Defensive medicine

4070

defensive-medicine

Support for ObamaCare is crumbling rapidly as people are getting more aware of its weaknesses. Yet one area in which the president Obama could curb costs is tort reform, which for many years has been a major driver of increasing health care expenditures. The fact is that American doctors have in recent decades increasingly resorted to defensive medicine (a recent study put the number at 87% of doctors) . These doctors are reckless in employing all available diagnostic procedures simply to escape claims of malpractice by their patients.

The price tag for this type of defensive medicine in the US amounts to somewhere between $100 and $200 billion per year. This considerable sum forms the livelihood of a group of well-heeled and specialized lawyers, who happen to be among the biggest sources of funding for the Democratic party. So for purely political reasons this is a no-go-zone for the Obama administration. In addition the rapidly increasing rates for malpractice insurance are invisible to patients:

- Nearly $2,000 a year in extra health expenses for an average family, according to the rate of defensive medicine found in a study by Daniel Kessler and Mark McClellan.

- Stuart Weinstein…has calculated that if a doctor delivers 100 babies a year and pays $200,000 for insurance (the rate in Florida), "$2,000 of the delivery cost for each baby goes to pay the cost of the medical liability premium."

If this money could be transferred into a patients health savings account about half of the yearly health budget for a middle income family of four would be provided for.

Mad and madder

4069

mad-and-madder

Japan's new First Lady believes that she was once abducted by aliens. "I think my soul rode on a triangular-shaped UFO and went to Venus" Miyuki Hatoyama wrote in a book last year. She also claimed to know Tom Cruise in a former incarnation when he was Japanese.

Mind you, her husband, the Prime Minister-elect Yukio Hatoyama, believes that raising the minimum wage, banning temporary employment, subsidising famers, and a $76 billion social spending plan is going to save the Japanese economy.

Junksmith is not sure which is crazier...

Scrapped for cash

4076

scrapped-for-cash

The SMMT (the motor industry’s lobbying group) has this week been selling the ‘success’ of the government’s scrappage scheme for old vehicles, with the news that sales are up 6% on a year ago.

Readers (and the BBC which reports the story) should cast a more critical eye over the scheme. Setting aside the senseless waste of destroying tens of thousands of roadworthy cars and the catastrophic damage to the used car market, the real outrage is that the vast majority of the £300m allocated to the scheme ends up in the hands of foreign firms and workers. Of the top ten cars sold in Britain in August, only the Vauxhall Astra (in 7th place) is built here. None of the manufacturers are British.

As we struggle through the recession, Brown and Darling are happily dancing to the tune of the lobbyists, taking money from British firms and workers and dishing it out abroad. More of their stimulus? No thank you.

Forget Tobin taxes – we need more competition in the banking sector

4074

forget-tobin-taxes--we-need-more-competition-in-the-banking-sector

As G20 finance ministers meet in London to discuss the economy, a new briefing paper from leading think-tank the Adam Smith Institute has attacked Financial Services Authority chairman Lord Turner for suggesting of a new tax on financial institutions, calling his plan "misguided", "unfounded" and "incoherent".

Miles Saltiel, author of the paper and the Institute's senior fellow in finance, accused Turner of playing politics, and said he was attempting to harness anti-City populism to shore up his position, as well as that of the FSA – which the Tories now say they will abolish.

The paper takes apart Turner's case for the so-called 'Tobin tax', arguing that there is no objective way of knowing whether the UK financial services sector has become disproportionately large. Since it operates internationally, comparisons with UK GDP are irrelevant. On a practical level, moreover, Turner's scheme is a no-go: such a tax could not be implemented domestically without driving business overseas, and reaching any international agreement would take a generation.

However, Saltiel's most damning criticism of the 'Tobin tax' is that it is a lazy alternative to undertaking the reforms the financial sector really needs. By guaranteeing them a bigger slice of the profits, it would encourage politicians to accept the too-big-to-fail, near-monopolies that have emerged in the banking sector over the last economic cycle. "This is nothing less than a corporatist Faustian pact", Saltiel added.

Tom Clougherty, the executive director of the Institute, said: "Turner is advocating precisely the wrong approach. What we need are smaller banks and more competition in the banking sector. That would reduce systemic risk and help prevent future crises, but it would also be good news for consumers. The government ought to start by breaking up RBS and Lloyds TSB - HBOS, before returning them to the private sector."

A PDF of Regulatory Corporatism: Lord Turner and the Tobin Tax can be downloaded here.

Another world...

4073

another-world

Neologism

4068

neologism

Idiocracy - Rule by idiots.

A fast food tax? Not so fast

4061

a-fast-food-tax-not-so-fast

The possibility of a new tax on fatty and unhealthy foods may be very real in the United States and other European countries. The idea behind the new tax is twofold: firstly, countries hope to regain additional costs in healthcare caused by obesity related diseases, and secondly to affect behavior so as to discourage the consumption of fatty foods. More specifically, in the United States the tax would be put into place to fund public healthcare expansion. Is the tax justifiable or is it simply a way increasing government control in the private sector?

Although it may be easy for government officials to sell this idea to the general public by claiming that if fast food is more expensive you will eat less of it, in reality it is a but more complicated. The idea that fast food is a normal good is false. In fact, it has been found in almost all circumstances to be an inferior good, meaning that if the price of that good increases so will the demand for that same good. Inferior goods are unique in that they appeal more to low-income individuals because of how easy they are to access and also because of their price. As low-income individuals are able to increase their income they are therefore able to substitute out of fast food and into better types of food which are more expensive. If the price of healthier foods increases they will be forced to substitute back into fast food; however, if an individual is currently dividing his or her disposable income between both healthy and unhealthy foods and the price of unhealthy foods increases then in order to maintain their current overall consumption they must shift exclusively into fast food and spend no money on healthy foods, therefore increasing demand and consumption of unhealthy foods which are still comparatively cheaper than their healthy counterparts.

A study out of Tulane University confirmed the fact that fast and fatty foods are indeed correlated with low-income areas. The government also knows about the ineffectiveness of altering behavior by taxing inferior goods, but they are easy targets to line their pockets. Attacking a product that everyone knows is unhealthy is politically easy, and it is also useful in pulling the wool over the public’s eyes while government programs continue to creep more and more into the private lives of its citizens.

DfID’s fake aid

4064

dfids-fake-aid-

Do you think DfID solely uses taxpayers’ money to help the poor overseas? Think again. A new report from International Policy Network shows that the Department for International Development (DfID) has spent nearly £1bn on spurious ‘communications’ activities since 2000, with £140 million spent this year alone.

The research documents how DfID is channeling millions of public money through a select coterie of NGOs to fund ideological “awareness" and “advocacy" activities, which support DfID's (erroneous) view that state-funded social services are the best way to tackle poverty.

In other words, DfID is using taxpayers’ money to spread its own political propaganda in the UK. Much of this money never gets near the poor and needy. This is not just harmless guff: thanks to DfID funding, Voluntary Service Overseas (VSO) was able to persuade the Gambian government to ban all-inclusive package holidays. That hardly helps foster economic development.

DfID is also using public money to set up fake charities to peddle its own agenda. Connections for Development (CfD) received start-up funding of over £600,000 from DfID to represent black and ethnic minorities “on issues relating to international development." If the need for such a charity is so pressing, how come it has to rely on the government for 100 per cent of its funding?

Overtly partisan organizations that have little to do with development are also cashing in on the DfID payola. The Trades Union Congress (TUC) has received over £1.2m since 2003. Most of this money has funded TUC lobbying, new staff and even an “international buffet and wine" event in London.

This kind of spending reveals a worrying disregard for democracy on the part of the government. It is not right that public funding should go – frequently without tender - to unelected and largely unaccountable bodies to promote ideological views on development.

It stinks, and the next government should not hesitate to take an axe to it.

On the buses

4062

on-the-buses

Last month, the Office of Fair Trading announced that it has – once again – pressed its nuclear button by referring the local bus sector to the Competition Commission (CC). This decision will not exactly put fear into the minds of the five UK bus companies who dominate the market – Stagecoach, First Group, National Express, Arriva and Go-Ahead. For many in the City, CC enquiries are normally of little interest – they are often dominated by its members poring over out-of-date figures and proposing remedies that are consistently ignored.

Of course, for Stagecoach, the CC – and its predecessor, the Monopolies and Mergers Commission – is a second home. Legendary tales of bare-knuckle competition in Darlington, Thanet and Carlisle will be long remembered. Yet, the fact remains that privatisation of the bus sector has brought considerable benefits, although some rural dwellers would vehemently disagree. In recent years, bus fleets have been modernised, partly due to environmental factors, whilst travelling numbers in major population centres are holding up well.

It should also be recognised that solid bus revenues have helped finance the bids for railway franchises: without them, there would have been precious few bidders for these franchises. Stagecoach was the first credible rail privatisation bidder – for the South Western franchise, whilst National Express – the key bus operator in the West Midlands – has been very active on the railways. Its spectacular over-bid for the East Coast main-line franchise will not be forgotten.

To be sure, 10%+ operating margins on UK bus operations outside London are attractive. But the reality remains that the reform of transport markets would be far better directed elsewhere. The BAA/Heathrow shambles remains unresolved. And, on the railways, urgent action is needed to sort out the much-criticised franchise system and to bring Network Rail under greater financial control.

Are these issues not more important?

Charlotte Bowyer joins the ASI

4060

charlotte-bowyer-joins-the-asi

Having finished 6th form at James Allen’s Girls’ School where I received A-levels in Politics, Economics & English, I am honored to be taking a Gap Year placement with the ASI. Following this I intend to go backpacking before heading off to university where I hope to study PPE at Oxford or Government and Politics at LSE.

I have spent the last two years ranting to uninterested classmates and left-leaning teachers about the wonders of capitalism and a government’s innate ability to squander money and complicate any economic difficulty. I’m therefore very happy to work at a place where my views are supported and I have the ability to voice them. In such an economic climate I think it’s incredibly important that Britain does not turn to the government in hope of economic and social salvation. Today’s government has created an untamable national debt as taxpayer’s money is wasted in unprofitable uses, a bloated public sector weighed down with bureaucracy and a slow and steady erosion of citizen’s freedoms. All of this suggests that no government - be it Labour or Tory - can hope to make Britain a better place without dispensing with megalomania and handing economic and civic freedom back to the public.

In my spare time my interests include eating and lying in bed, djing, taxidermy and learning to crochet.