The Serendipitous Socialists

Cross-posted from The Agenda on National Review Online.

Over at The Health Care Blog, one of the most thoughtful and rigorous health care blogs out there, Northwestern business school professor David Dranove has posted an intriguing piece entitled “The Accidental Socialists.” He writes:

Over the next few years, the U.S. healthcare system will be in the hands of academics from Cambridge, Massachusetts. New CMS Czar Donald Berwick was a member of the Harvard Medical School faculty. Joe Newhouse, who has been the senior adviser to Medicare for as long as I can remember, holds appointments in three different schools at Harvard. David Cutler, Dean of Harvard’s Undergraduate College, seems a good bet to lead the Independent Medicare Advisory Board. Countless of their colleagues and former students have taken key policy making positions in Washington.

I know most of these scholars. They are brilliant as a rule and are acting in the truest sense of public service. None of them are socialists in the usual sense of the word; they do not believe that the government is an efficient provider of most goods and services. I don’t think they want the government to provide health care either. They have never called for government ownership of hospitals or suggested that physicians join the civil service. But whether they realize it or not, they are the vanguard of a movement bringing socialized medicine to America.

Dranove is right to point out that most left-leaning academic health policy types don’t see themselves as ideologues, but rather as technocrats. But, perhaps out of professional courtesy, he is generous when he includes Donald Berwick in this group: a guy who speaks ominously of the “darkness of private enterprise.” Whether or not you share Berwick’s “romance” with the British NHS, the most socialized system in the developed world, Berwick’s view of socialism isn’t accidental. Indeed, Berwick is a smart guy, and we should give him the credit of being well aware of what he thinks and what he says.

Despite this unpersuasive start, Dranove makes some interesting points about the academics who will be charged with putting PPACA into practice:

[Conservative academics] like Stanford’s Alain Enthoven and Wharton’s Mark Pauly favor some sort of voucher or direct subsidy with which individuals can buy their own private insurance. Unfortunately, Wharton is hundreds of miles from Cambridge and Stanford is on the wrong coast. The preferred Cambridge solution is a combination of greatly expanded government insurance and a tightly regulated private insurance market. This is the essence of Obamacare.

But this solution does not end with a government takeover of health insurance. There isn’t a public or private health insurer anywhere in the world that doesn’t directly intervene in the delivery of medical care. Socialized insurance necessarily leads to socialized medicine, and if the government controls well over half of the insurance sector through Medicare and Medicaid, and tightly regulates the rest, it is only inevitable that it will also seek to control how health care is bought and sold. And I don’t think it will make much difference whether it is Democrats or Republicans in control. The temptation to set the rules for 17 percent of the GDP is too great.

Dranove hits on the essence of conservative objection to PPACA: that the downstream consequences of the law will be far worse than the law itself. Many on the left guffaw when conservatives fret about “socialized medicine,” but this is precisely this problem that they fret about.

Dranove also points out that academics are routinely overconfident about their ability to solve complex problems with clever-seeming, complex solutions. In 1988, when Harvard professor William Hsiao and colleagues published the “Resource-Based Relative Value Scale” as a way of controlling Medicare’s cost explosion, he was hailed by the health care mandarins of his time as a genius. A generation later, the data shows that his efforts (and his projections) were in vain. Dranove adds:

To take another example, I helped redesign a physician payment scheme in Alberta with the goal of increasing competition. The provincial government adopted part of the scheme and omitted key details. Now I fear that competition is going to be stifled.

The Obama administration has hired an army of academics to implement the new reforms. They bring with them the finest Cambridge pedigrees and promising ideas. They will write the first draft of the rules and academics everywhere will nod in approval at the cleverness of our colleagues. (Some of us may even enjoy seeing our own pet ideas turn into policy.) But in the fullness of time, the rules and regulations that will govern our health care system will bear the imprint of politicians more than academics. It is the nature of the beast.

It’s comforting, I guess, to blame politicians for messing up the brilliant ideas of academics. After all, politicians do often make a mess of things. But the much more serious problem arises when the ideas put forth by the academics themselves are flawed.

Dranove concludes:

My Cambridge colleagues do not favor socialized medicine. But I fear that the regulatory behemoth they have been entrusted to manage is too big for them, despite their talents. Ten years from now, we will look back at these days as the beginning of the end of market-based medicine in America. And my colleagues will only be able to look back, shake their heads, and say “it wasn’t supposed to turn out this way.”

The only thing is, when it comes to American health care policy, Dranove’s colleagues (and their predecessors) have been shaking their heads and saying this for fifty years. They remain ever-assured that, this time, they have it all figured out.

The Best and the Brightest

Cross-posted from The Agenda on National Review Online.

When Pulitzer prizewinner David Halberstam used the title “The Best and the Brightest” in his 1972 book on the Vietnam War, he was using it ironically. The Kennedy and Johnson administrations had recruited the best and brightest scholars and leaders to Washington, with the thought that these brilliant minds would lead the nation to its greatest heights.

It didn’t work out that way. Vietnam permanently damaged the country and led directly to many of the foreign policy problems we have today. The best and the brightest, Halberstam observed, concocted “brilliant policies that defied common sense”—reminding us that intelligence is not the same as wisdom. This distinction between intelligence and wisdom was also behind Bill Buckley’s contemporaneous contention that he “would rather be governed by the first two thousand people in the Boston telephone directory than by the two thousand people on the faculty of Harvard University.”

In health care policy, the difference between intelligence and wisdom is too often blurred. I was reminded of this when re-reading an open letter, penned by 23 prominent economists, sent to President Obama to insist upon the importance of health reform, and of certain parameters thereof.

Many people believe that the academic community should serve as the arbiter of what is a good or a bad idea for health care reform. (This idea is especially popular among academics.) During the Obamacare debate, the President spoke often of how “every single serious idea” on reducing health-care costs was incorporated into the legislation. He was speaking truthfully—if “every single serious idea” is understood only to mean those that are widely accepted by the academic community.

There were, and are, a lot of other good ideas that the President ignored: moving to an individual market for health insurance; expanding consumer-driven health care; increasing cost-sharing for government programs. But those ideas, and others with a free-market bent to them, were contrary to the President’s ideological orientation, and their principal exponents were outside of the academic orbit.

Academics see themselves as the most disinterested observers of the health care world: or, more precisely, the ones who are most committed to a rational and humane health care system. Analysts from industry, in this view, are corrupted by their economic interests; and analysts from think tanks (especially conservative ones) are hopelessly biased by their ideology.

But is the academic world non-ideological? At least 90 percent of health policy academics, if not more, are left-of-center. Populist conservatives like to complain about this, but in fact this phenomenon does a greater disservice to liberals than it does to conservatives, because it diminishes the quality of their work.

Academic explorations of health care policy suffer from several handicaps, handicaps that are exacerbated by ideological conformity. They include:

1. Group-think. Academics are rewarded for publishing articles in peer-reviewed journals. What this means in practice is that academics are rewarded for gaining the approval and acceptance of other academics: a process that reinforces group-think at the expense of rigorous criticism.
2. Homo academicus. Because the incentives of academics revolve around the approval of others, rather than objective economic failure or success, it is difficult for academics to relate to the health care world as it actually exists: one in which economic incentives drive the behavior of patients, doctors, hospitals, insurers, and product manufacturers. In the economic world, there is such a thing as failure, in a way that is difficult for many tenured professors to fully appreciate.
3. Elitism. If you study the health care system in a lot of depth, it is natural to feel that your views should carry more weight than those of people who haven’t studied the issue as much. It is easy to be pessimistic about the unsophistication of ordinary people, to believe that ordinary people will benefit from the guidance of disinterested experts like yourself, and to dismiss the ideas of those who you perceive to be less expert, and less disinterested, than yourself.
4. Bad data. Ludwig von Mises and Friedrich Hayek observed long ago what has become known as the economic calculation problem: that, in a centrally planned economy, there is no way to gain an independent sense of how the market values various goods and services. As a result, academics are often overconfident of their ability to predict how various reform proposals will play out in the real world.

This isn’t to say that all academics are bad, or that academics never do useful research. It is merely to suggest that academics should approach their craft with more humility than they often do. There are many other sources of health care research that academics would be well-served to consider:

1. Think tanks. Because of the ideological conformity of the academic world, think tanks provide a useful counterpoint. Indeed, many right-of-center think tanks were explicitly created as a way of providing a home for academically-oriented policy experts who found it difficult to gain acceptance in the left-of-center academic community. In my own policy reading, I find that think tanks are an excellent source of original, non-consensus thinking on health care policy.
2. Industry. The health care industry puts out quite a bit of data, and also a fair amount of policy analysis. However, academics, especially liberal ones, frequently dismiss analyses from industry as corrupt, because they assume that industry is out to advance its economic interests. But whether an analysis advances one’s economic interests is independent of whether or not the analysis is accurate. And not all analyses are driven by greed: for example, CIGNA (a health insurer) can make money regardless of what type of health plans people use, so its analysis of why people choose some plans over others is highly useful, as it takes advantage of the company’s proprietary consumer research.
3. Wall Street. Wall Street analysts produce outstanding research on the health care industry that well exceeds the rigor of most academic studies. This is true for three reasons: (a) Wall Street analysts are incentivized to accurately assess the economic prospects of health care companies in real time, whether good or bad, in a non-ideological fashion; (b) Wall Street has considerable economic resources with which to conduct research that, in the academic world, requires grant applications and bureaucratic approval; (c) analysts gain immediate feedback, in the form of stock prices and company performance, as to whether or not their predictions have proven accurate. Hence, they are able to know when they have made mistakes, and are able to learn from their mistakes. However, the work of Wall Street suffers from two major drawbacks: (a) it is limited to those areas of the health care industry that are relevant to the financial markets; (b) it is distributed to paying clients, and is not generally available to academics or the public. The best research does leak out, however.
4. Industry consultants and professional societies. There are plenty of health care analysts, at places like Deloitte and Ernst & Young, who consult for private companies and provide much of their research to the public for free. Societies like the American Academy of Actuaries do the same (here is an excellent analysis of consumer-driven health care from the AAA). Consultants often get tarred by the left for their industry associations, as PriceWaterhouseCoopers unfairly was for their insurer-sponsored study on the impact of Obamacare on the cost of health insurance. But again, either the analysis is correct, or it’s not. Ad hominem attacks against the authors’ motives don’t advance the debate.

All of this is to say that I hope we can improve the quality of the health care debate by focusing less on where health care research comes from, and more on how good that research actually is: is its data accurate? Are its methodologies sound? If we can do more of that, instead of prejudicially dismissing the views of those who come from institutions we suspect, we are bound to learn much from each other.

Is Intermarriage On The Decline?

Cross-posted from The Agenda on National Review Online.

I got interested in the topic of intermarriage—what was once called “miscegenation”—after reading a brilliant article on the subject by Nathan Glazer in The Public Interest back in 1995. (The magazine’s complete archives are now freely available on-line thanks to National Affairs.) Glazer pointed out that marriage between people of different ethnicities, especially blacks and whites, was the last frontier in racial integration:

After we become ready to work in politics together, to earn our living together, to go to school together, to live together in the same communities, it is not surprising that this increasing togetherness should lead for many to intermarriage. Intermarriage is so crucial a final step because it does more than mark the attraction between two individuals—it marks the highest degree of social acceptance.

To me, this is an exceptionally important and underappreciated idea: that true racial integration can only happen when people are willing to integrate those of other ethnicities into their families.

Unsurprisingly, intermarriage is a signal of how intractable black segregation has been. In his 1995 piece, Glazer cited data that, while 50 percent of American Jews marry outside of their ethnicity, and 30 percent or more do so among Asians and Hispanics, blacks had not: as of the 1980 census, the intermarriage rate for black women was 1.3 percent; the next lowest figure for women was Puerto Rican women, at 21.3 percent.

This, in many ways, was the true symbolic promise of Obama’s presidency: not merely that Obama was the first African-American President, but that he was the son of a white mother and an African father, someone who, in his very existence, was a symbol of racial integration. And yet, there has been little progress on the intermarriage front from 1980: in 2006, the intermarriage rate for black women was 3.7%, and was 8.4% for black men.

In a 1997 piece in National Review, Steve Sailer took a pessimistic take on intermarriage, noting that black men intermarry at much higher rates than black women, and Asian women at much higher rates than Asian men. He contended that these discrepancies cause a number of inter-ethnic tensions that the mainstream media has not grasped:

Black women’s resentment of intermarriage is now a staple of daytime talk shows, hit movies like Waiting to Exhale, and magazine articles. Black novelist Bebe Moore Campbell described her and her tablemates’ reactions upon seeing a black actor enter a restaurant with a blonde: “In unison, we moaned, we groaned, we rolled our eyes heavenward…Then we all shook our heads as we lamented for the 10,000th time the perfidy of black men, and cursed trespassing white women who dared to ‘take our men.’” Like most guys, though, Asian men are reticent about admitting any frustrations in the mating game. But anger over intermarriage is visible on Internet on-line discussion groups for young Asians. The men, featuring an even-greater-than-normal-for-the-Internet concentration of cranky bachelors, accuse the women of racism for dating white guys. For example, “This [dating] disparity is a manifestation of a silent conspiracy by the racist white society and self-hating Asian [nasty word for “women”] to effect the genocide of Asian Americans.” The women retort that the men are racist and sexist for getting sore about it. All they can agree upon is that Media Stereotypes and/or Low Self-Esteem must somehow be at fault.

(More of Sailer’s work on the topic can be found here.)

This brings us to new studies by Daniel Lichter and Julie Carmalt of Cornell and Zhenchao Qian of Ohio State, highlighted in today’s Wall Street Journal, that suggest that intermarriage rates are stagnating or even declining among Hispanics and Asians. Intermarriage among second-generation Hispanic women declined to 16% in 2000 from 22% in the 1990s; among Asian women, the percentage married to white men stayed at about 40% between 1980 and 2008.

“The massive influx of new immigrants from Latin America and Asia has not only fueled the opportunity to marry one’s co-ethnics,” hypothesizes Lichter, “but also revitalized ancestral and cultural identity.” While that could be, a 40% intermarriage rate for Asian women is still quite substantial, where the influx of new immigrants is lower than it is for Hispanics.

Is there a more benign explanation for these disparities than Sailer contends? Are the trends identified by Lichter, Carmalt, and Qian distorted by recent immigration patterns? All in all, this is a subject to pay close attention to.