And it will be up tomorrow, you dope.

Recovery is not going to be marked by an increase in the Dow. Quite the reverse.

Recovery will come only when companies accept the massive writedowns that will be necessary for their balance sheets to reflect the actual value of their liabilities. Many banks in particular are really insolvent right now, and everyone is trying to find a way they can pretend not to be insolvent. Doesn't work.

Once they accept those massive writedowns, it makes sense that the stock market will plunge to reflect a more realistic valuation of the companies in question. However, taking the writedowns will also make it possible again for the remaining banks to start lending - which they can't do right now because they are having to hold onto every cent to maintain their solvency against these liabilities. That's when the recovery will come.

Grim, ain't it. But that's the truth. You won't hear it on the TV news, but get the hell out of stocks.

Bill, the bar is pretty low. It's at "imagine how much more things would have sucked if we hadn't done all this stimulus stuff". That's the line from the MSM, and guys like Alex have swallowed it hook, line, and sinker.

"Massive writedowns"? Where and when? Or, Bring it on! Write down GM! Write down Chrysler! Write down AIG! Write down all the deadbeats and their mortgages! Oh, wait, we're going to bail them all out with taxpayer dollars. There are not going to be any writedowns. Writedowns mean that the bad businesses go bust. Barry isn't willing to let anyone go bust.

And it's not just businesses. Write down the public employee pensions to what their current funding balances can afford. If the plans are underfunded by 40%, then all current and future benefits get cut by 40% immediately. Otherwise the tax hikes that will be necessary to bail out these overly generous pensions will make the stimulus look like small potatoes.

Do the Dems not "get" that it is regulatory stability that causes investment? This is getting really seriously scary. The banks, the businesses and now the mortgage borrowers. Punish the winners with higher taxes, reward the failures with the spoils. Is it that complicated to see that you are rewarding and incentivizing bad risk and unproductive behavior?

I always thought that Atlas Shrugged was a hyperbolic fable. I don't think that anymore.

I really don't think this crisis, and the lack of investment it has produced, has been caused by regulatory instability. The regulatory environment for banks and mortgages stayed pretty much the same from 1999-2008, and it is that regulatory environment that produced this crisis. A structure that enabled the creation of exotic, highly leveraged financial instruments that depended on home prices continuing to rise is not a healthy structure.

If you own a home and the rain starts coming in through the roof, you get up there and fix the roof. You don't start claiming that making any changes to the house would be counterproductive.

Now, the administration is not responding in the way I'd like to see. I would like to see forced writedowns and the insolvency of the banks that overbet on bad investments, so that we can all get through this. The plain fact is, I think that they're scared that if the full scale of the insolvency is revealed, it will be a blow from which the economy cannot easily recover. So they're trying to find gentler ways that inevitably reward bad behavior. The Bush administration was doing the same thing.

Atlas Shrugged is a hyperbolic fable. But if you know of any titan of American industry who is particularly competent at their job, now would be a good time to float their name. Certainly that incompetent loser Robert Nardelli (CEO of Chrysler, formerly the guy who drove Home Depot into the ground) is no John Galt!

Alex, the regulatory instability isn't the cause -- it's the ill-conceived "cure". I think we actually agree on that, though I'm not sure that the Bush administration was 'doing the same thing'. I don't think the lender banks are as causally complicit as the financial firms that securitized the tranches of loan product, and the first round of TARP was supposed to help the lenders loan again on better terms and lower the aggregate default risk while putting money back into the economy -- wasn't it?

If there is a reductionist Keynesian element of this entire effort -- which certainly seems to be what Obama is saying -- and we'd do anything including paying men to dig ditches and fill them again just to put money into the economy -- then it is NOT inevitable that we reward bad behavior. The very simple bottom line is that good behavior - investment, prudence and moderation of risk -- has its rewards. Good behavior makes you rich. So "sharing the wealth" means that we are transferring the fruits of prudence and success to those who have not been prudent, moderate or even honest.

Now, it's one thing for you to tell me -- look, Rose, you make a lot of money, so you should pay a little (actually it's a lot) more toward the social safety net for the truly indigent, the wounded veterans and our national defense. I've been doing that since I left law school. However, if you say -- Rose, I know you didn't buy more house than you could afford, and even though you'd like to refinance and can't because of the market, and even though you make every payment on time, you should pay off the mortgages of those who overextended, and those who simply and deliberately stopped paying even though they could pay -- NO. I have to draw the line, Alex.

Have some wealthy, successful individuals gamed the system in various ways and benefited? Yes. This is not a license or a justification to turn the entire economic incentive system on its head. Enforce the laws; change them to make accountability more transparent and meaningful. It's equally true that low-income individuals game the system -- welfare, for instance -- that's no justification for taking that help away from the good, honest people that need it. The same principle applies at each end of the spectrum and everywhere in between.

Also -- every mortgage is attached to real property which at least at one point was relatively close to the loan amount. The country is full of people that pay their mortgages -- some 90%+. The depth of the problem is not as severe as you might fear, if only it could clear itself from the system -- transfers are WAY up in California, and in Northern Virginia the inventory is clearing as well. If you now REWARD default, you will see a whole new wave of it that is purely opportunistic, PLUS at least half of those who get 'bailed out' will simply default again within a year. What are we doing?!

There is going to be a massive protest movement in this country before long. People are somewhat disassociated with the payment of taxes, because it's largely withheld from income at the middle-class level. If someone making 65,000 a year had to write a check every April for 20,000 I can guarantee you people would think a lot harder about government spending and tax policy. However, nearly everyone pays their mortgage monthly out of their own pocket, and nearly everyone has seen their appraised value decline, and nearly everyone knows someone personally that over-borrowed or that took 120% equity out of their homes at the peak to fund their lifestyle. Mark my words. This is about to get ugly. There were hundreds of protestors in Mesa. That's a drop in the bucket.

Look -- you can believe what a man says, but it's usually more accurate to believe what he does. In this case, can anyone really doubt that "spread the wealth around" meant far more than just making the rich bear more of the cost of supporting the indigent and funding core government functions? The goal is to equalize the economic classes -- this 'crisis' -- which the Obama administration is encouraging to fester with every tool at its disposal including rhetoric -- is just the excuse. Alex, you're a smart guy and you recognize the danger of continuing to mask and defer clearing of the bad debt -- surely you see that.

I actually do think the bankers knew what they were doing. They were following their individual incentives, which were to make a bundle of money from originating new mortgages in the short term and then get out before the whole structure went south. They were by and large utterly complicit in the securitization process.

TARP failed to make banks lend again because the banks have to retain whatever capital they have in order not to be declared insolvent. The problem is not lack of assets; it's gargantuan, undeclared liabilities in the form of securitized investments. Nothing has been done about those, and till something is done they cannot start lending again.

If good behavior has rewards, then bad behavior should be punished. Currently, I don't see any of the people responsible for this mess - the financial traders, the mortgage brokers, the deregulating senators, any of them - stepping up and taking the hit. They partied with our money for years, pissed it away on dubious investments, and have left the taxpayer holding the bag. Let's start there when we talk about accountability.

I counseled some of the potential first-time homebuyers who got caught up in all of this. I gave good advice about being responsible in their mortgage choices, reading the paperwork, avoiding interest-only mortgages and teaser rates and so on. But the same people were getting hammered every single day by ads that claimed falsely that they could actually afford to own a home, from mortgage brokers who were interested only in the origination fee and not in whether the person was actually a good risk or not. Sometimes they listened, and were wise; sometimes they didn't, and were foolish. But foolishness is a whole lot less bad to me than the active malevolence of the mortgage brokers and the callous greed of the financial traders. They were preying on people who simply didn't have the financial smarts to see that they were being taken for a ride. You say, "Good behavior makes you rich", but it seems to me that there are a lot of people right now who have gotten very very rich through bad behavior, and many of the people suffering and losing their jobs and their homes have done pretty much what they should have done.

That's the thing about a recession. It's not an arbiter of justice. My parents lost our family home to foreclosure in the early 1990s. Nearly everyone in England has variable-rate mortgages, and interest rates rose to 15%, making the payments impossible to sustain on their income. How could they reasonably have foreseen that? and would you blame them for what happened?

Rose, you should pay off the mortgages of those who overextended, and those who simply and deliberately stopped paying even though they could pay -- NO.

I would agree. And is that really what's being proposed? Or is that just what you fear will happen even though it is not being proposed?

Have some wealthy, successful individuals gamed the system in various ways and benefited? Yes. This is not a license or a justification to turn the entire economic incentive system on its head.

It is, however, a license to improve it. Obama is not, despite the propaganda, a bandolier-toting revolutionary. He's a deeply pragmatic, incrementalist sort of guy. And if some aspects of the system are broken, they ought to be fixed, for the sake of the system itself. Last time around, the changes Roosevelt wrought pretty much saved capitalism from its own excesses and from a revolution that would have swept it away entirely. Lovers of capitalism should embrace, not oppose, a reform agenda that tries to save the system from itself.

If you now REWARD default, you will see a whole new wave of it that is purely opportunistic, PLUS at least half of those who get 'bailed out' will simply default again within a year. What are we doing?!

Every government effort - and every private effort too - is a blunt instrument. It achieves some goal at a cost in terms of undesired consequences. The key is not to expect no undesired consequences, but to minimize them when they do happen.

Look -- you can believe what a man says, but it's usually more accurate to believe what he does. In this case, can anyone really doubt that "spread the wealth around" meant far more than just making the rich bear more of the cost of supporting the indigent and funding core government functions? The goal is to equalize the economic classes

The first part of what you say here contradicts the second. Let's wait for him to start a class war before we judge him for starting one.

I should also note that the opposite of "spread the wealth around" is not "do nothing about the current distribution of incomes" (it's inherent to government action that it will affect incomes somewhere in the economy) but "concentrate the wealth in fewer hands". Haven't we seen enough of concentrating the wealth?

It's not that complicated to create a much better incentive structure. The opposite of "spread the wealth around" isn't either of the things you suggested; it's "create conditions that support the creation of MORE wealth". Trying to manually adjust the "concentration of wealth" does not accomplish that; in fact, it has the opposite effect.

I have no problem with the government buying down the rate of everyone's mortgages. And I mean EVERYONE. Isn't that the easiest thing to do? However, no one is talking about this policy being strictly limited to retrospect. And yes; I do know of a lot of deliberate defaulting, because I am in this business. I don't think that people who are truly in need should be abandoned, but let's not kid ourselves that it has any stimulative effect on the economy to artificially float people above their income level. I will tell you that there are a number of subgroups of "problem" mortgages. One is the situation you named; predatory mortgage brokers and uneducated borrowers with bad judgment. The problem you have described in your own family (and believe me, I did not grow up wealthy and I am sympathetic) would not have happened in this market, where rates have remained near historic lows, and, if adjustable rate creep were the problem, wouldn't that have corrected when the rates dropped again? It's not too politically correct to name the others, but I will. Upper-middle class entrepreneurs or "Real Housewives" types funded non-real estate spending with equity on McMansions, and then ran out of road. They were either living way above their means or floating failing businesses. High income, good credit, borrowed 120% in some cases on houses that are now worth about 80% of the loan amounts. Another good-sized group (believe it or like it or not) is illegal aliens; suddenly the house is not worth the loan amount and they just walked away. That's totally rational -- why would they do otherwise? Another big problem is that the big merchant home builders stopped taking spec contracts some time ago, to protect themselves from risk, but continued to build out what was in the pipeline, and the market got flooded out. The big merchant homebuilders use Wall Street money now, and they have to put up quarterly profits. In the "old days" (like 15 years ago) developers used their own money and plain old bank loans, and when the market dipped they just backed off. Another big issue is divorce - wife wants the house and the money - husband can't afford both houses -- moves out and stops paying the mortgage.

Here is the big issue -- do you KNOW how many people could have pulled it together when the rates came down -- but haven't been paying since November because they will get bailed out?

So I do think that "concentrating the wealth in fewer hands" is class war. It just is. It's one thing to say that the tax structure and government policy have a side effect on income and wealth, it's another entirely for the policies to have that as their raison d'etre. If you don't like the words "capitalism" and "socialism", fine; it's not really fruitful to talk about definitions -- but to redistribute wealth for its own sake is what most Americans consider socialism. And they don't like it.

Here is the good news -- there is developing pent-up demand for housing, as well as a lot of other durable consumer goods like cars and washing machines. The population is still growing, and houses and cars and washing machines all have natural lives and eventually need replacement.

Thanks for your thoughtful comments, Rose.

I guess that part of the reason I am a Democrat is that I think that if the government restricts itself simply to "creating conditions that support the creation of MORE wealth", without any concern for who the wealth is going to, then you will inevitably end up with wealth concentrated in very few hands.

This is because wealth is not simply an index of competence. It's also an index of power. If you have more money, you have more power to prevent your children from facing the financial consequences of incompetence or the legal consequences of illegal behavior. Over the course of a couple of generations, with a wholly hands-off government, a class composed entirely of entrepreneurs will transform itself into a class of wealthy and entitled people whose income bears little relation to their actual merit. They will use their money to shape policy to continue to benefit them and people they perceive as being like them. That's just how people are. Founding Father Thomas Paine saw this risk, which is why he actually proposed that the American republic should outlaw inheritances and force each adult citizen to earn his own bread through his own work.

So then the question becomes: is the adverse effect of intervening to distribute income more equally, for example through a graduated income tax or a minimum wage, better or worse than the adverse effect of not intervening?

let's not kid ourselves that it has any stimulative effect on the economy to artificially float people above their income level.

I think there are many people who tried to afford their homes over the last few years who really can't. They should not be artificially kept in a homeownership situation through subsidy. But right at the bottom of the income scale, where a marginal dollar makes a lot more difference than it does at the top, there is a lot of consensus among economists that the minimum wage does stimulate demand without overburdening the economy.

I agree with your analysis of the "problem groups". I don't know "how many people could have pulled it together when the rates came down -- but haven't been paying since November because they will get bailed out". I don't think anybody knows that. What I would say is that it would have been irrational for them to act that way in the hope of a payout from a program that doesn't yet exist and is in no way guaranteed to go to them anyway. That doesn't mean people aren't acting that way. But no reasonable policy intervention would be able to distinguish those who are consciously not paying in order to game the system even though they can afford to pay, from those who are getting deeper and deeper into debt and really can't make the payments.

to redistribute wealth for its own sake is what most Americans consider socialism. And they don't like it.

Do Americans like plutocracy any more than they like socialism?

Thanks, Alex. I guess the reason that I'm a Republican is that I don't believe that the government should decide who gets rich. That sets the stage for an outcome just as corrupt -- if you control wealth, you control elections, and if you control elections, you control wealth....or power can be seized by arms and that's also bad. Nor do I believe that you are inherently better off if I am worse off. It's not the relative prosperity that affects people's lives, it's their standard of living and their perceived control over their own destiny. Simply put, I believe that democracy is about liberty and equality, and the real difference between a modern Democrat and a modern Republican is that the left side of the house is more about equality of outcome and the right is more about liberty and opportunity. I believe in equality of opportunity, not a falsely-created equality of outcome -- for a number of reasons. It's fundamentally fair, it recognizes the inherent good in human nature, it incentivizes positive dynamics like hard work and innovation, and moderation of risk, and it's actually achievable de jure. State-sponsored forced equality of outcome, in my opinion, does not meet any of these criteria. Life, liberty and the PURSUIT of happiness. The business about not inheriting wealth didn't make the final draft (and, I might point out, not everyone in America has to work to be financially supported).

I think that we would both agree that no one in America should be without the means to basic human needs. I think that we probably also both agree that the very wealthy should not be shielded from the law if they make that money illegally or fraudulently. As to the other 90% of the population, I think they should have good free education through the 12th grade, they should have the opportunity to work or attend college (or both) free of discrimination of any kind, and they should be entitled to the fruits of their labors without molestation, and they should be able to depend on the rules of the game not changing dramatically.

We do, in fact, already have a minimum wage and a progressive tax code, and pretty significant social safety nets for the poor, disabled, elderly. We do not have a 'completely unregulated' market economy. You're making a straw-man argument here. When you are talking about "the wealthy and entitled" having the power to evade the law that applies to "ordinary" people -- you are referring to a very small number of people in any event (and even in that case I don't agree with you). Let's talk about families making -- let's say -- $200,000 a year. Two professionals, student loans, family (and just to be clear, this is not my household). Why do these people need to be brought closer to the lower end of the economic spectrum to satisfy your idea of fairness? Nor is it necessarily the case that this couple achieved that status through birth advantage. A couple with two college degrees or graduate degrees is in this general range of income, and I sure don't think most think that they are "rich" or outside the reach of the law. Not everyone above the median income is like the crazy family in "Dirty Sexy Money"...that's a convenient trope. There are incredibly wealthy people who live very quiet, generous, principled lives, and who expect their children not to simply live off of a trust fund. Most people in that dual professional income range are just working their butts off and trying to invest for their retirement and their kids' educations. There are also relatively poor people who exploit the law. If your theory is "it's bad to be rich, so we had better make sure no one is" -- then that IS class warfare. I'd much rather say "it's bad to be poor, so we had better make sure no one is". Even then, I'd rather give the poor the means to be fruitful than keep them on the dole. If you think that a ruling elite, fueled by political advertising and special interests, doling out success and clipping wings, is any less a plutocracy, I have two words to say to that: George Soros. So perhaps Americans like it quite well.

Here's another question -- how much has the economy declined since the Democrats regained a majority in Congress? The Dow has dropped well over 5000 points. So what do you think -- is this working?

"Recovery is not going to be marked by an increase in the Dow. Quite the reverse."

Oh, please.

I guess, though, that depends on what "recovery" means to the fascists now in control of the White House and Congress.

Whatever it is, I'm willing to wager it does not match what many of the rest of us would call it.

BTW: People are withdrawing from investing now because of the incessant naysaying from the Doomsayer-in-Chief and his gaggle's campaign against capitalism.

Ultimately, of course, the recovery will be marked by a rise in the stock market. But rises or falls right now mean nothing for recovery, because we still haven't dealt with the root cause of the economic crisis (worthless mortgage-backed securities that people are still trying desperately to pretend have value). Dealing with that will cause the market to fall, but it's also the only thing that will ultimately allow it to return to a path of growth. It would be a good thing - if the government has the guts to tackle it.

People are withdrawing from investing because they know that the crap on the market is still out there somewhere, and they can't reasonably determine what would be a good investment until the crap is disclosed. Obama could talk the market up or talk the market down. It won't change that fact.

Rose, I understand and share many of your views. Corrupt apparatchiks doling out favors is no basis for a viable economic system. But the firms who have done really well over the last ten years or so have been firms that, to use Ayn Rand's phrase, have "pull" in Washington - defense contractors, oil companies, and so on. I fear a society where a wealthy elite of Wesley Mouches hampers ordinary people from achieving their dreams.

I don't believe in enforcing equality of outcome; what I believe is that a more interventionist government is needed to provide genuine equality of opportunity. Without that, you have the kind of equality of opportunity of which Anatole France spoke when he said, "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread." It's not equality of opportunity to set up facially equal rules that give people of a given level of competence wildly unequal chances of success.

What I don't follow is how you can oppose redistributive government policies in theory, but accept the existence of a minimum wage, a progressive income tax, or a public school system, each of which is inherently redistributive. What is the difference that makes these things OK, but makes, say, a cap on the pay of CEOs of companies who choose to receive government stimulus not OK?

they should be able to depend on the rules of the game not changing dramatically.

I was with you up to this point. Obama was elected in a free and fair election; as, by and large, were the Democratic majorities in Congress. They're entitled to have a crack at forming policies, because the voters have given them that chance. If the voters don't like what they get, they're free to throw them out.

Let's talk about families making -- let's say -- $200,000 a year.

Sure. As it happens, that's about what we are lucky enough to have made last year, up from maybe $60,000 in 2004. This is because my wife is a professor in a business school (working in nonprofits, I don't earn much, especially as I'm part-time). We do have graduate degrees (she has a PhD). We're not "outside the reach of the law", but the difference between us and an indigent couple is that we could, if in trouble with the law, afford to hire a competent lawyer to defend us. You know how the public defender system is.

I've been poor. Being poor sucks, and I genuinely have no wish to see people remain in poverty. We don't have different aims in view here, just different beliefs about the best way to achieve them. I know that Republicans in general don't really want a society bifurcated between a small number of highly prosperous people (like us) and a large number of low-paid workers who struggle to get by. However, I do see Republican policies as unintentionally encouraging that outcome. I'm interested in forming and maintaining a solid middle class, who can afford to provide for their kids' educations, their pensions, their healthcare, a decent place to live. You have surely seen that that kind of lifestyle has become harder and harder to sustain over the last thirty years.

Here's another question -- how much has the economy declined since the Democrats regained a majority in Congress? The Dow has dropped well over 5000 points. So what do you think -- is this working?

It is only now that we are seeing any kind of wholeheartedly Democratic proposals being signed into law. The situation in Washington (as opposed to the setup in the Constitution) is that the President does set the agenda for what is spent on what. So I'm not going to attribute to the hapless Congressional Democrats the woeful economic record of the last few years. My view, as outlined in other posts, is that whether the Democratic efforts succeed now depends crucially on whether companies are forced to acknowledge the real worthlessness of the paper they're holding. I'm not seeing that yet.

Hmmm....

Firms with "pull" in Washington have always done well, Alex. It's not something that hitched a ride into town with GWB and the Texas Rangers. Your team just has different money at its back and in its pockets. I think we do probably have a lot of points of agreement, but I do have a couple of comments in mind:

I didn't say I didn't oppose the minimum wage or the progressive tax code...I pointed out that it's a straw man argument to pretend that the current (pre-2009) system has no controls or measures designed to support the lower class and minimize poverty. I don't think that the public school system is any more redistributive than roads or bridges, in fact.

Shame on me for saying that obeying the law obviates the need for legal counsel...but...it does.

I think you'll find, if you think about it, that the average middle-class lifestyle far exceeds that of, say, 1950. Look at house size, number of cars, televisions, vacations, even the style of houses. This has gotten much worse in the last 20 years or so. When did middle middle class people decide they needed and could afford 4000 square foot houses with granite countertops, and 3 plasma TVs? 3 and 4 car garages?! Go sit in the ER sometime and check out how many people with designer clothes, $150 shoes and gold jewelry need indigent care. I know a family that makes less than $100K a year, and they go on major transatlantic vacations every year, two new cars, new house in a "gated" community, football and racing trips every weekend...and it's mostly on borrowed money. There are at least a million families like that.

Not everyone has to be rich -- not everyone wants to be. But the lifestyle people think they need has gotten way out of whack, and that problem goes from the very bottom to the very top.

If you're sure that the President drives the agenda, then it cuts both ways -- it was Clinton that reversed Glass-Steagall...

I agree that many people are spending beyond their means. They have the idea in their heads that they should expect to have a higher standard of living than their parents had, even if the wage they earn doesn't allow for it. Debt was too easy to obtain, and now many people are drowning in it.

Despite that, I do think that it represents a failure in our governments over the last thirty years that those years have not seen an increase in the median wage. I feel that more progressive policies, followed more consistently, would have allowed people to improve their living standards without taking on more debt. For example, a leading cause of indigence is unexpected medical expenses, and a progressive policy on healthcare would remove that cause of indigence entirely.

I think Clinton was wrong to sign the reversal of Glass-Steagall. I'll bet he regrets it now. I don't resent it quite as much as his failure to keep it zipped, but it's definitely not a mark in his favor.

If you do oppose the minimum wage and a progressive tax code, then you have at least the merit of consistency. But the public school system is also deeply redistributive. Affluent parents who educate their children privately get dunned double, once to pay for other people's kids and once to pay for their own. Poor parents are generally not homeowners and don't pay property taxes directly that are generally what finance public schools. So poor parents get something very valuable for their kids for nothing, whereas many affluent parents pay twice over. Sounds redistributive to me, and of course, being a liberal, I am totally fine with it.

Poor parents don't pay for a lot of things if they are not property taxpayers, but keep in mind that most developers (at least where we are) pay proffers toward public schools for each unit of multifamily (rental or condo) residential they build, so at some level it's paid in rent. Affluent parents take the aggregate cost of private education into account when deciding to send their kids to private school, including the fact that they are paying for public school. People that have no children at all, regardless of income, also pay for the schools. I think that even diehard conservatives have accepted that public K-12 education is basic public infrastructure. I may not drive on certain roads, but I pay for them.

What I object to is changing the "concentration of wealth", not because some need it, but because it's nicer somehow to have less of a gap.

The problem I have with the argument about healthcare is that I believe that a lot of people on the margin simply make other choices with their money than health insurance premiums. I personally believe we need universally available, cost-accessible catastrophic health insurance, and we need self-funding of more basic services for those who can afford it, and we need clinic-based health care for the indigent to keep the strep throat and UTIs out of the ER. I actually believe that we'll see doc-in-the-box delivery in national chain pharmacies (and probably Walmart) as a common thing within 5-8 years. The whole delivery mechanism will change. This, too, would remove that cause of indigence, with relatively little cost to the taxpayer. What we don't need is government public health officials deciding that anyone over 45 doesn't merit a heart transplant on a cost/benefit analysis.

It's remarkable how benign Clinton looks in the rearview to me now. Obama scares me.

I think that even diehard conservatives have accepted that public K-12 education is basic public infrastructure.

That's true. It's not consistent, but it is true. Why K-12 in particular, and not pre-K or college? It's a pragmatic, not a principled acceptance.

If you know of any system of socialized medicine where "anyone over 45 doesn't merit a heart transplant", let me know. I grew up under a socialized system, and that is not what happened - my father still lives in the UK, is poor, has heart trouble, and gets free treatment. The National Health Service gives people the benefits of much lower infant mortality rates and longer average life expectancies than are the case in the US. Exotic and new treatments are harder to come by, and because of that I would have personally suffered adverse outcomes had I stayed, but on average people's health is better there.

To get decent health insurance for a family here, you're now talking $1,000 a month in most parts of the country. Would it really be so bad if, instead of each family forking out $1,000 a month to a private insurer, the average tax burden rose by $750 a month? Surely that would make households better off? The US spends far more of its GDP on health care than any other developed country, but ranks only 38th in terms of outcomes. We can do better for less money, but only in a socialized system. Think of all the overhead involved in handling insurance claims, billing and administration that would be saved. Think also of the benefits to business. No more healthcare costs for the car companies to swallow. No more entrepreneurs deterred from starting their own business because they don't dare lose their employer-based insurance. There are a lot of advantages, which is why many businesses now support healthcare reform.

It is simply not true that it is always more expensive and less efficient to do things via the government. If it were always more expensive and less efficient, then Americans would spend less and get on average better care than other countries. In fact, on key indicators of population health, we do much worse than many other developed countries with socialized systems. This is informative. It shows, as of 2008, that the US has fewer doctors per head, fewer acute hospital beds, shorter life expectancy, higher infant mortality, and higher obesity rates than the average among OECD countries, nearly all of whom have socialized systems. We do well in having low rates of smoking and in quality of cancer care, and that's about it. Meanwhile, we spend 49% more per head on healthcare than the next most expensive country, Norway. Do you really think this is "more efficient" and "less expensive" than a socialized system?

Sorry, here's the link: http://www.oecd.org/dataoecd/46/2/38980580.pdf

Sorry, the figure for the cost per head of the NHS should be $207 per month (forgot to convert the NHS budget in pounds into dollars). The point still holds!

The US presents far more in economies of scale than the UK for free market solutions. For example, nearly all common prescription drugs are available at Walmart for $4 a month. This program has saved people over $1B already. There is no need for the Federal government to insure basic health care and basic drugs. The market can make that affordable through different delivery mechanisms, as I pointed out, and indigent clinic care can pick up those who can't afford them.

The new, exotic treatments that you can get here, and not in places like the UK, are the common lifesaving treatments of tomorrow. This is one of the many many ways that the US carries the water for the world. Are there a lot of Americans flying to London for surgeries or chronic disease treatment?

I'll tell you this -- I have a different take on certain things if I am going to be funding healthcare for all Americans. I want smokers to be ineligible for public healthcare. I don't want to pay to treat epidemic disease that is preventable, period. If it's fair to cap salaries on bankers who accept Federal loans, then it's certainly fair to cap benefits on individuals who knowingly create more cost for the system.

We have a fundamental attitude problem in the US. A lot of people "can't afford" health insurance because they have other "needs" that crowd that out...like electronics and entertainment. The current It's become very easy to simply look to the government for that, and it will only become easier. It used to be a point of shame to HAVE a mortgage, much less to default on one.

Take a look at the income point where you are no longer eligible for Medicare and Medicaid. If you make $25K or $30K a year, in most cases there is employer health insurance available. Ironically, the workers that can't get it as easily are employed by small businesses (the owners of which businesses are about to be crushed by tax increases). Even if we assume that a family making between $30K and $50K is just incapable of paying a health insurance premium, why doesn't it make sense for them to (1) have high-deductible health insurance, available at a much lower rate (and Alex, actually the average COBRA premium is about $700), (2) have a health savings account for the purpose of accumulating the deductible, and (3) have reasonably priced meds and basic health care in private delivery mechanisms?

Alex, how many of the currently uninsured in America are either (1) not American citizens or (2) eligible for public coverage, but not signed up? And how many of that number are transitory uninsured?

Hi Rose,

Let's take some of the heat out of this discussion by dealing with the questions of fact you raise.

The national average premium cost for family COBRA coverage is not $700. It was $1,069 in 2008 (Source: Families USA, at http://economy.kansascity.com/ ?q=node/765.) For that money, five individuals in the United Kingdom would receive full healthcare coverage at the above-mentioned rate of $207 per month.

how many of the currently uninsured in America are not American citizens?

Short answer: maybe around 4 million out of the 45.8 million uninsured in 2005. It is therefore not mainly a problem that can be solved by ending illegal immigration.

Longer answer: There are 36.2 million uninsured American citizens, and 9.6 million uninsured noncitizens (Source: http://aspe.hhs.gov/health/reports/05/uninsured-cps/index.htm. ) How many of the latter are illegal immigrants is unclear, but out of the total US population there are around 11.8 million illegal immigrants out of a total foreign-born non-naturalized population of 29 million (Source: http://www.dhs.gov/xlibrary/assets/statistics/publications/ois_ill_pe_2007.pdf ). We could guess that the same proportions apply in the uninsured population, which would give us a figure of 11.8 / 29 * 9.6 = 3.9 million uninsured illegal immigrants out of the 45.8 million total uninsured. In practice it may be somewhat more than 3.9 million because of differences in the kinds of job held by legal and illegal immigrants.

how many of the currently uninsured in America are eligible for public coverage, but not signed up?

Uncertain, but 21% of the long-term uninsured had been offered insurance of some kind. (Source: http://www.aspe.hhs.gov/health/long-term-uninsured04/index.htm )

how many of the currently uninsured in America are transitory uninsured?

34% of the uninsured are uninsured for six months or less. 51% are uninsured for a year or more. (Source: http://aspe.hhs.gov/health/reports/05/uninsured-cps/index.htm. ; also see http://www.aspe.hhs.gov/health/long-term-uninsured04/index.htm for more data on the characteristics of that 51%)

I know you want to minimize the scale of this problem, and therefore the need of the government to do anything about it. But even adopting your implicit suggestion that the government need not do anything about any of the categories of people you mention - including me as a non-citizen - we can still estimate that there are perhaps 15 million long-term uninsured American citizens who are nonsmokers, ineligible for current government programs, who are not covered under the current system and who would be covered, potentially at a lower average cost to American households, under a socialized medicine system. Isn't it worth your while to look at ways 15 million of your "worthy" peers can get coverage?

Let me cut to the chase - I mean to do nothing of the kind. It was my intention to point out that, unless we consider the true scope and nature of the problem, we cannot solve it, and that it may admit of different solutions. Isn't it worth, for instance, spending resources to get the eligible signed up? Also, didn't we just subsidize COBRA (is it 65% for nine months)?

Is it economically efficient to implement universal socialized medicine to pick up 15 million people -- maybe 5% of the population -- when they could be served by other means? I think that is the real question. We also don't know how many of these 15 million are simply opting not to pay for coverage available from insurers. Is there a more surgical solution that doesn't simply permit and encourage employers to drop coverage? And why do we need to provide "coverage" -- as though insurance is the question -- don't we want to deliver services and meds? Are there other ways to do that?

Thanks for being clear.

What you say makes it clear that for you, this is actually not about whether uninsured people deserve services and medicine. The fact that there are millions who are deserving by any definition under the current system does not make you want to change it.

The current US system is deeply inefficient, in terms of how much is spent versus the outcomes achieved. It is hyper-complicated in its billing. It causes patients the double stress of being ill and of worrying about how to afford to pay for their treatment. The only reason not to move to a socialized system, which could spend less and achieve better outcomes and which does do that in most industrialized countries, is a prior moral objection to doing it via government. You want a "more surgical" solution not because it would be cheaper or more efficient, but because it would be non-governmental.

Don't be fooled into thinking the current system is sustainable. For those who are insured, premiums have risen 50% over the last ten years, and the quality of their insurance is getting steadily worse. This is due to the problem of adverse selection, which cannot be cured within the system as it is. There are good models out there of healthcare systems that are cheaper than what we have, and just as high-quality. Moving to one of them would be a great boon to the US economy, and diminish the massive waste of our resources represented by the current system.

I do not believe that the current Congress has the will to really squeeze the costs out of the system by moving to a socialized system of medicine. What will come out of it will probably be a messy compromise that covers more people and maintains a role for the insurance companies. That would cost more than what we have now, as it has in Massachusetts and Hawaii, but I am still willing to accept such an outcome for the sake of the step it represents towards a saner system of healthcare in this country. We could have gotten over this hump forty years ago under Nixon. Not doing so has cost our economy astronomical sums, so I think we do have to bite the bullet and go ahead even if the solution will not be the best.

What you say makes it clear that for you, this is actually not about whether uninsured people deserve services and medicine. The fact that there are millions who are deserving by any definition under the current system does not make you want to change it.

"Deserving" has nothing to do with it. I shouldn't have to pay far more for someone. I don't pay anywhere near $750 now, so why should I so someone else can have insurance that I work for? Now, if EVERYONE paid $750 AND it was better then I might think about it. The fact is the government is horribly inefficient and won't make it better. Not to mention that not everyone will be paying for their insurance. The top 20% or so will pay for everyone else. Yet another punishment for succeeding.

I agree it is complicated in its billing and other paperwork and I would like to see those hurdles removed, no argument there. Government control won't eliminate that though. The government is notorious for bad paperwork. I know I've been there. Not to mention the fraud and waste that will get thrown in the mix.

It is obvious you have never worked for the government before.

Hurray we have a bigger comment field now :)

I have worked for the government, as it happens, though not the federal government (no non-citizens allowed!). I agree with you that governmental administration can be bureaucratic and inefficient. But nothing I have seen in and around government compares to the horrendous, Byzantine, Heath-Robinson insanity of our current healthcare system.

Alex - nope. You have not articulated why it's better to move 95% of Americans to a new government system than to create a solution for the 5% that need it -- EXCEPT that you have a prior philosophical predisposition to a PUBLICLY FUNDED solution.

Let's say 5% of kids in an elementary school need free lunch. Let's say 55% of the kids are paying full price for the lunch, and 40% are bringing lunch. Why is it better to pay for all of the lunches?! Won't the moms stop sending lunch money or making the pb&j sandwich in the AM? HOW IN THE WORLD is that less costly? It's not. You just like that solution better.

You still haven't explained why we need government-funded pharma coverage if Walmart sells those drugs for $4 a month. Most people's COPAYS are more than that. If Walmart begins to deliver basic healthcare -- checkups, well woman, screenings, mammograms -- for $40 or $50 a pop, wouldn't that work? Isn't that what is really driving down cost? What if we had government funded and staffed clinics (or, heaven forbid, private nonprofit clinics) to treat the people who really couldn't afford the basic services, but who were too wealthy to get Medicare or Medicaid? What if we tiered the high-deductible policies by income (in other words, if you make $30K, your deductible is $1000, and if you make $300K it is $10,000), and permitted those deductibles to be funded by HSAs? The clinic care would treat the families on the margin, whether on a one-time or consistent basis.

You are making the assumption that the delivery mechanism has to be an insurance product. If services are delivered this way, isn't it much simpler?

I'm about to speak a little more pointedly. We have had a good discussion and I think (humbly) that it would be valuable for anyone to read. However, you seem dead set on concluding that I am simply a bad person, and that I don't want all Americans to have good health care available to them at a price they can afford, or for nothing if they truly can't. Nothing I've said indicates that. Absolutely nothing. I must also say that you undoubtedly have a bias toward a socialized system, having lived in one, but EVEN YOU have acknowledged that it wouldn't have worked for you. The US population is much larger and it is growing faster; this means that government funded solutions will become exponential over time, and also that economies of scale can really impact private pricing (e.g., Walmart). Also, we have a problem in this country in that Social Security and other entitlements are about to become bankrupt -- so when I oppose more nationalization, I do so from the standpoint of wanting to protect the solvency of the entitlement commitments we've already made.

Rose, I never suggested at all that you were a bad person. I do think that you're seeing this in a piecemeal way, and resisting the idea of changing what you have even if on average it would work out better for people and even if it might save you money. That doesn't make you a bad person: it just makes you cautious. It's because of such natural feelings that Obama and the Democrats are pursuing a much more piecemeal, incremental solution than I would like to see - and one that likely won't save American households nearly so much money overall, if indeed it doesn't turn out to be more expensive.

It's very simple. 95% (well, more like 70%, but whatever) of people should move to a socialized product because it is cheaper and produces better average outcomes. It is cheaper because it is immensely simpler to administer a non-insurance-based system where people don't have to negotiate and prove they deserve the care before they receive it. If you're currently paying more than $387 per month for each adult in your household, it's reasonable to assume that a socialized system would save you money, because there is no reason to think that the British system is notably more efficient than a socialized mechanism that the American government could put in place.

The advantage of a socialized system is precisely that it is not an insurance product. Most of the built-in problems with the system we have can be traced to the fact that it's run on an insurance basis when people cannot assess their health risks accurately ahead of time, and when your profits depend on denying people the care they need. I agree with you that that's no way to run things.

Your school lunches example suffers from the fact that schoolkids' lunch needs are very homogenous. Pretty much everyone can be catered for with a standard lunch. The situation in healthcare is much more as if 20% of schoolkids needed a $100 lunch, but they didn't know ahead of time whether they'd need a $3 lunch or a $100 one, so many kids would get to school and find they didn't have what they needed - not because their families were improvident but because there was no way of knowing what they needed ahead of time.

I know that I am not biased towards a socialized system, because I would argue very differently if socialized systems were more expensive or got worse average outcomes. You're the one in the position of defending an expensive and (on average) poorer-quality product. I can hardly be blamed for failing to see why the principle of private provision is so important that it justifies the higher expense and the worse average outcomes.

My political beliefs are not driven simply by what is best for me personally. I happen to be one of the few unlucky people who would have suffered a worse outcome if I had lived under the UK system rather than the US system, because I understand that the UK is particularly bad among socialized systems at treating cancer. I am fully capable of observing that for most people that wouldn't be the case, and therefore of advocating for a different system to be in place in the US than what we have now. We can learn from other socialized systems where they deal with cancer better.