Mitchell’s Musings 10-2-2017: What You Know

01 Oct 2017 1:51 PM | Daniel Mitchell (Administrator)

Mitchell’s Musings 10-2-2017: What You Know


Daniel J.B. Mitchell


Sometimes what you assume to be true may not be. Mark Twain is supposed to have said that “It ain't what you don't know that gets you into trouble; it's what you know for sure that just ain't so.”[1] But then again, just to illustrate the point, it appears that he never said it.[2]


Two items in the news recently come to mind. One is the political appeal of “single-payer” health insurance. There seems to be an assumption, at least on the part of some on the left, that this concept is a natural rallying cry for Democrats. Indeed, it seems on the way to be becoming a litmus test for Democrats. But how popular is the idea generally, i.e., among voters? The other item I spotted in the news – albeit very locally - is that we live in an era of unprecedented technical progress. The little city I inhabit – Santa Monica, California (population around 93,000) - feels a need to plan for this progress.


Let’s start with the first item. How popular is single-payer, particularly among Democrats, but also among voters in general? Below is a poll from the Public Policy Institute of California (PPIC) that asks those questions. Note that California is a “blue state,” so one might expect the notion to be particularly popular in a California poll.

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Source: http://www.ppic.org/wp-content/uploads/s_917mbs.pdf

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It’s true that the poll above doesn’t really ask about “single-payer.” It asks about a “single national health insurance system run by the government.” And it is quite likely that because lots of folks don’t really know what single-payer is, the pollsters had to define it for them to obtain responses. Still, described the way the pollsters asked, only 44% of Californians who identify as Democrats favor the idea. Of course, Republicans don’t like it at all. And independents are in between. So when you add them all together, and adjust for who is likely actually to vote, you get about one-third support.


That result doesn’t prove that if you had just said “single-payer” with no definition, you might not have gotten a higher level of support, at least among some Democrats (but maybe a lot more “don’t knows.)” But if there were an actual political campaign in favor of a single-payer plan in California, you can be sure that opponents would use language that was intended to evoke a negative reaction. Maybe “government-run” would be emphasized. Or the ending of all private insurance would be featured as a threat, since loss of that option would affect lots of people.[3]


The poll didn’t test “Medicare for All” as a slogan, which might be considered a subset of “single payer.” But it’s worth pointing out that Medicare is less “single” than you might think, and it doesn’t really eliminate private insurance, as the diagram below illustrates. Most people under Medicare also have some other supplemental plan. And many recipients have Medicare Advantage plans under which a private entity handles medical coverage for a fixed payment from the government.[4]

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The bottom line here is that single-payer is unlikely to be a path to sure victory for Democrats. What tends to be popular as a concept is universal coverage – everyone should have health insurance - without a specification as to how that coverage is to be provided. Given the fact that we have had a history of various forms of private health coverage, the notion of re-starting with a new system and scrapping the past seems naïve at best.


Now let’s turn to the second news item that describes what some people are sure they know. What about the notion that we live in an era of unprecedented technological progress? My own little city, Santa Monica, as noted, recently became concerned about the impact of that progress. It is commissioning a report on how technical change would affect the city and its government over the long term. There is nothing wrong with looking ahead, of course. But the premise seems to be that very rapid progress is inevitable and already occurring:


Many observers… note that the “pace of technological change is increasing exponentially. Technologies and ways of doing business are rapidly changing and are expected to have significant impacts on how the City provides services and how it pays for those services.[5]


There is a problem with the idea of the “pace” (presumably rate of change) increasing exponentially, i.e., faster and faster. One relevant measure from the U.S. Bureau of Labor Statistics (BLS) is the change in output per hour. It’s a noisy series, affected by the ups and downs of the business cycle. But when you smooth it out, as in the figure below, it’s hard to see signs of exponential advance.

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You do see swings in the BLS series. But in fact in the recent period, the index seems to suggest a recent decline in the rate of advance. Indeed, the current period looks reminiscent of the 1970s and early 1980s when there was a federal Productivity Commission established to analyze what had gone wrong with productivity growth. Of course, you can always say there must be some type of measurement error and point to some new app on your cellphone as surefire evidence of rapid advance. In a more sophisticated response, you might respond that labor productivity is not quite the same as technical progress.


In fact, the BLS does have a more comprehensive series – so-called multifactor productivity – that is supposed to come closer to measuring technological progress. Unfortunately, although there is a long history of trying to measure multifactor productivity, BLS doesn’t have a really long time series of that concept on a consistent basis. But what there is – shown below – mirrors the story told by output per hour, i.e., recent slippage.

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There is no harm in Santa Monica, or any other city or region, engaging in futurology, so long as the cost isn’t too high. But whoever does the study ought to keep in check the tendency to think that right now there is a special leap in progress occurring, unlike what has gone before. It seems that since the Industrial Revolution, people always seem to believe they live with unprecedented progress.


Perhaps the best place to illustrate that tendency is in popular culture. The new edition of the movie “Blade Runner” is coming out, this time set in 2049. However, the original film was set in Los Angeles in 2019 and was made in 1982, i.e., at the low point of measured productivity shown earlier. Nonetheless, the film postulates that by 2019, there will be flying cars. Bio-tech will have advanced so much that there will be “replicants” and other artificial creatures. Travel to other planets will be routine. It seems unlikely that these prophesies will develop in the next two years. But the filmmakers must have believed they were living in a period of especially rapid progress back in 1982 that would produce such advances in only 37 years.


In short, the lesson is that Mark Twain was right, even though he didn’t say it.

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A clouded 1982 view of the future: A Los Angeles of flying cars, heavy Japanese influence, replicants, and Pan Am.

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Footnotes:

[1] https://www.brainyquote.com/quotes/quotes/m/marktwain109624.html

[2] https://newrepublic.com/minutes/126677/it-aint-dont-know-gets-trouble-must-big-short-opens-fake-mark-twain-quote

[3] There was a single-payer initiative on the California ballot in 1994; it was defeated in a landslide. Of course, that was then and this is now. See https://ballotpedia.org/California_Proposition_186,_Single_Payer_Healthcare_System_(1994).

[4] Source: http://www.kff.org/medicare/issue-brief/medigap-reform-setting-the-context/. I was unable to find a source with later data of the type shown on the chart. 

[5] http://santamonicalookout.com/ssm_site/the_lookout/news/News-2017/September-2017/09_28_2017_Santa_Monica_City_Officials_Brace_for_a_Future_of_Hi_Tech_Change.html.  


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