Nanny Staters: Old World And New
The White House refuses to drop its insipid case against Oregon’s assisted suicide law. In yet another a blow to small-government conservatives everywhere, the Bush White House continues to press an issue classically left up to the states. My opinon? Nobody forces doctors to assist in suicides, so the ones who wish to refuse are perfectly free to do so. If you’re terminal, in horrendous pain, and qualify for assistance under Oregon’s fairly stringent criteria, there’s probably not much point in being alive anyway. Sometimes a shorter term of suffering is the only way to improve the situation.
Across the pond, an extremely fat man with a genetic disorder has been taken into custody for being an extremely fat man with a genetic disorder. This is where the slippery slope of health-related bans goes, folks. First they take smoking out of bars, then they want to tax fast food, then the CDC’s dietary recommendations propose nigh-on starvation in the name of losing weight not being healthy, pretty soon they’re hauling the fat off to fat prison.
I was trying to get across both, really. That the fatty tax is likely a net utility loss and at best revenue ambigious, and that the heatlh provision is in major need of reform.
I’m inclined to think that the best shot at getting a good healthcare system is to remove a lot of the government from it. I’d guess you’re probably with me on that.
I really think having individuals buy insurance instead of going through their employers would go a long, long way because the rest of us wouldn’t get screwed with these group rates. There’s also a lot of mandated coverage that one cannot opt-out of. I am insured for pre/post birth hospitalization, ovarian and cervical cancer, pre/post natal care, and a host of other coverage that I neither want nor need. Why? The insurance company is required by law to give me that coverage, not offer, provide. Even just mandating that they offer me that coverage instead of making me carry it would help a lot, I think. I’m a single, childless (thank my own birthcontrol obsession), and male. I don’t want any of that crap, but I have to have it anyway. If they have to provide me the option to buy it, well, then maybe later if I get married/have kids (not bloody likely) I’ll pick it up.
Whew.. that was close.. you almost went down the road of assuming I said health care was a public good. That would have been bad.
Well Tim, I think we’ll just have to agree to *agree.* I think your piece above is well thought out, but goes a little too far in some of its assumptions that will completely change the behavior of the consumer. I also think you dismissed my original idea for the tax a little quickly; that by paying for health “insurance” – we’re also paying for the costs of Fred, the fatty, and the heart disease he develops at an early age. Overall I’m more inclined to side with your idea to stay away from taxing and look at better ways to provide and charge for health insurance – although I’m not sure that’s the point you were trying to convey so much as the ambiguity a fatty tax might have.
You’re goddamned right.
But not as much as he likes sin!
Well, I like sin taxes in so far as they aren’t overly distortionary due to the relative inelasticity of the markets involved. Low elasticity means less response to price shifts, therefore less distortion of behavior barring extreme measures. Point is, that a tax high enough to re-align behavior is by its very nature distortionary.
Now apply Tim’s argument to every other sin tax and we see how silly it becomes for government to do YOUR thinking for you.
“We” would be a lot better off if everyone stopped thinking about “we” and started thinking about “me.”
(yes I know the irony of the previous…)
poor nice fat man.. 🙁
The fat tax would also distort the preferences and behavior of all of the other consumers in the economy by changing the price of the goods being taxed. This would likely reduce their utility as well, causing even more dead-weight loss while not really collecting much revenue.
I don’t think health care is a public good. It’s rivalrous in consumption and it’s exclusive. Finite resources, if you’re using a doctor I can’t use him/her. And people could be denied healthcare. Not a public good, simply doesn’t meet the definitions. But, one might say, it’s immoral to exclude people from medical care!
Okay, so let’s assume that health care is non-exclusive. It’s still rivalrous, meaning that it’s not truly a public good.
Well, your point was more about a healthy populace than it was about the insurance market, and on that I think you might have a point. However, some other dude being unhealthy has exactly no negative effects on me if I’m not made to pay for his medical expenses. If health insurance were actually insurance, was purchased by individuals based on their own risk categories, and the poor were subsidized with vouchers rather than price controls [because vouchers work on a demand-side basis, thus allowing the information-signalling part of a market price to continue to function], other people’s health wouldn’t be my problem.
The most interesting idea I’ve seen forwarded regarding healthcare is to do something like most states do car insurance: you purchase it individually but are required to carry it. While I don’t like the compulsory nature of such laws [because I think you should be allowed to assume the risk of accident/illness yourself if you want], it would probably fix a lot of the informational problems that plague the health market. I would also severely hack down government subsidy for medical care, especially for the elderly, because that kind of crap drives prices up for everyone. A lot. Becker and Posner have some pretty interesting stuff on medicare/drug issues. As does Arnold Kling, and do the guys at Marginal Revolution.
I also agree with Don Boudreaux and Russ Roberts that the FDA is largely useless. Reducing the costs of drug development would go a long way toward making certain types of treatment cheaper.
Anyway, back to the fat tax. Let’s assume that Fred is a large man with a big appetite, and that he hates exercise. Let’s also assume that Fred has transitive preferences. Fred’s preferences are like this: McD meal > 1 lb home burger (15% fat beef) w/fries > burger (7% fat beef) w/fries > steak w/ baked potato (with everything) > salad w/ranch > salad w/ low-fat ranch > salad with lemon.
Suppose that we impose a tax on McD’s food such that Fred’s utility drops below the price he has to pay including tax, but not far enough that he likes the burger at home better. Well, he’ll still like the McD buger and buy it anyway. Say we, the omnipotent nanny staters, know this so we raise the tax enough so that Fred prefers the home-cooked burger to the McD. Well, that doesn’t re-order the rest of Fred’s preferences now, does it? He’s still gonna want that buger more than the salad. So we, the still omnipotent nanny-staters decide that’s just not right and we impose on high-fat ground beef. That has two effects, 1) it drives up the price of the home buger, 2) it drives up the cost of the McD food further. Well, if we drive those up enough, Fred will want the 7% fat burger most, followed by the 15% burger and the McD burger (McD previously trumped by 15% burger due to heavy taxaton). Well, this just changes Fred’s preferences again but still doesn’t get him to eat the salad like a good boy…but we’re omnipotent and we see that this is really just a multiperiod game, so we realize that in order to get Fred to eat the salad we’re going to have to tax the shit out of a lot of things.
So we do, because we want Fred to be a good boy. We tax everything but salad fixings and fruit because that way Fred will always prefer salad. Fred gets thinner, maybe, if the reduced caloric intake is enough to trump his slovenly lifestyle. Is he healthier? Again, that’s uncertain, only if the change in diet is a panacea for all of his woes.
The next question, of course, is Fred really better off? Say he’s healthier and thinner, just for the sake of it, from this new diet. Is he really better off? Has his utility increased any? I sincerely doubt it. The taxation policy has reduced him to his seventh-best choice (salad with lemon) from his first choice. Fred obviously doesn’t derive much utility from being fit (or he’d exercise) or care much about being thinner (he’d have done something already) so in all likelihood Fred has less utility now than he did before the policy was implemented! That’s dead-weight loss.
But has total welfare gone up? Well, how much dead-weight loss was caused by the harm to utility to all the Freds out there and how much tax revenue was collected? I’m certain that the tax revenue will be less than the deadweight loss. How much will be saved on health care costs? That’s uncertain, as you said, people can’t be forced to exercise and just weighing less isn’t really that great a measure of health.
Essentially all you’ve done is reduce Fred’s utlity without any noticible gains. If taxes are set high enough to have the sort of nation-wide effect needed to get folks to change their dietary habits on a massive scale, they’ll definitely not generate any revenue. If the tax is on sales, and people aren’t buying, well…. Well, if they’re not eating it anyway, you don’t need the tax, so say you eliminate it…OH NO! They buy McD again! So you keep the tax maybe out of an urge to control what people do, but you still can’t make them exercise or follow other simple health prescriptions. To control markets you have to control people, and people do not like being controlled.
Want healthier folks? Make kids take PE and play sports.
This is also a basic problem with people’s underling philosophy of life.
Every moment you live is a choice to live. Every choice you make is the best choice with the information you have. So if you give your ability to make choices to someone other than yourself, how can you be trusted to make the right choice on whether you should live or die?
What I advocate is never to give up your rights to decide what to do with your life to anyone else. That is what makes you a mature human and not a slave in hegemonic bonds. This is what America was built on, and this is what we should stand for today. Austrian Economics has extensivly studied this topic and also read olly’s review on “The Road to Serfdom.” Hayek you da man!!
Good stuff Tim.
Anyone got a breakdown on how the OLCC spends their income?
Lock smokers up? Nah. Just tax them more. Just as I suggested with Chrissy’s problem.
While your assessment that there are several factors involved in why health care costs are so high is correct, but to what degree do you think you can attribute faults in the system for the high costs? More than that of the individual?
I’m very aware of the elasticity’s of the marketplace – raising the taxes on tobacco has little effect on the consumption, and the idea that adults know best is fine.. so long as the costs for their problems do not take from the pocketbook of their neighbors.
You claim that a fat tax won’t work because substitutes are easy to find, but what if those substitutes don’t cause the myriad of problems as the original good? Tax a McD’s hamburger and it will cause more people to cook at home – and what do you think the chances are that the food their cooking at home is as harmful as that they consume at the McD’s? I suppose that point is moot (the actual defintion, not common misused), but at the very least it won’t contain as much rat feces. Did they burn some extra calories during their preperation of the food? (joking)
Don’t get me wrong, I’m all for letting people kill themselves in whatever manner they want, so long as I don’t have to contribute a penny to their cause.
What about the issue of a public goods? Shouldn’t you consider a healthy population a public good? A public good, by definition, is one in which utility is derived by all, but no one would pay for individually. Thats the sole reason for government’s existence in the economic sense. Vaccinations? I wasn’t allowed to enroll for my 2nd term at UofO until I went and got some shots, that I paid for. (likely subsidized in some way) So are they really overstepping their bounds when they tax tobacco? I would think this is the argument you are facing, not that of a free marketplace.
While I can’t tell you much about how many calories are burned in running a mile.. I can tell you this.. what do you think the percentage of adults who run one mile a week are? 5%? You can’t force exercise on the population, but you can tax them.
Back to the issue at hand.. do I think Chrissy should be locked up? Flat out no; I agree that it’s, “simply sickening” at best – but by defintion he does have an issue where he has become a danger to himself and has not demonstrated the ability to properly address the issue in the 23 years he and his family have been alive – so what should the government’s role be? Let him die? Sure. How quickly does someone die from something like that? 2-5-10 years? What about the costs associated to the public during the time he’s hospitialized before death? More than the incarceration (rehabilitation, anyone.. ?) he’s currently going through?
Ahh yeah, nice to see that as opposed to leaving the bloke to figure a way to solve the problem himself or die you think the state ought to save him. Should we imprison smokers, I mean, after all they do cause all sorts of harm to public health and cost a lot.
The reason my, and your, health insurance is so expensive is a lot more complicated than just morons making bad decisions and causing themselves cancer, diabetes and a host of other medical problems. Adverse selection perhaps, informational asymmetry, government regulation (FDA approval, etc), that health insurance isn’t insurance, government subsidy (Medicare, Medicaid, OHP, etc), that health providers aren’t allowed to turn down coverage due to inability to pay, Europe free-riding on American innovation (price caps, socialism), malpractice suits, just to name a few of the complicating factors. There’s also the lack of a real good market in health insurance, likely due to employer group plans.
What next, is the question? Do we stop people from buying twinkies? Do we ban saturated fats and processed sugars? Shall we ressurect Aaron Rorick’s moronic proposal for a twinkie tax?
The reason that sin taxes and gas taxes work is that the markets for those goods are extremely inelastic. Extremely. In the case of tobbacco addiction is a reasonable explanation, certainly, but in the case of booze and gas the more likely culprit is a complete lack of substitutes. You can’t just pick a different product when booze, tobacco, or gas gets more expensive because there’s no other product to buy that’s equivalent.
Not so with junkfoods. So you tax pre-made junk foods, people will just start baking things themselves instead. Same with fast food. So say you notice that and start taxing refined sugar, well, folks can use raw sugar and corn syrup. Just look at Candy companies using corn syrup instead of sugar (because sugar is about twice as expensive in the US as in the rest of the world). There are adequate, nay, plentiful substitutes for junk food and if you tax the junk you’ll change behavior and not gain nearly the revenue you thought you would. And guess what? There will still be a major obesity problem.
Why? One because “overweight” is a poorly defined term not based on health. Two, because if you’re not a slovenly buffoon you can eat pretty much whatever you want and still be relatively healthy. You have any idea how many calories running a mile, just one, burns? Even fairly slowly between 500 and 1000. As fast as I used to run in practice in high school it was 2100, on race days 2600 (plus the 3k and the 400m relay). Get some exercise, you’ll be fine.
As for the poor sot whose stomach won’t stop rumbling, he’d likely benefit from a good dose of exercise to manage the lack of fitness, but how’s locking him away going to be any less costly than having him be out on his own? Why is it the govenment’s problem if he dies?
The right to make bad decisions and deal with one’s life circumstances as one sees fit is the very essence of individual liberty. To take that away from people because “nanny knows best” is simply sickening. Adults, even adults with likely terminal conditions, can decide for themselves what’s best. Don’t need the damn government involved to choose for them.
The difference is that there already is a tax on alcohol. I think everyone could probably agree that if you want to devote more money to programs to help a-holes who can’t handle thier booze, then get rid of the OLCC. That would have to free up a pretty large chunk of scratch, with little adverse effect. Or the OLCC could go full-throttle with the hard alcohol in grocery stores project, or “HAGS” as I like to call it.
Well.. there is this little overlooked part..
“Chris, of Hastings, East Sussex, suffers from an incurable condition called Prader-Willi Syndrome. It means he cant tell when his stomach is full and could eat so much that it will kill him.”
Focus on that, ‘will kill him’ part. I don’t know so much that I agree with hauling him off.. but after 23 years of not being able to control something on his own, maybe the state has some right to intervene. At the very least for aesthetic reasons.. personally I think they should leave him at home, but at least charge him a fat tax.. $1 per overweight lb/per month.
As far as the alcohol tax goes.. how is that any different than cigarette taxes already in place? Gasoline taxes?
It puts *SOME* of the burden of the costs for upon those who are responsible for the high costs in the system. I.e. why I, a non-smoking perfectly healthy mid-20’s male, have to pay out the ass for health care (well, not really.. but my employer does) when I hardly need it. You don’t think some of those costs incurred by myself (paying for health insurance) are a direct result of people who have developed lung cancer over the past 25 years of smoking? Heart disease as a result of 25 years of dining at McDonalds? Fat tax suddenly sounds good. This new alkie tax doesn’t sound all that bad so long as the benefits are going towards the problem. Are there better ways to do it? Probably. Go ahead and propose one and get it passed.
What about the new tax on alcoholic beverages being proposed in the Oregon legislature? It’s $.10 per 12 oz. beverage to pay for alcoholism treatment and other booze-related expenses. That’s $2.40 per case people! If this thing passes I’m moving to Alaska.
What happened to the days when the term “small governement conservatives” was redundant? Anyone want to bet me that Scalia doesn’t side with states rights on this one? I’ll give 3 to 1.
This calls for a Center for Consumer Freedom plug. consumerfreedom.com: because you don’t like taking orders.