see if Saudi Arabia manages to constrain Twitter. Cutting communications, however, is a poor substitute for true reform. And the royal family is kidding itself if it believes it can remain aloof from political modernity forever.

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Where Is Turkey’s Apology?

Whether or not it was wise, we can debate. But it’s hard not to see Prime Minister Benjamin Netanyahu’s apology to Turkey as the diplomatic equivalent of a battered spouse apologizing to the batterer.

Namik Tan, Turkey’s ambassador to the United States, tried to ameliorate the bitter taste left by the apology. “As we always said: only true friends apologize to each other,” he tweeted. So, is Turkey a true friend, then? After all, Prime Minister Recep Tayyip Erdoğan last month called Zionism “a crime against humanity.” Apologists suggested that Erdoğan’s slander was based on the Turkish understanding of Zionism, and should be seen in that context. Mustafa Akyol, for example, wrote, “Erdoğan is a very Turkish politician. He, in other words, thinks and speaks in very local terms, not international ones. Therefore when he speaks of ‘Zionism,’ what he has in mind is what most Turks have in mind, rather than what Ban Ki-moon, Netanyahu and Kerry have in theirs.” By such logic, of course, any and all incitement is permissible. Ahmadinejad, after all, is just a product of his society. That Erdoğan has systematically moved to crush any editor or journalist that did not parrot his world view has only augmented Turkey’s hatred. Nevertheless, if Turkey is a true friend, as Namik Tan suggests, then perhaps it is time for Erdoğan to apologize for his remarks.

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Whether or not it was wise, we can debate. But it’s hard not to see Prime Minister Benjamin Netanyahu’s apology to Turkey as the diplomatic equivalent of a battered spouse apologizing to the batterer.

Namik Tan, Turkey’s ambassador to the United States, tried to ameliorate the bitter taste left by the apology. “As we always said: only true friends apologize to each other,” he tweeted. So, is Turkey a true friend, then? After all, Prime Minister Recep Tayyip Erdoğan last month called Zionism “a crime against humanity.” Apologists suggested that Erdoğan’s slander was based on the Turkish understanding of Zionism, and should be seen in that context. Mustafa Akyol, for example, wrote, “Erdoğan is a very Turkish politician. He, in other words, thinks and speaks in very local terms, not international ones. Therefore when he speaks of ‘Zionism,’ what he has in mind is what most Turks have in mind, rather than what Ban Ki-moon, Netanyahu and Kerry have in theirs.” By such logic, of course, any and all incitement is permissible. Ahmadinejad, after all, is just a product of his society. That Erdoğan has systematically moved to crush any editor or journalist that did not parrot his world view has only augmented Turkey’s hatred. Nevertheless, if Turkey is a true friend, as Namik Tan suggests, then perhaps it is time for Erdoğan to apologize for his remarks.

That is only the beginning, however. After the Bulgarian Foreign Minister questioned Turkey’s position on the Mavi Marmara incident, a senior aide to notoriously caustic Erdoğan ally Egemen Bağış suggested the reason why the Bulgarian official had taken such a position was because he had Jewish roots. Would an apology from Mr. Bağış be too much to ask? Perhaps Ahmet Kavas, Namik Tan’s colleague as ambassador, should apologize to France, the United States, and all the victims of 9/11 for embracing al-Qaeda and denying it is a terrorist entity? Of course, no apologies will be forthcoming. That probably reflects the fact that diplomatic smoke-and-mirrors aside, Turkey simply isn’t a good friend.

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The Political Implications of the Increase in Life Expectancy

The new, April, issue of National Geographic has maps of life expectancy for each county in the United States for 1989 and for 2009. (Apparently the digital version allows you to click on any particular county and get the local information, once you shell out $19.95 for a digital subscription.)

The story emphasizes the fact that life expectancy for men has increased more than it has for women over these 20 years and suggests that this may be due to inadequate treatment for women with high blood pressure and cholesterol. But it seems to me (though I am no epidemiologist) that that discrepancy might be due to the fact that women live longer than men and thus have less upside potential.

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The new, April, issue of National Geographic has maps of life expectancy for each county in the United States for 1989 and for 2009. (Apparently the digital version allows you to click on any particular county and get the local information, once you shell out $19.95 for a digital subscription.)

The story emphasizes the fact that life expectancy for men has increased more than it has for women over these 20 years and suggests that this may be due to inadequate treatment for women with high blood pressure and cholesterol. But it seems to me (though I am no epidemiologist) that that discrepancy might be due to the fact that women live longer than men and thus have less upside potential.

To me, the most startling fact in this data dump is just how fast life expectancy has increased for both sexes: 4.6 years for men and 2.7 years for women. That’s a 6.4 percent increase for men and a 3.4 percent increase for women in just two decades.

There was a similar leap in life expectancy in the early 20th century, but that increase was due to much lower infant and childhood mortality thanks to vaccines against such child-killers as whooping cough and diphtheria and the mandated pasteurization of milk, which eliminated the horrendous number of infant deaths caused by impure milk.

This latter-day increase comes at the end of life. Partly it is due to medicine’s greatly increased ability to cure or manage such killers as pneumonia, heart disease, and cancer. Partly it is due to a greatly improved environment, especially in cities and factories. And partly it is due to improved life styles, with more exercise and less fat, alcohol and tobacco.

There is no reason to think that this increase in life expectancy will abate any time soon. Indeed, it may accelerate. And that has tremendous public-policy implications with regard to Social Security, Medicare, etc. And as the percentage of old people increases in the population, their political clout will increase with it.

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