Do we want to eliminate the middle man in the health care industry? I do, but what I want to see is consumers pay providers directly. More thoughts:

[UPDATE: see also Ezra Klein, who agrees with me that a lot of the people shouting about this issue do not know what they are talking about.]

Tyler Cowen lists five major strands, taking a swipe at one.

3. Mises Institute nationalism. Gold standard, a priori reasoning, monetary apocalypse, and suspicious of immigration because maybe private landowners would not have let those people into their living rooms.

My minor strand I call civil societarianism. Collective institutions that are separate from government--good. Government--bad. Activities that can be sustained through profits or philanthropic donations can be presumed beneficial, from a utilitarian-ish perspective. Activities that require taxation are sometimes beneficial in theory, but public choice issues make them much less beneficial in practice.

Science, Ziliak and McCloskey say, needs to learn both whether and how much. But the putatively common practice of ending the empirical analysis by checking whether a calculated test statistic does or doesn't reject the null hypothesis according to a 5 percent or some other a-sized crtical region is basically to stop at the question of existence without addressing the scientific issue of magnitude

That is Saul Hymans, reviewing The Cult of Statistical Significance. His review appears in the June 2009 issue of the Journal of Economic Literature, which just came in yesterday's mail.

Once you grant that personality has an important effect on ideology, it's only natural to wonder why.  Gerber et al propose what they describe as "two tentative and equally plausible possibilities here, one focused on other regarding judgments and the other focusing on self-interested behavior."

Possibility #1: Some personalities are less self-interested than others.  Their example:

One of the key components of Agreeableness is compassion, as opposed to competitiveness. Individuals who are particularly Agreeable may be more inclined to support policies that benefit others, while less agreeable individuals are unwilling to support interventions that do not improve their material self interest.

Possibility #2: Some personalities have different interests than others.  Their example:

[W]e might expect people who are low on Emotional Stability to be particularly worried about the possibility that they will lose their health insurance and thus may be more inclined to support a government-sponsored program.

Here's my question: What's wrong with...

Possibility #3: Some personalities see the world more clearly than others.

My example:

People high in Agreeableness are emotional and refuse to face the reality of trade-offs.  So when someone suggests that the minimum wage might actually hurt the poor by causing unemployment, they just get hysterical.  People low in Agreeableness, in contrast, are logical and eager to identify trade-offs.  So when you ask them about the disemployment effect of the minimum wage, they calmly consider the argument, and realize that it makes sense.

Now you might think that I'm unfairly maligning the Agreeable as a pack of mushheads.  But whose maligning whom?  On Jungian personality tests like Myers-Briggs , they don't call it "Agreeableness."  They call it "Thinking vs. Feeling."  As a person at the 99th percentile of the Thinking distribution, I see the "Agreeableness" label as a conspiracy of the Feeling to condemn me for my truth-seeking disposition.  Seriously.

In any case, doesn't it stand to reason that Thinking people would be more likely to embrace the "economic way of thinking" and hence pro-market views?  As I explain in my article "The Gender Gap of Economics: Why Do Men Think More Like Economists?":

One of the main dimensions on the Myers-Briggs personality test is Thinking versus Feeling.  The breakdown for men is about 60% Thinking, 40% Feeling; the breakdown for women is about 30% Thinking, 70% Feeling. (Briggs Myers and Myers 1993)  Similarly, in the Five Factor Model of personality, women are about half a standard deviation more Agreeable than men. (Costa et al 2001; Costa and McCrae 1992: 75)  This indicates, in part, that women are more "moved by others' needs and emphasize the human side of social policies," whereas men are more likely to "consider themselves realists who make hard decisions based on cold logic." (Piedmont 1998: 90)    So when economists argue - as they often do - that good intentions have bad unintended consequences, and vice versa, we should expect it to alienate the Agreeable/Feeling, and pique the curiosity of the Disagreeable/Thinking.

Admittedly, I can't prove that my Possibility #3 is right.  But doesn't it deserve as much consideration as Gerber et al's "two tentative and equally plausible possibilities"?  Whoever said that all personalities have equally accurate beliefs?

Today's Washington Post has six op-ed pieces. Three are on Sarah Palin, who resigned as governor of Alaska the other day. The other three are on Robert McNamara, who died yesterday.

Palin is known for hunting moose. McNamara is known as the architect of the Vietnam War. The op-ed writers generally take a more respectful tone toward McNamara.

Palin represents small-town America. McNamara was comfortable among business and academic elites. It is easier for me to relate to McNamara than to Palin.

I often say that an important step in my journey away from the left was reading David Halberstam's The Best and the Brightest and seeing how someone as intelligent and well-intentioned as McNamara could have blind spots. One could argue that McNamara is exhibit A in my case against what Thomas Sowell would call the unconstrained vision, which holds that certain people have so much knowledge and moral strength that they should be given great power over the rest.

David Ignatius writes,

perhaps the memory of this brilliant and tragic man will keep us from being too certain of our own judgment--and encourage us to consider, even when we feel most confident, the possibility that we could be wrong.

Not bloody likely. I worry that today's equivalent of Robert McNamara is Peter Orszag, who I fear is poised to do for our health care system what McNamara did for Vietnam.

The Economist's blogger (the magazine has a policy against signed articles, and they have stupidly decided that the same policy has to apply to their blog) writes,

there is every indication that recovery from this recession, when it arrives, will do little for many of the unemployed for years to come. Time to start thinking about why this is the case, and what can be done about it.

Thanks to Mark Thoma for the pointer.

I want to emphasize once again that the structure of the economy has changed over the last fifty years. We have gone from over two-thirds of the labor force having no more than a high-school education to over two-thirds having at least some college education.

Up through the early 1980's, many of the unemployed in a recession were low-skilled workers on temporary layoff, in many cases concentrated among large industrial firms. Once demand recovered, they were called back--end of story.

The Dotcom recession was different. The people who were laid off by Webvan and Pets.com and Worldcom were not going to be called back. The companies were not viable. From late 2000 onward, a lot of the labor force simply disappeared. There was a recovery in productivity, as firms slashed marginal workers. The unemployment rate did not get terribly high, in part because fewer people looked for work. The employment-to-population ratio never recovered. Maybe it's a Tyler Cowen story--leisure got cheaper because of the Internet, and so people consumed more of it. (Just kidding)

My thesis is that unemployment is more persistent when the layoffs come from structural change rather than from excess inventories. With excess inventories, once the excess has been absorbed you can go back to work at your exact same job. On the other hand, when firms and industries permanently shrink, you have to find a new job, and possibly even an entirely new occupation. It is rare for people to have the capacity to do that, and it takes quite a bit of time when they do.

Part of the problem is credentialism. The demand for health care workers is high, but if state regulations say that you need a doctorate to be a physical therapist (a real example, in my state of Maryland), then shifting into health care is not going to be easy.

Most of the structural adjustments in the labor force consist of a cohort of young workers joining and a cohort of older workers leaving. This changes the mix of skills and occupations.

No economist knows how to deal with structural unemployment on the scale that we are seeing nowadays. Fiscal stimulus is not a proven remedy, and it may not be a remedy at all. Worker retraining programs are a logical idea and an empirical failure.

Using a standard cost/benefit approach, the policy recommendations generated by stipulating unacceptable "tipping points" appear very inefficient. For example, the current Waxman-Markey bill pending in Congress requires an 83-percent reduction in U.S. emissions (relative to the 2005 base level) by the year 2050. Yet, most models show that if the whole world were to adopt such an aggressive target, the costs would far outweigh the benefits. The latest calibration of Nordhaus's "DICE" model indicates that such strict cutbacks would yield more than $15 trillion in net costs, that is, costs net of benefits. The other models (which use CBAs) studied by the IPCC show similar results.

This is from Robert P. Murphy, "The Economics of Climate Change." In his article, Murphy takes as given that global warming is real, it is caused by humans, government policy can reduce global warming, and government can be trusted to do the efficient thing. He still concludes that the policies being proposed today are too extreme from a straight cost-benefit viewpoint. He then goes on to relax the last assumption about government, introducing some basic public choice.

Read the whole thing.

A commenter points to Bryan's critique of A Conflict of Visions, which makes a number of good points. Bryan concludes,

What really puzzles me is why Sowell did not try a much simpler typology. Why not simply distinguish between advocates of laissez-faire, free-market policies on one pole, and advocates of government control on the other pole? _This_ dichotomy is unable to accomodate left-wing anarchists, but almost every other ideology fits neatly into place. Of course, this typology fails to capture the "underlying assumptions" of the two polar views. And it fails to do so for a simple reason: each of the polar views has supporters with a wide range of underlying assumptions.

I think that the differences between Sowell's outlook and Bryan's outlook are interesting. A few observations.

1. Bryan would favor open immigration and not favor strong national defense. Sowell would take the opposite positions.

2. Sowell has an unremitting lack of faith in the superior moral wisdom of the elites. In his view, they do not have the superior wisdom that justifies elitist exercise of power. This skepticism is an essential component of the "constrained vision."

Bryan keeps harping on how support for free trade is an elitist view, correlated with education. The implication is that Bryan would prefer elitist government, at least on the free trade issue, which puts him more in the "unconstrained vision" camp.

I think that Sowell could counter that the elite support for free markets is shallow. Everyone supports markets when they work the way you want them to. The crux of the issue is what you do when you encounter markets that deliver what you think are sub-optimal outcomes. At that point, Bryan's well-educated friends with the unconstrained vision abandon free-market policies in favor of social engineering. Only Sowell's friends with the constrained vision stick with markets when the going gets tough.

3. This shows why underlying assumptions really are important. In the unconstrained vision, the underlying assumption is that a social optimum is possible if wise leaders make the right choices. When the right choice is to let the market work, then let the market work. If the right choice is to fix the market failures in banking, education, health care, energy, the automobile industry, unemployment...then fix, fix, fix.

In the constrained vision, the people doing the fixing are no wiser than the people being fixed. In fact, the people doing the fixing lack important local and historical knowledge.

4. Bryan thinks that libertarian anarchy is a reasonable ideology. Sowell would regard it as an unconstrained vision, because it assumes that people are basically nice, so that in the absence of a state they would all get along. Sowell probably would be more sympathetic to the view of North, Weingast, and Wallis that social order is inherently fragile. According to NWW, in most situations, peace only comes about when violent elites can agree on a stable split of economic and political power. Occasionally, this "natural state" evolves into an "open-access order" in which many people have rights of economic and political participation.

5. My own view is that the constrained and unconstrained visions are held by elites. The masses operate on the basis of what I call folk beliefs. Elites compete for power by appealing to and manipulating these folk beliefs. At the moment, I believe that those elites who hold the unconstrained vision are at an advantage in making such appeals. Arguably, they have had an advantage for nearly a century.

Law professor Eugene Volokh has a recent piece in the Wall Street Journal defending the right to burn the American flag as an exercise of free speech. It's good reasoning, and there's nothing in it that I disagree with. But he omits a much better argument based on property rights. If you burn my flag without my consent, I don't care how much you're exercising your right to free expression. Free expression does not guarantee you the right to other people's property any more than it guarantees you a working larynx. But if you burn your flag, you're simply exercising your right to use your property as you wish. It's a sign of how far the courts have moved away from defending property rights that Eugene Volokh, a pro-freedom, pre-property rights lawyer, does not make the property rights case.

UPDATE: I just noticed Professor Volokh's and Professor Somin's responses. While I appreciate Professor Somin's attempt to bail me out, I do think that Professor Volokh correctly saw what I was getting at and did give me an important lesson in constitutional history. Touche.

Arnold makes a fair point about the size of the effect of personality on ideology.  Why then am I so impressed?  Because compared to most conventional predictors of ideology, the personality variables do well.  I've spent many hours looking at ideology data before.  Variables widely believed to predict ideology (particularly education and income) usually matter quite a bit less than Gerber et al's personality measures.

If Arnold's willing to say, "Nothing predicts ideology well, but if these results hold up, personality is among ideology's strongest predictors," we're basically in agreement.