Posted by on October 17, 2016

The most frustrating thing about watching the debates is wishing that Economic Man were on the stage.  I have made this request to the Commission on Presidential Debates.  They have responded in a letter that included the words “snowball,” “chance” and “hell.”  So, I have decided to hold a fantasy debate in which I answer the questions posed during the (sur)real presidential debates, starting with the second one from last Sunday.

When you read the transcripts[1] of the debate, you realize how little time was actually spent asking and answering policy questions.  It is mostly random insults from Trump and platitudes from Clinton.  So, if you are shocked by how few questions and answers you see below, don’t be.  The debate is mostly a battle of wits between two unarmed opponents.

I will spare you the questions about Donald’s sexual assaults and Hillary’s lifelong struggle with telling the truth.  Also, I will try to adhere to the two-minute rule.  Finally, I will try to mimic the partisan, simplified, vaguely patronizing responses of a politician, although barring a partial lobotomy, I will never be able to dumb down as thoroughly as the pros; however, expect some loss of nuance and completeness.

Ken Karpowicz (from the audience): The Affordable Care Act, known as Obamacare, is not affordable. Premiums have gone up, deductibles have gone up, copays have gone up, prescriptions have gone up and the coverage has gone down. What will you do to bring the cost down and make coverage better?

EM: Ken, thanks for this question.  At last we get to talk about something other than Donald’s man-child lechery and Hillary’s pathological need to lie and skirt the rules.

Let’s first recognize that medical costs are a huge problem in America.  If Americans haven’t had a wage increase for 30 years, it is largely because employer health insurance costs have eaten up their improved productivity.  If the deficit and national debt are out of control, much of this is because of government payments for medical care.  If the American Dream is becoming a receding mirage for so many middle class citizens, it is largely because of the huge and rising costs of healthcare, housing and education – three areas where the fingerprints of bad government policy are all too visible.

Let’s also recognize that the fundamental problem with the American healthcare system is price.  It is just too damn expensive.  Economics tells us that whenever the price of something is prohibitively high, it is a result of too much demand, or too little supply, or – which is what we have with healthcare in America – a toxic brew of both of these things.  If the price of healthcare in America were not so astronomical, then the argument about who pays for it would be much lower key.

On the demand side, we have one simple fact: Something like 80 to 85% of health care expenditures are paid with other peoples’ money.  An insurance company or the government.  Imagine if 85% of your restaurant bills were paid by someone else.  You would eat out every night and you wouldn’t much care if the menus arrived without prices.  No market can function when the buyers have almost no motivation to consume wisely.  Yet, this is precisely what we have created in America.

We need health insurance that is real insurance.  Which means that it covers catastrophic events and not routine ones, the same way that your automobile insurance covers accidents and not replacing tires.  Until we introduce discipline into the decisions of purchasers, including the lifestyle and end-of-life choices they make, we will either have uncontrollable prices (if we continue with a private system) or waiting lines that stretch to the horizon (like they have with state systems in places like England and Canada).

On the supply side, we need to break up the government-mandated cartels.  We need to get rid of the artificial restrictions on medical schools.  The procurement policies for medical equipment.  The restrictions on pharmacies, clinics and nurses providing routine care.  The restrictions on foreign medicines.  The entire crazily expensive approval process of the FDA. The intellectual property system that has gone wild. The crazy tort law and medical malpractice system.  Etc, etc, etc.

And, yes Donald you simpleton, we can also do away with the restrictions on interstate sales of medical insurance.  But, unlike you, we won’t pretend that this is the only thing needed.

Obamacare was a badly designed bandaid for a fundamentally flawed system.  Hillary just said that she wants to fix Obamacare and not repeal it.  This is putting a bandaid on a bandaid.  The time for this is long past.  We need root and branch reform, and we are certainly not going to get it out of either the Republicans or the Democrats.

Gorbah Hameed (from the audience): Hi. There are 3.3 million Muslims in the United States and I’m one of them. You’ve mentioned working with Muslim nations. But with Islamophobia on the rise, how will you help people like me deal with the consequences of being labelled as a threat to the country after the election is over?

EM:  Well, certainly Donald is doing his best to whip up Islamophobia as part of his campaign to scare Americans into electing a strongman.  This is in the best tradition of third-world countries but it has nothing to do with what made America great.

But if we trace this problem back to its origins, we realize that this is a case of Donald exploiting a problem that Hillary did a lot to create.

The western world is experiencing a number of attacks by people inspired by a perverted version of Islam.  There are two theories to explain these attacks.  The first is that they are inspired by religiously-based hatred for western ideals of freedom, progress and secularism.  The second is that they are “blowback” against western interventions in the Middle East.

To my mind, there is no doubt where the truth lies.  Listen to what the terrorists shout as they perpetuate mass slaughter.  Read their social media posts.  Listen to their rhetoric.  This is blowback.  And Hillary, who has supported about nine out of the last seven wars the US has fought, is one of its principal architects.

As one Republican Senator said, we have kicked a hornets’ nest in the Middle East and now we have to live with the stings.  But the first rule when you are in a hole is quit digging.  We have to stop being the most effective recruiting agent for the jihadis.  We have to get our military out of the Middle East.

Even if we stop now, the sad truth is that we will have this problem for a long time.  But we need to recognize that the likelihood of dying at the hands of a terrorist is lower than getting hit by lightning.  The worst thing we can do is allow a demagogue like Donald to use this to frighten us into violations of our fundamental beliefs and freedoms.

England lived with IRA terrorism for over 40 years.  It wasn’t pleasant, but the country thrived and stayed free.  We can do the same.

But, Gorbah, you and other members of the Muslim community have a special responsibility and a special role to play.  The country will help by leaving the hornets’ nest alone.  But your community must take the lead in making sure that the gullible and vulnerable are not exploited by the extremists within your faith.  And, if it comes to it, you must be alert to risks and quick to tell the authorities about them.  No one is better positioned than you to do this.  The recent arrest of a terrorist in Germany is a good example.   After eluding a Keystone Kops effort, he was captured by three citizens.  Three Muslim citizens.

Raddatz: Thank you Mr. Trump. I want to move on. This next question comes from the public through the bipartisan open debate coalition’s online forum where Americans submitted questions that generated millions of votes. This question involves WikiLeaks’ release of purported excerpts of Secretary Clinton’s paid speeches, which she has refused to release. In one line in particular, in which you Secretary Clinton purportedly say, ‘You need both a public and private position on certain issues.’ So, two from Virginia ask: ‘is it okay for politicians to be two-faced? Is it acceptable for a politician to have a private stance on issues?’

EM: No.  It is not acceptable.  But with Hillary’s policies, it is inevitable.

There are two quotes I like.  The first is that “the state is the great fiction whereby everyone attempts to live at the expense of everyone else.” The second is shorter: “There are no free lunches.”  Hillary’s entire campaign is an attempt to deny these truths.  She can do this in public, but in private, she has to admit the truth.

There is also a deeper reason why Hillary is compelled to be two-faced.  Many laws affect a large number of people, but only a little bit for each one.  These same laws affect a small number of people a great deal.  In addition, this small group is often the party that has the greatest expertise in the area covered by the law.  Which means that the small group has both much more motivation and much greater skill in influencing these laws.  This is why Hillary rails against bankers in public, but in private speeches, she confesses that she really needs them.

This isn’t just Hillary being deceitful again.  It is Hillary obeying a law of economics that is every bit as ironclad as the Law of Gravity.  Replacing Hillary with someone else won’t solve the problem.  Only reducing the size of the government, and therefore the areas where this law can work its evil, can do this.

Donald likes to pretend that, as a poacher turned gamekeeper, he is immune to these influences.  Don’t you believe it.  His campaign is also full of promises of a free lunch.  And since he has no real commitment to reducing the size of government, he will be subject to the same iron law.

Spencer Moss (from the audience): Good evening. My question is what specific tax provisions will you change to ensure the wealthiest Americans pay their fair share in taxes?

EM: Spencer, when did you stop beating your children?

Just kidding.  That’s my subtle way of letting you know that you’ve asked a loaded question.  And that you’ve been listening to the wrong people.

Here are the facts: The top 1% of Americans earned about 15% of total income in 2013, the last year for which statistics are available.  This same group paid 25% of the total federal taxes of all types.

The remainder of the top 20% of Americans earned about 38% of total income, but paid about 44% of total federal taxes.

Altogether, the top 20% of Americans paid almost 70% of all taxes.  The bottom 50% paid almost nothing.

But this is just one side of the equation.  The other side is government payments and benefits, very few of which go to the wealthiest Americans.  Add these in and the net government burden borne by the wealthiest taxpayers becomes even greater.

Now, is this a “fair share”?   I don’t know, but then neither does Hillary when she claims it isn’t.  There is no objective standard of “fair share.”  Maybe Hillary thinks that the rich, and all those who aspire to be rich, should be soaked even more.  But it appears to me that we are already doing a pretty good job of this.

What I can tell you, objectively, is that if you are tempted to try some more soaking, history shows that this is not a winning strategy.  The last time taxes on the rich were significantly increased, they arranged their affairs to declare a lot less income.  The end result was a slight reduction in the total taxes they paid, plus a whole lot more inefficiency, and a lot less investment and growth, in the economy.  Not necessarily a great idea, eh?

But you are quite right to raise a question about our tax system.  We have many challenges facing our country and reform of the tax code is near the top of the list.  The question we have to ask ourselves is whether we should try to make the existing system better – which can be done, although not through changing a tax rate here or eliminating an exemption there, as both Hillary and Donald pretend– or whether we should move to a fundamentally more rational system, such as the consumption tax supported by many economists.  This is the real discussion that should take place, which is obscured by the petty vote-buying of both Hillary and Donald.

Raddatz: The heart breaking video of a 5-year-old Syrian boy named Omran sitting in an ambulance after being pulled from the rubble after an airstrike in Aleppo focused the world’s attention on the horrors of the war in Syria, with 136 million views on Facebook alone. But there are much worse images coming out of Aleppo every day now where in the past few weeks alone 400 have been killed, at least 100 of them children. Just days ago, the State Department called for a war crimes investigation of the Syrian regime of Bashar al-Assad and of its ally, Russia, for their bombardment of Aleppo. So this next question comes from social media, through Facebook. Diane from Pennsylvania asks: If you were president, what would you do about Syria and the humanitarian crisis in Aleppo? Isn’t it a lot like the Holocaust when the U.S. waited too long before we helped?

EM: Diane, you’re not going to like this answer, but the truth is, there is not much we can or should do.

We’ve tried to help before.  We tried it in Iraq.  We tried it in Libya.  We even tried it in Afghanistan, although in this case we and the local population had a common enemy in the Taliban and Al-Qaeda.  We won the military battle in all of these cases.  But is America any safer because of this?  Are the people in these countries better off because of our attempts?

The lesson is that there is no point in winning the war unless you can win the peace.  And America cannot deliver a winning peace to these countries on a silver platter.  This has to come from within.  And there is, unfortunately, no foundation for this.

If there is a genuine international effort to establish safe zones, where innocent civilians can flee the carnage and where the international community can offer them safety and subsistence, then America should support this.  But America has tried being the global policeman for too long and it has proven to be a thankless and endless, but certainly not costless, task.  This has to stop.

James Carter (from the audience): My question is, do you believe you can be a devoted president to all the people in the United States?

EM: James, this is a great question.  Again, we have to go back to first principles.

Our country is incredibly divided.  This campaign has made this worse.  But the campaign is also a reflection of an existing deep divide.

Part of the genius of the Founding Fathers of our country is that they recognized that the only way people of different religions, races, origins and outlooks could live together peaceably is by leaving the maximum freedom to each individual.

But this wise rule has been repeatedly broken.  Too often, one side or the other has used the heavy hand of the government to try to impose their views.  Whether it is about abortion, or school curricula, or marriage, or religious freedom or political correctness, the result has always been the same: resentment and a desire to retaliate through the same heavy hand.  And the divide grows.

This has to stop.  And the only way this can happen – the only way that anyone can be the “devoted president of all the people” – is through a government that refuses to take sides and instead allows neighborly tolerance and respect to flourish.

Beth Miller (from the audience): Good evening. Perhaps the most important aspect of this election is the Supreme Court justice. What would you prioritize as the most important aspect of selecting a Supreme Court justice?

EM: Thank you, Beth.  The fact that you have to ask this question is proof of how far we have strayed from the principles that made America great.

Let me start by saying what we shouldn’t do.

Listen to Hillary’s response.   In her litany of litmus tests, not once did she mention “adherence to the Constitution” as a requirement.  She makes crystal clear that she will attempt to stack the Supreme Court in order to achieve her activist agenda, regardless of the Constitution or the democratic will of the American people.  Like President Obama, Hillary thinks that she knows exactly what the American people need in every aspect of their lives, and she intends to give it to them, good and hard.  And she won’t allow the Constitution or the law to stand in her way.

But Donald is no better.  Although he mouths platitudes about Justice Scalia, he has no real understanding of judicial or governmental restraint.  Listen to his words on preventing companies from moving offshore, or torturing suspected terrorists, or using the libel laws to suppress dissent, or policing the internet.  He is fundamentally an authoritarian who only objects to government control when he does not control the government.  Anyone who thinks that he would allow a Justice Scalia to stand in his way hasn’t been paying attention.

We need Supreme Court justices who understand that they are the umpires and not the players.  Who understand that their job is to interpret the rules and not to make them.  Justices who will enforce the Constitution and the rule of law, not only on the judiciary itself, but also on the other branches of government.  This is what we should prioritize.

Ken Bone (from the audience): What steps will your energy policy take to meet our energy needs, while at the same time remaining environmentally-friendly and minimizing job losess for fossil power plant workers?

EM: As you know, Ken, I have deviated from libertarian orthodoxy on this subject.  I am in favor a revenue-neutral carbon tax, provided that it is combined with a repeal of all our other energy policies, regulations and subsidies.

There are two ways to try to achieve a policy goal.  The first is to make and enforce a rule book, specifying exactly how the goal will be pursued.  The second is to create the right incentives and then let the free market determine the means.

The first way is always a mistake.  This produces enormous inefficiencies and costs.  It also produces the legions of K Street lobbyists, who spend their days making sure the rules favor their employers.  This is the type of top-down, command-and-control that the Soviet Union proved does not work.

By putting a tax on carbon, we will get the innovative genius of the American economy working for us.  This will provide the incentives for conservation.  It will encourage carbon emissions to be reduced in the most effective ways possible.  And it will motivate the private sector to support and fund alternative energy technologies.

With the right incentives in place, we can eliminate all the regulation – and, not incidentally, the regulators.  No more fuel economy standards for cars or efficiency standards for appliances or homes; the market will provide this.  No more need for subsidies.  No more Solyndras!  The market will do all of this far more effectively, and far less corruptly, than Washington could ever do.

And this won’t hurt growth.  The carbon tax will be recycled into the pockets of Americans in the form of reductions of other taxes.  It will not become another opportunity for politicians to pursue their grandiose dreams, and vote-buying, with other peoples’ money.

But you also asked how we are going to minimize job losses in the fossil fuel industry.  And the answer is that we are not.  We are going to let the market decide how quickly this industry fades away.  We are not going to pretend, like Donald, that we can revive the carriage industry in an era of automobiles.  Our country can no longer afford this type of self-deception.

What we will do for the workers displaced by this inevitable march forward is create the most vibrant and flexible economy possible.  Hillary just told you about her attempts to help Appalachian coal miners.  In reality, she is killing them with kindness.  They don’t need reasons to stay in dead-end jobs in declining communities.  They need the types of opportunities, mobility and skills that will allow them to thrive in the 21st century, not the 19th.

Karl Becker (from the audience): My question to both of you is, regardless of the current rhetoric, would [each] of you name one positive thing that you respect in one another?

EM: [The sound of crickets chirping]

Roger Barris

Weybridge, United Kingdom


I Wish That I Had Said That (And Sometimes Not)…

“Everyone appreciates your honesty, until you’re honest with them, then you’re an asshole,” by George Carlin.

“The essence of a libel claim, of course, is the protection of one’s reputation….Nothing in our article has had the slightest effect on the reputation that Mr. Trump, through his own words and actions, has already created for himself,” from the response of the New York Times to Trump’s demand for a retraction of an article on Trump’s groping of women, showing why it is so difficult for well-known scumbags to win libel suits

“Trump proposes eliminating America’s $500 billion trade deficit through a combination of increased exports and reduced imports,” from the White Paper on Trump’s economic policy.  Yes, apparently it really is that simple

The Trump campaign will simplify the GOP’s quadrennial exercise of writing its post-campaign autopsy, which this year can be published November 9 in one sentence: ‘Perhaps it is imprudent to nominate a venomous charlatan,’” by George F. Will, showing Trump the right way to insult someone


[1] The transcript has clearly been machine-generated, which means that it sometimes contains mistakes.  I have cleaned up the obvious ones.

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Posted in: Economics, Policy, Politics

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Mary Lou

This was the best