Campaigns/Elections

John Edwards vs. the Lobbyists

A presidential candidate promises to clean up Washington--by trashing the First Amendment

|

It was nearly an hour into the candidate forum at YearlyKos, an annual convention of liberal bloggers, when John Edwards finally decided to go for the jugular. Chopping the air with his hand, bobbing his head like a racehorse, the former senator from North Carolina challenged Sen. Hillary Clinton (D-N.Y.) to turn down donations from lobbyists.

"No more, from this day forward, not a dime from a Washington lobbyist," Edwards roared. "We do not want their money! Their money is no good to us!"

That got a rowdy standing ovation, but Clinton waved it away. "I don't think," she said dismissively, "that based on my 35 years of fighting for what I believe in, that I'm going to be influenced by some lobbyist." A groaning jeer rose up from the crowd.

"A lot of those lobbyists, whether you like it or not, represent real Americans," Clinton continued. "They actually do. They represent nurses; they represent social workers. Yes, they represent corporations that employ a lot of people."

Clinton tried to soft-pedal that last bit about corporations, using the same tone of voice her husband would use when admitting what his brother Roger was up to. It didn't save her: The political press was agog at her gaffe. The Politico's Ben Smith reported that rival candidate Barack Obama's campaign team had joked "about how quickly they would be able to turn her words into a television ad." Pollster Scott Rasmussen recorded a drop in Clinton's lead in his weekly tracking reports, and he pointed to her lobbyists-need-love moment as the reason.

"Hillary's comment sounded so odd because Democrats don't talk like that," says Robert Bauer, a D.C. lawyer who counts lobbyists on his client list. (He has advised Barack Obama, but his comments do not represent the senator's campaign.) "It's like someone from the Moral Majority talking about atheists and saying, 'Oh, they're not really pagans; they're not so evil. Maybe atheists have a place in society.'?"

John Edwards' rhetoric about lobbyists is as Manichean as anything Jerry Falwell ever sermonized. But try to imagine a government the size Edward envisions—socialized health care, subsidized college tuition—without lobbyists. New government programs breed lobbyists, and for good reasons. People who might be affected by the new programs want to get into the rooms where those programs are devised. And if money is being doled out, they want a place at the front of the line.

Edwards argues that businesses, interest groups, and even public-sector lobbyists shouldn't be able to influence presidential candidates. He has called for reforms that would end private financing of elections and legislation that would curtail lobbying activity. Lobbyists would get in the way of the "bold, transformative change" the candidate wants to push through Congress. Edwards doesn't want to have to deal with the people who would be affected by those changes. He wants to dictate terms.

Edwards wasn't done grandstanding once the Kos crowd went home. He followed his performance with an open letter to Clinton and Obama demanding that they cut off lobbyists and refuse their donations. The front-runners ignored him. Then Edwards knocked Obama for proposing a law that would merely make lobbyist activity more transparent and records more available. The bill was "an important first step," Edwards granted. But "letting people watch the money game as it's being played simply isn't enough—we need to put an end to the money game altogether."

You can see how Edwards won huge jury awards when he was a trial lawyer. His smooth talk obscures an illiberal idea and allows him to pitch that idea to some of the people most invested in the lobbying system. At YearlyKos, he turned to an audience that included plenty of union members—an audience that, just 24 hours earlier, had attended a luncheon at which Service Employees International Union head Andy Stern spoke—and asked, "How many of you have your own Washington lobbyist?"

"That spoke to his own ignorance," sniffs Jan Beron, a lawyer who has worked for Republicans and private-sector lobbyists. "Who had a lobbyist? They all did! The AFL-CIO was in that room, for God's sake. When I get questions about who represents the little guy, I say, well, how about the AARP?"

Whether lobbyists are there for the little guy or not, they multiply when government programs appear on the horizon. In 1998 the health care industry spent $204 million (in current dollars) on lobbying.

The next year, as both houses of Congress debated a "patient's bill of rights" for health care, the spending rose to $230 million. In 2003, the year of the vast Medicare Part D expansion, the sum reached $304 million. That surge in spending was meant to ensure that various companies got friendly treatment, or at least benign neglect, under the final bill. But it was also the only way members of a multibillion-dollar industry could influence legislation that would affect them for decades. You can decry the outcome, but to restrict citizens' access to the people crafting the bill would be even worse.

Not all lobbying reform impinges on First Amendment rights. But honest reform would be less concerned with limiting people's access to government and more concerned with limiting the amount of government there is for them to fight over. No Democratic candidate is proposing that—certainly not Edwards.

In practice, even Democrats who slam lobbyists rarely try to shut them out altogether. Edwards has vigorously sought support and endorsements from unions, and he hasn't talked about cutting off their lobbying activity, much less turning down their donations. (That goes double for the trial lawyers' lobby.) The Democrats aren't exactly eager to end the money game; they just want to shape the rules to their advantage.

Take the lobbying reform the House of Representatives passed before the August recess, which later failed in the Senate. Its strictures didn't affect lobbyists who worked for the public sector (which would include some union lobbyists) or for universities and cities. It would have allowed the University of California system to nudge congressmen with gifts but barred the private University of Southern California from doing so.

This despite the fact that the crooked ex-lobbyist Jack Abramoff, the man whose crimes inspired the latest anti-lobbying crusade, took advantage of the relatively weak rules governing public-sector lobbying in his campaign to bribe Republican and Democratic power brokers. Abramoff mostly gave to Republicans, but public-sector lobbying usually comes from people favorable to Democrats.

In the system we have, there's nothing illegal about that. The City of San Diego has as much of a right to sweet-talk or browbeat senators as Exxon or Home Depot does. Any special interest, in the public sector or the private, understands the direct relationship between government spending, which Democrats tend to favor, and the lobbying game, which they pretend to hate. Lobbyists have grown accustomed to anti–K Street campaign rhetoric, and they've grown accustomed to the weak, contradictory reforms that occasionally arrive afterward.

If history is any guide, Edwards' rhetoric translated into practice would look like the lopsided changes the Democrats already have begun to pursue. If that's the case, the "change" candidate is promising the same kind of slanted lobbying reform—tough on interests Democrats don't like, easy on those they do—that Clinton supports. It's the same result with added hypocrisy.

"A lot of this rhetoric about lobbying groups," says Jan Beron, "is just an attack against people who take contrary views." It's an attack on First Amendment rights couched as a defense of Americans' freedoms. Unless Democrats pledge never again to expand a government program or take advice from their good friends at the National Education Association, their attacks on lobbyists will just be an attempt to muzzle the other side.

David Weigel is an associate editor of
Reason.

Advertisement

NEXT: Wilhelm Reich: 50 Years in Hell and/or Heaven

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Edwards is the biggest hypocrite in the race (except for when Rudy attacks Romney for flip flopping). Taking swipes at him is as easy as clubbing a baby seal. But a lot more fun.

  2. When I see and hear Edwards, all I can think is this is the left’s version of a televangelist.

  3. The Democrats aren’t exactly eager to end the money game; they just want to shape the rules to their advantage.

    No! Tell me it isn’t so!

  4. Why does John Edwards want to take away senior citizens’ right to be heard in Washington through the AARP? Why does he want to allow Bush to destroy the environment if Sierra Club, etc. can’t be heard in Congress?

    Why is this douche bag still given any serious attention at all?

  5. MONEY IS NOT SPEECH…once we interpret it that way we will assure that those with the most money run everything…and a few rich people will have far more speech than millions or hundreds of millions of others.

  6. MONEY IS NOT SPEECH.

    No, but it can purchase a lot of time for it.
    And it’s more effective than CAPITAL LETTERS.
    Dumbshit.

  7. MONEY IS NOT SPEECH.

    The hell its not. Unless you define speech as “communication that can be made only to people within range of my unamplified voice.”

  8. money is amplification for speech…in countries where wealth distribution is most skewed, this is a license for the rich to rule with impunity.

  9. Dave, it’s not just proposed spending programs that attract the attention of lobbyists. Consider “free trade” agreements that allow US agribusiness to continue to collect subsidies while other nations must open their markets to their exports. Or “tort reform” that limits the rights of individuals to sue corporations for their misconduct, or intellectual property rights changes that keep innovations out of the public domain for longer periods. Then of course there’s oposition to any change to labor law that stacks the decks against union organinzing. The bottom line is that the torrents of money that flow from corporate lobbying efforts do far more harm to the democratic process and the interests of ordinary people than non-corporate lobbying will ever do, because their influence comes more from votes that can be delivered than campaign contributions.

  10. It would be far better to look to guarantee more proportionally-equal speech…as close to a 1-1 ratio of speech to person as possible and allow a real exchange of ideas.

  11. Where is John to accuse ReasonofShillingfortheDemocrats now?

  12. as close to a 1-1 ratio of speech to person as possible and allow a real exchange of ideas.

    Oh! I know! Let’s get everyone out in a big, big, biiiiiiiiiiiiiiiiiiiig field, and we can all hold hands and watch a giant TV screen in the clouds where all the candidates can express their views, and then we can all mingle around and talk about it!

  13. It would be far better for to look to guarantee more proportionally-equal speech…as close to a 1-1 ratio of speech to person as possible and allow a real exchange of ideas.

    Are you saying we currently have a fake exchange of ideas? Are you advocating having government prohibit any and all spending to politicize anyone’s political viewpoints? Starting by shutting down H&R, and DailyKos, and RedState … oh, and let’s not forget shutting down the editorial and letters to the editors pages of newspapers … come to think of it, no more newspapers at all, or TV news, etc.

    What a free, lovely world that would be — Hugo Chavez’s wet dream.

  14. I do think we have a fake exchage of ideas now…oh we still have the institutions or a democracy but they have been so corroded that they work to disinform the public. The internet is one of the best mediums because it allows free exchange without prohibitive expense, however, when it comes to big media like tv and radio and political lobbying these privledge the ultra-rich far beyond their numbers.

  15. The rich should not be able to buy and dominate the media…period. BTW if you know anything about what is happening in Venezula and much of Latin America under the oligarchs this is exactly what happens, most every station is a sort of FoxNews. That is not freedom in any meaningful sense of the word.

  16. James, you’re the reason why it’s impossible to talk sense to a liberal.
    You have only these vague “feelings” about how things are, that the rich apparently control the strings of society, without any sort of proof or logical arguments in your favor, bellowing platitudes and propaganda like “money is not speech,” to which you also have no solutions other than bullshit language like “empowerment” and “real exchange of ideas.”
    Doesn’t that shit distress you? Distresses me.

  17. If money is speech, then the rich have (by many magnitudes) more speech, is that what you are comfortable with? Is there really a flaw in that argument?

  18. I’ve always. pre and post internet, been able to dope out what is truth, what is opinion and the motives of people who publicize them. I’ve been fooled/hoodwinked on occasion (who hasn’t?) but if your interested in an issue, informing yourself on all viewpoints has NEVER been that difficult in the goood ol’ USA.

    Maybe I’m some sort of genius, but I really doubt it. People who want others to think for them always find them. I am for full disclosure of campaign contributions and the elimination of perks (corporate jet travel, anyone?) that are so often abused. Hiring someone to buttonhole lawmakers does seem to be a first amendment right.

  19. “They actually do. They represent nurses; they represent social workers. Yes, they represent corporations that employ a lot of people.”

    Oh my god, she uttered something I agree with.

    *checks forehead for temperature*

  20. —-I’ve always. pre and post internet, been able to dope out what is truth, what is opinion and the motives of people who publicize them.—

    I believe you…and I also believe that you must have noticed over the past 7 years that our government now actually relies on the maxim that you just have to fool most of the people some of the time…and any way you look at it, the corporate media in this country from the big 3 to cable news to mainstream newspapers has been an unmitigated disaster.

  21. the corporate media in this country from the big 3 to cable news to mainstream newspapers has been an unmitigated disaster.

    Explain.

  22. The rich should not be able to buy and dominate the media…period.

    James, who are the “rich”? You suggest that the “rich” speak with one common voice. Like wealthy people are all a bunch of GWB style republicans. This couldn’t be further from the truth.

  23. If money is speech, then the rich have (by many magnitudes) more speech, is that what you are comfortable with?

    A hell of a lot more comfortable with that than with the only alternative, which is state-controlled media.

  24. money is speech, then the rich have (by many magnitudes) more speech

    *sigh*… how many times does this argument have to be settled?

    Money is speech the way nude dancing is speech. Money is speech the way Mapplethorpe photos are speech. Money is speech the way a 2 Live Crew performance is free speech.

    Oh, and here’s another thing about that. Campaign finance reform laws turned the whole concept upside down, not just claiming that money is speech, but that speech is money.

    That last part is the most chilling part of an attempt to stifle free speech in an effort to “get the money out of politics”.

    When a court can declare that talking has value, and therefore talking can be banned based upon this value is something that I never would have believed liberals would get behind in droves. Especially after living through the 1st amendment debates in the eighties where liberals declared (and rightly so) that any infringment on speech, even if only purely artistic speech or so-called lewd speech, can eventually bleed into areas of political infringement and therefore said infringement must be blocked at every turn.

    Note to liberals: relocate your 1st amendment support. I don’t care how scary the basement is, or how you never go down there anymore. It’s there, somewhere, and your ass had better find it, and pronto.

  25. You know you are talking to an economically illiterate when he or she utters the words: “wealth distribution”.

    Congrats James, you are an ignoramus when it comes to economics.

    When was the last time that you went and paid to listen to a homeless guy speak about how bad America is? If you haven’t you should, that way you can balance out the amount of speech that you hear.

    Freedom of speech does not give you the right to be heard.

  26. People shouldn’t be allowed to hire lobbyists to solicit legislators for ’em…that’s money talkin’! They should have to go down there an’ buttonhole ’em personally. That way we know it’s honest.

  27. I believe you…and I also believe that you must have noticed over the past 7 years that our government now actually relies on the maxim that you just have to fool most of the people some of the time…and any way you look at it,

    And that maxim was inoperative, when? I’d wager it was true for tribal cave dwellers as well. Is it your point that people are idiots? If so, you don’t have priority with that discovery. The “mainstream media” hasn’t changed a thing.

  28. When was the last time that you went and paid to listen to a homeless guy speak about how bad America is? If you haven’t you should, that way you can balance out the amount of speech that you hear.

    And he’ll be grateful, too. 😉

  29. I know I’m the rare libertarian who considers campaign finance reform to be a pet topic, but I don’t think the answer to our campaign finance problems is a smaller government. I think one of the effects of our campaign finance problems is the big government that we have. When corporations lobby, they usually don’t ask for less government, but ask for more government that tilts the market in their favor. Think tariffs, subsidies, tax-deductions, etc. Public-choice economists call this rent-seeking.

    And no, money is not speech. If it were, bribery would be legal. That’s spending money to get your message to a politician, after all. I made that point to Roger Pilon at Cato, and he acknowledged that money wasn’t speech, but was used to buy speech, and said that bribery was handled by a politician’s oath of office. I didn’t find that convincing. You can argue that you are using your bribe to buy the politician’s speech, as they will be arguing your point in their speeches and on the legislature floor.

    Plus, this just highlights that rules matter. That oath could easily include not accepting lobbyist money. The reason we don’t allow bribes is to prevent corruption. Democracy is most representative when it honors the principle of one person, one vote. If you allow bribery, you make a mockery out of the whole voting process, because one vote plus a bribe matters a lot more than a vote without one.

    But if you think about it, allowing campaign contributions has pretty much same effect as allowing bribes. One vote plus a $3,000 campaign contribution matters a lot more than a vote without one. Furthermore, money is obviously fungible. If you give poor people food stamps to prevent them from buying drugs, they can merely decrease their spending on food and use the savings to buy those drugs. Likewise, if you give a candidate a campaign contribution, they can decrease their own personal spending on their campaign.

    I am not sure what the solution is that doesn’t exacerbate incumbent strength or allows crackpots to spend public campaign funds or narrows the field to mostly just rich white guys (well… never mind). But I think libertarians are fooling themselves if they think the solution is smaller government. Government gets bigger for a lot of reasons, and campaign contributions is one of them.

  30. You’re right; I can’t think of a fundamental distinction between campain contributions and bribery. They definitely make some votes matter more than others.

    From another point of view, though, campaign contributions look enough like speech that I’m not sure how you could restrict them without also restricting political discourse.

    Let’s take three hypothetical examples. First, I go out and buy posterboard and make a “Vote Colbert” sign to support my favorite candidate. I’m using a tiny amount of money to promote Colbert’s campaign, but I think most people would say I’m exercising a right to political speech, right?

    Now let’s say I associate with other likeminded people, raise money, and put pro-Colbert ads in newspapers and on TV — or maybe just “issue-based” ads that make it clear which candidate we support. Isn’t this just a bigger version of me and my poster?

    And what if my organization makes the final choice to donate to the official Colbert campaign itself? We’re still buying speech — we’re just delegating the specific choices to the campaign managers. Of course, the more money we give, the more influence we have with the candidate (while the lone voter with a poster has no influence at all). But it seems arbitrary to declare that it’s okay to voice a political view only as long as you don’t spend too much money.

    I agree that rent-seeking is bad for the country as a whole. But people have the right to argue those positions. Maybe a compromise would be full disclosure of campaign contributions?

  31. MONEY IS NOT SPEECH…once we interpret it that way we will assure that those with the most money run everything…and a few rich people will have far more speech than millions or hundreds of millions of others.

    Actually, it works the other way around. When lobbying is legal the millions of people who belong to the National Rifle Association can join their relatively small contributions to “outshout” a George Soros. When legal lobbying is banned it’s much easier for a George Soros to hide one large illegal contribution than it would be for millions to hide many small ones.

    The bottom line is that the torrents of money that flow from corporate lobbying efforts do far more harm to the democratic process and the interests of ordinary people than non-corporate lobbying will ever do,

    One thing you need to remember; “corporate” is not just IBM, GE, and GM. All of the major organizations of “little people,” like the NRA, Sierra Club, AARP, NAACP, LWV, NOW, ACLU, etc. are all incorporated. And if you read the “reform” legislation they, and the millions of votes they influence, are the real target.

    You’re right; I can’t think of a fundamental distinction between campaign contributions and bribery. They definitely make some votes matter more than others.

    Two big differences:
    1. Campaign contributions are relatively legal. Therefore they can be reported, so everyone can follow the money. Who candidates accept campaign contributions from tells me a lot about whether I want to vote for them or not.
    2. Campaign contributions are overwhelmingly used to purchase advertising, which is another source of information about the candidates.

    Also, when you read election “reform” legislation you find much more than restrictions on contributions. The main provisions prohibit independent campaigning by special-interest organizations. For instance, the NRA would be prohibited from pointing out a candidate’s anti or pro gun voting record before the election. That, pure and simple, is about the most serious violation of the freedom of political speech that should be most vigorously protected by the First Amendment I can come up with.

    It would be far better to look to guarantee more proportionally-equal speech…as close to a 1-1 ratio of speech to person as possible and allow a real exchange of ideas.

    Which is exactly what corporations like the NRA-Institute for Legislative Action can accomplish.

  32. src: You’re right; I can’t think of a fundamental distinction between campain contributions and bribery. They definitely make some votes matter more than others.

    I agree that rent-seeking is bad for the country as a whole. But people have the right to argue those positions. Maybe a compromise would be full disclosure of campaign contributions?

    My point about bribes is not that campaign contributions should be illegal. It’s that if you agree that bribery should be illegal, this means that money is not speech. Which makes sense on the face of it. What is protected is not the posterboard sign, but your right to say whatever you want ON that sign. Whether you are allowed to use a sign or a television ad is not a First Amendment issue, and thus is up for debate. Yes, whatever line we draw will seem arbitrary, but so is the line we have now between bribes and campaign contributions. Drawing lines is inevitable when seeking to strike a balance between liberty and democracy.

    Once we realize that the “money is speech” line is dogmatic and untrue, then we can look for pragmatic solutions. Disclosure would be a start, but while necessary, hardly seems sufficient to do anything about rent-seeking. What we want is a solution where what you say is more important than how much you can spend to broadcast it. Look at the Internet and the blogosphere. Libertarian ideas are far more prevalent there than they are in the rest of public discourse. This is what happens when the strength of your ideas is given prominent importance. Now imagine a political landscape that mirrored that.

    To get there, you need some sort of campaign finance reform, whether it be limits or public campaign financing (I’m rather fond of the Clean Money, Clean Elections proposal) or something else that the libertarian movement could come up with if they stopped ignoring the problem and looked for solutions.

    Because the people who want big government have a lot more money than people who want small government. This means that the libertarian movement is doomed to remain a fringe player in our political landscape as long as money plays the role that it does.

  33. Hey everybody new rule…one dollar one vote.

  34. –“You know you are talking to an economically illiterate when he or she utters the words: ‘wealth distribution'”–

    The economy has one sole purpose which is to serve the society…to serve the democracy. I have great doubts as to whether democracy can truly exist when the top 1% or 10% owns the vast majority of everything…It seems only likely that this relatively small number of people might use this influence to only aggrandize their wealth more…and indeed over the past 30 years this is exactly what has happened.

  35. James,

    Free market economies don’t have a purpose. They simply exist. If you want an economic system that serves society or democracy or any other political system, then you shouldn’t worry about the “rich” being able to “buy and dominate the media” because you’re guaranteeing that they will.

  36. “Free Market economies don’t have a purpose. They simply exist”

    This is pershaps the biggest (one os so many) told by free market fundamentalists…that is that Free Market economies exist in a state of nature or that they are not in fact a very strong socializing influence. They do socialize people in to a very dog-eat-dog, devil-take-the-hindmost way of thinking and this extends to every facet of society. Finally, there is no place in the world where the free market exists in pure form…and when it has come close like in central and south america, it has been put in through force and brutality.

  37. Economies do have a purpose: provide an efficient allocation of scarce resources. Free markets achieve that purpose more efficiently than any other system we know because of the price mechanism.

    A democratic political system’s purpose is not the same; it’s to provide political representation for all its constituents fairly. This tension between fairness and efficiency is the source of the problem here.

    And wealth and income distribution is of concern to economists. Think Gini coefficient.

  38. I would agree that wealth/income distribution is on concern to economists…just not the sort of free-market-funamentalists whose solution to every problem is to privitize and cut public funding. I do not belive in a command and control economy but a mixed economy that supports social health. I agree that free marketism has a certain kind of efficiency to it…undoubtedly this is its greatest strength. I simply do not believe that efficiency is the sole criterion for a political economy.

  39. I don’t believe it is either. But I would merely say to be very cautious when considering government solutions. Government failures are far more common than market failures (and public choice economics goes a long way towards illustrating why).

  40. I would simply point out that for example when it comes to what is a public service in many countries; healthcare, that the United States in fact has far more private involvement compared to other industrialized nations and in fact we have a system which is significantly more expensive and serves a smaller percentage of people…that is per capita costs are much higher in the U.S. and yet we serve arguably a healtier segment of the population than other modern nations. I believe that a private sector can exist side-by side with a public and non-profit sector in a modern economy.

  41. I would say that this merely illustrates that the amount of privatization is not as important as the manner in which it is implemented. Whatever final mix of government and markets you end up with has to honor incentives.

    Our current healthcare system fails to do that because the people making the buying decisions are not the same people paying the money, resulting in little or not incentive for healthcare providers to compete and lower costs. In addition, a lot of our healthcare expenditures occurs at the flat of the curve, where marginal benefits are pretty low but, because our society is prosperous enough, people are still willing to pay the high costs (especially if, again, it isn’t their own money they are paying). Healthcare is not an area I have a good deal of expertise, and I don’t want to stray too far off topic, but the point is, whatever solution you come up with ought to have the incentives lined up right. Healthcare savings accounts looks to me like a step in the right direction.

    I agree that public and private sectors can exist side-by-side. Indeed, a solution that has the public sector competing with the private sector would probably be reasonably efficient (e.g. education tax credits allowing private schools to compete on a level playing field with public schools).

  42. I think you are perhaps trying to make the argument (as conservatives often do) that really the problem with the American health care system is the so-called ‘moral hazard’, that the problem is that people use too much healthcare. I would say that the problem is that private systems require enormous overhead(advertizing, executive salaries/golden parachutes, administrators whose job it is to deny compensation, and lots of profit). Other national health care systems cover EVERYONE and yet are considerably cheaper…and believe me private industry does everything it can to NOT have to compete with the government. However my bigger point is that I believe that certain core functions of socity should be mostly public(health,education,social security) because they are more democratic and and universal. Private systems will of necessity exclude a significant amount of the population.

  43. Mccain hates the first amendment too. Maybe Mccain-Edwards would make a good ticket…”burn the first amendment to increase our freedom” would be the slogan…hip hip hooray, it is bipartisan it must be good!

  44. However I might very well be open to a tier-ed public health system which grants greater privleges to people who keep themselves in good shape and charges a premium to those…for example(smoke, drink excessivly, or are significantly overweight). This might create an incentive for people to act responsibly in exchange for medical care.

  45. James: private systems require enormous overhead(advertizing, executive salaries/golden parachutes, administrators whose job it is to deny compensation, and lots of profit)

    Public systems have overhead as well. However, private systems have an incentive to lower overhead to increase profits. Whereas government programs bureaucracies that fail to solve the problem they were intended to solve end up having even more money thrown at them.

    Private systems will of necessity exclude a significant amount of the population.

    To me, the solution is to let the private sector handle what they are strong at: supplying scarce resources at a low cost as possible. And then have the public sector supply a minimum amount of welfare benefits so that the poor can obtain necessities such as food, water, clothing, shelter, and healthcare (including insurance).

  46. “To me, the solution is to let the private sector handle what they are strong at: supplying scarce resources at a low cost as possible.”

    Generally speaking I would agree with you although there are no free lunches and every cent that goes to upper-executive pay increases the price of products. Comparatively government workers, even at the top levels make a fraction of their counterparts in the public sector. In many cases I think the private sector model works, however when it comes to health care I actually think it should not be run with profit in mind. Again…Not-for-profit healthcare is much cheaper in other industrialized nations.

  47. Every cent that goes to upper-executive pay also increases costs and reduces profits. And companies face strong incentives to maximize profits and reduce costs. The ones that overpay executives for the value that they produce will do worse than those that do not.

    And again, the amount of privatization is not as important as the manner in which it is implemented. You need to get the incentives right. But you are comparing one system that has it wrong with other systems that have it wrong.

    In addition, correlation is not causation. You need to explain how and why those systems are controlling costs better. Once you identify the features that are controlling costs and understand how and why they do a better job of aligning incentives, then you can make a case for implementing them here.

  48. I think it is rather simple the way that gov’t systems control costs. 1)They receive premium prices for purchasing in bulk 2)They do not have to operate at a profit 3)They have a more efficient centralized system and 4)They do not have to pay high executive salaries/pay for private jets/golden parachutes etc.

    You said that “I am comparing one system that has it wrong with another system that has it wrong” and I disagree when it comes to healthcare, I don’t think the gov’t system has it wrong. It is not incumbent upon us to find a free market solution to every problem.

  49. More efficient centralized system? The reason we won the Cold War was that Hayek was right about the price mechanism being the most efficient method of allocating resources from dispersed information. Information from what is scarce, what is plenty, what is the most valuable use of a resource. The price mechanism quickly and efficiently directs resources from low-valued uses to high-valued uses.

    Contrast that with a system where information travels up through a bureaucracy to a government board, where none of the bureaucrats are accountable for passing up bad information or failing to pass along key information. Even if all the relevant info got through, the government planner would not have the ability nor the motivation to process it all to make the right decision.

    As for 1, it’s economies of scale. Firms have it too. But there are also diseconomies of scale: layers of management creates overhead. I said this already, but firms have a profit incentive to limit this, and the process of market entry and exit will automatically find a balance between these, whereas government faces no such incentive. I’ve already addressed 2 and 4 as well. You need to get away from the mindset that profits are bad. They serve an important purpose.

    As far as healthcare goes, I didn’t say government has it wrong. I said that the system we have does not have the incentives set up right to contain costs.

  50. I think you are talking about free-market in theory rather than in practice and I am talking about the health care industry because I think it is one place where gov’t managed programs empirically show better results. Now I understand what ideologues like Hayek or Friedman say, and they are right about the technical functions of markets but I frankly often discount them because I don’t think they really believe in democracy(more importantly I don’t think health care or something like social security should be treated like comodities).

    As for the economies of scale, why do you think that the Republican Medicare plan disallowed the U.S. gov’t to bargain and purchase in bulk? Because they didn’t want it to be efficient! The do not want it to be able to compete with the private sector plan(I’m not saying that you support that plan, I’m simply saying that conservatives go out of their way to be certain that the gov’t can’t compete with private industry).

    Now I agree that the price system is an efficient way to ration goods, but it always rations from the top down…and when it comes to health care those at the top don’t need insurance anyway.

    You are right in another respect…health insurance companies benefit from the byzantine nature of the system and if we make the system more transparent they will deal with this by cutting the most expensive people from their plans…that is an efficient way to save money…by making sure nobody who really needs treatment gets it.

  51. Both theory and practice. In practice, we did win the Cold War exactly because of the inefficiencies of central planning.

    Discount Hayek and Mises if you want. Listen to me. I believe in democracy, and I think I demonstrated that by being the only libertarian here willing to point out the need to balance liberty with democracy when it comes to campaign finance. As far as the Republican Medicare plan, I know I’m not the only libertarian or conservative to consider it a disaster (one due to rent-seeking, I might add). Conservatives are hardly a monolithic group.

    I agree that the price system is an efficient way to ration goods, but it always rations from the top down

    No, from the bottom up. The man on the spot makes decisions based on the local knowledge that he has, and this information travels up via prices to producers making resource allocations. The real decision-making is made by a widely dispersed group of people at the bottom. The information from all their collective decisions is aggregated into prices which firms have to heed in order to maximize profits.

    It’s the central planning model that’s the one where decisions get made top-down. Furthermore, information doesn’t flow naturally, it has to be gathered by government agents.

  52. “Both theory and practice. In practice, we did win the Cold War exactly because of the inefficiencies of central planning.”

    In general I agree but there was also a ton of b.s.(propaganda about how our lives were in peril) involved in us winning the cold war…I mean I would love to live in a country we didn’t have to spend $600+ Billion dollars/yr and/or run the largest defecits in history to prime the economic pump. We have never had a free market in this country and I would actually argue that our version of ‘state capitalism’ or ‘state mixed economy’ was what allowed us to prevail. The Soviet Union/Russia was never particularly strong economically before,during, or after Communism.

    I think when I said that the price system rations from the top down I was actually trying to say that the distribution of the resources is so concentrated at the top that the price system will work in a sort of inverse pyramid of consumption. And again I would say that when it comes to something like healthcare the way that companies will lower their costs is to cut the people who require a lot of healthcare adrift.

    Regardless…I do give you credit for being articulate and open-minded and would never confuse you for a modern new-mettle conservative:)

  53. there was also a ton of b.s.(propaganda about how our lives were in peril) involved in us winning the cold war

    I think that you categorize it as B.S. seems to belie that you don’t really think it helped all that much. And note, the Soviet Union wasn’t the only country that ran into the knowledge and incentive problems, which is why every country dumped central planning.

    I’ve never disagreed that we’re a mixed economy. The world is completely filled with them now. My point all along is that the trick to making it work is to get the incentives right.

    I think when I said that the price system rations from the top down I was actually trying to say that the distribution of the resources is so concentrated at the top that the price system will work in a sort of inverse pyramid of consumption.

    I’m sorry, you’ll have to elaborate, because this made no sense to me.

    Regardless…I do give you credit for being articulate and open-minded and would never confuse you for a modern new-mettle conservative:)

    Well, thank you. Although I’m confused at why you’re picking a fight with me on healthcare given that 1) this was a thread on campaign finance, and 2) I was the one guy who agreed with you (indeed, my point about the Gini coefficient was aimed at Ben Rushing, not at you).

  54. I think I might have gotten to health care because I thought that the incentives work in the wrong direction when it comes to the privatized health insurance industry.

    Just a note since we got way off topic…I don’t think Brazil,Chile,Uruguay,Argentina etc. backed away from Socialism because it failed them…CIA assasinations, U.S. funded para-militaries probably played and still play a role in many of these countries. While I don’t believe in state socialism I cannot discount the all out economic/political warfare declared by the U.S. on these countries.

    Any way…as to the first topic…the reason I do not support no-holds-barred election financing in the United States is less about incentives than it is about means. The few in this country(and most countries) have far more means than the vast many put together.

  55. Well, I don’t see why incentives work the wrong way. The purpose of profits is to create incentives to lower costs. I don’t see why that wouldn’t be true for healthcare. I can see an argument that it is important for society to give the poor access to healthcare, but I covered that.

    You’re right about Latin America, and I wish more Americans were familiar about that history, but I was thinking more about Eastern Europe.

    I view campaign finance as partly about incentives (you want to prevent politicians from having incentives to give in to rent-seeking) and partly about fairness (which I think ties into means). I won’t quibble about the amounts.

  56. Since when is bribary a constitutional right? What crap! Okay, if you must “contribute” money to your favorite candidate it should be done in total anonimity and the amount contributed should be undisclosed. Just loose cash dropped into the box with no name and no way to trace who dropped it. No way to work a quid-pro-quo.

    Express a little altrusiam for your favorite candidate. That’ll be the day!

Please to post comments

Comments are closed.