Saturday, July 7, 2007

Springtime for Michael Moore in Cuba: Review of Sicko

Michael Moore's new movie is fun to watch, but does little to convince. His arguments are weak and his imagery is one sided, which adds to its hilarity but makes it unconvincing. Moore's public relations spin has been that he is trying to moderate his delivery to appeal to conservatives. Having seen the film, I am surprised that Moore believes that he has toned down his rhetoric.

Thus, Anthony Breznican in USA Today writes that Moore

"wants to inspire people of all political stripes to improve a health care system he says is too focused on making profits and not enough on caring for the ill and injured."

Breznican adds that Moore believes that his earlier films were too combative and that Sicko will be more convincing than earlier works like Roger and Me and Fahrenheit 911. I do not think that Moore's aims have been realized, although Sicko is fun to watch. (I wonder if Moore will care that he failed to make his case if the movie does well at the box office and he can, well, afford even more donuts.)

The problem with Sicko is that Moore's ideology is extreme and his fact and research base limited so that he inadvertently succeeds in making a case against nationalized health insurance rather than a well-reasoned case for it. It is hard to believe that Moore was able to blow this, because the United States's current system is dismal, but Moore's argument is perverse enough to increase opposition to national health insurance.

Bismarck introduced the first national health insurance program in late 19th century Germany. As Richard M. Ebeling writes in Freedom Daily:

"State-mandated health insurance began in Germany in 1884, and initially covered workers in factories, mines, foundries, banks, dockyards, railroads and inland shipping. The blanket of coverage was extended over increasing portions of the work force in 1885 and 1892, with family members of workers included after 1892. In 1911, workers in agricultural and forestry occupations were added, and by 1928, practically every trade, occupation and craft in Germany was enveloped in the system.

"Before the First World War, anyone making less than 2,000 marks in the covered occupations was required by law to participate in the insurance scheme. By 1928, all those earning less than 3,600 marks were forced to participate. The insurance funds mandated by the German state were organized on the basis of trades and occupations. But the state continually consolidated them, with the result that, while in 1909 there were 23,000 of such funds, by 1914 they had been reduced to 10,000, and to about 7,400 in 1929."

As well, Goldbug Howard Katz notes:

"...the German Government gave its citizens “free” health care. The second thing that the German Government gave its citizens was “free” old age retirement. For approximately 40 years, Germans went around bragging that their country was the country of love.

"And then there was a transition period. From 1920 to 1930 (or more precisely 1919-1933), called the Weimar period in German history, the country was thrown into turmoil. And what emerged was the country of hate. This country killed 50 million innocent human beings. It enslaved millions of others. It invented a system of mechanized murder (called the Holocaust) which has never been seen in recorded history."

Thus, within 50 years of national health insurance's introduction in Germany, and just a few years after national health insurance was made virtually universal, Hindenburg made Adolf Hitler chancellor. Nazi totalitarianism and World War II followed on the heels of the completion of Germany's national health insurance policy.

Indeed, despite the bloodthirsty nature of their ideology, the Nazis were not content with mere national health insurance, but also advocated wellness policies similar to policies that Moore advocates in Sicko. Thus, the 25 points of Hitler's 1920 Nazi Party Manifesto include point 21:

The State has the duty to help raise the standard of national health by providing maternity welfare centres, by prohibiting juvenile labour, by increasing physical fitness...

Those on the left may argue that claiming that national health insurance is linked to totalitarianism is a post hoc ergo propter hoc fallacy (i.e., Nazism's following national health insurance does not mean that national health insurance caused Nazism). Incredibly, though, Moore uses health care in Cuba, a Nazi-like state, to make the claim that health care is "humane".

Frankly, I was flabbergasted. Is Michael Moore a sociopath, an ignorant fool, or both? Does he really think that presenting us with Potemkin village-like portraits of Castro's victims amounts to a convincing argument for national health insurance?

The Truth Recovery Archive on Cuba estimates that Fidel Castro's regime has murdered 87,073 non-combatants. Humberto Fontova wrote in August 2006:

"The young Fidel Castro was a keen student of Nazi pageantry, often seen around campus with his well-thumbed copy of "Mein Kampf" alongside his pistol. His title of Lider Maximo perfectly mimics the German term Fuhrer". Fontova adds in a Frontpagemag article:

"By 1992 two million Cubans had fled Cuba, most against staggering odds and with only the clothes on their back. By most estimates this is a tiny fraction of those who desired to leave...According to Cuban-American scholar Dr Armando Lago, 83,000 Cubans have died at sea while attempting to leave Cuba...

"500,000 Cubans (young and old, male and female) have passed through Castro's prison camps. At one time during 1961-62, 300,000 Cubans were jailed for political offenses islandwide. This makes Castro's political incarceration rate higher than Stalin and Hitler's."

Fontavo notes that "lunacy" about Castro is nothing new. Yet, if Michael Moore is eager to develop an argument for national health insurance, I'm puzzled how associating it with a Mein Kampf thumping, military-fatigue wearing butcher like Castro does the trick. Perhaps Moore's point is that Castro provided good health care to his political prisoners after he drained them of blood?

As I watched Sicko I began to wonder if the title was meant to apply to Moore's sociopathic indifference to Castro's suppression and murder.

Ultimately, though, Moore's arguments are unconvincing because he lacks factual evidence and data. There are serious problems with the US approach to health care. Costs are too high, about 16 percent of gdp, about 50 percent higher than other industrialized countries'. Also, there is little evidence that medicine here works in its most important applications, i.e., the cure of terminal illness. Modern medicine unquestionably works with respect to traumatic injury, infections, broken arms, and in a number of other areas. But those are probably not where most of the spending goes. We have permitted the medical field to spend in areas where it does not achieve results. This may be true in other countries too, but it is likely true to a more limited degree. Spending in other countries (all other countries have national health insurance or some version of socialized medicine) is limited, more so than here. More people get turned down for exotic operations than they do here. Moore did not interview such people. However, basic health care is more widely available to the needy in other countries than it is here.

For instance, Moore cites a case of a worker who lost two fingers and could not afford $72,000 to reattach both fingers, so he spent $12,000 to reattach one finger and forewent the $60,000 to reattach the second finger. Moore does not ask the Cuban physician whom he interviews whether the Cuban system would have provided for the reattachment of the fingers, or if such procedures are even available at all in Cuba or in England or France. Even if they are, a large proportion of health care in America would certainly not be provided in Europe, Canada or Cuba. In other words, people are denied care in those countries too, but they are denied care in ways that are different from the way that care is denied in the US, where the decisions are made by insurance industry bureaucrats rather than governmental bureaucrats. Moreover, there is greater weight put on ability to pay here than in other countries.

Much like the Bismarckian welfare state, the Nazi Party and Castro's communism, Moore pretends that health and welfare benefits provided by state systems are "free". He repeatedly states that "care is for free" in France and Cuba. This is of course not true. Someone pays for the care, and the care is rationed. When speaking of the Canadian system, one of Moore's interviewees says "someone always complains about anything". Might we not conclude that Moore and his cranky left-wing followers are those ever-complaining people here in the US?

Seventy years ago, the City of New York "nationalized" the New York City subway system. After seventy years of the benefit of public management, the New York subway is dismal. Rats scurry about, and trains skip stations. The entire system is unpredictable, over-crowded and badly run. If one goes to France, Russia or Tokyo, the subways are much nicer. They are clean, well-maintained and run on time. Moore's (and the left's) argument is that the US will adopt a French, Russian, Japanese or Canadian style health care system. But in all areas I have seen, Canada runs public systems much better than we do. Moore and the left are confused. If the United States nationalizes health care, we will have a New York-style health care system, not an Ottawa-style health care system. Perhaps Moore and his left-wing followers should concentrate on the messes that their incompetence has created in other, now less interesting, public sector areas before they move on to new areas for socialization in which they also lack competence. Some examples include education, the subways, the post office and social security.

Indeed, as Moore notes in his movie, the post office and the education system are socialized. Yet, both of these "services" are dismal. The post office is such a bad service that several large firms have sprung up to provide alternative service at many times the cost, yet they are successful. No one knows how much better service would be if competition with the post office were permitted. Moore aims to convince us to adopt nationalized health insurance based on our experience with the post office. Is he on drugs?

As for the public education system, Moore talks through both sides of his mouth. On the one hand he tells us that we can nationalize the health system just like the education system. Then, later in the movie he bemoans the fact that people are afraid to complain about the education system because it is so badly run! The left has taken control of the education system, and standards and literacy have declined. If we nationalize health care, the left will preach its anti-foundationalist philosophy that reality does not matter, it only matters that society construct good health. God save us.

There is considerable unnecessary care in the United States. The way to end such unnnecessary care is to treat spending on health care just like spending on everything else. Introduce competition into the medical profession by ending licensure. Educate consumers about low-cost options overseas. In time, technology will replace current approaches through discovery of new drugs.

We do not need to emulate Fidel Castro.

Response to David Hogberg's Analysis of the Mortality Rate/Health Reform Nexus

David Hogberg, Ph.D. of the National Center for Public Policy Research argues that life expectancy and infant mortality rates are not good indicators of the quality of the American health care system.

His point is worth considering because arguments for increased government involvement in the financing of health care often rest on the claim that US mortality rates are not lower than other countries', but our health care costs are higher. There is little argument that our health care costs are considerably higher than all other countries'. According to Dr. Hogberg, health care spending does not extend life. If Dr. Hogberg is correct, then current debate about health reform is misguided. If he is correct, it would be better to de-fund our health system rather than continue to subsidize a system that is very expensive and does little to extend life.

Health costs' not increasing mean life expectancy implies either that a small percentage of people incur the costs and their lives are extended, but they are too few in number to influence the mean; or that medical care is a sham and does not extend life. In either case, it would suggest that our current system is a failure, and the reason is that modern medicine does not work well.

If medical care does not improve life expectancy, questions that ought to be asked are:

-"Why are physicians licensed?"
-"Why are tax exemptions given to health plans?"
-"Why are hospitals not closed down from a plethora of fraud suits?"

Perhaps they should be. If the health care system does not extend life, then the promise of modern medicine has been vastly exaggerated. The question isn't socialized medicine versus private medicine. The question is, do we pay for bogus treatments or not?

In addition, Dr. Hogberg argues that life expectancy is not a good indicator of the quality of health care systems because it does not control for interaction with the health care system. Many people die without having seen a doctor. But on this point Dr. Hogberg begs the chief criticism of the American health care system: lack of access. Unless there is reason to believe that random events like sudden death heart attacks or sudden death car accidents occur at greater rates in the United States, the question of access is the chief concern of proponents of a national health plan. Access in America is the worst in the industrialized world, so saying that lack of interaction explains high mortality rates concedes the critics' chief point. It is anything but an argument for not using mortality as a measure of the quality of health care.

If many people are not obtaining access to the US system, then, argue critics, that is a serious problem that Dr. Hogberg seems to explain away. If there is limited access say by poor people, then the system has an access problem. Saying that lack of interaction excuses the system from criticism begs the question of why access in the US is poor, despite the extremely high costs (roughly 50% more than many other industrialized countries').

However, Dr. Hogberg's point that the health care system does not affect mortality is potential dynamite. If not, why have a health care system at all? Dr. Hogberg suggests that "a health care system has, at most, minimal impact on longevity." If this is so, I am puzzled as to why we are spending 16 percent of our gross domestic product on it. Shouldn't people assume that when they receive cancer treatments that the treatments will have an effect on extending their lives? What part of health care spending is the part that we should assume doesn't extend life?

If there is any merit to Dr. Hogberg's argument, it would seem that there needs to be considerable reevaluation of why we are spending 16 percent of gdp on health care. There needs to be validation of what the system is accomplishing. Where is the data? Are we spending more on cancer treatments than other countries, and if so, do those treatments prolong life? If not, why are we spending money on the treatments?

Christian Scientists limit their exposure to physicians and the health system. How different is the life expectancy of Christian Scientists from those who visit physicians?

Dr. Hogberg claims:

"A health care system has, at best, minimal impact. Thus, life expectancy is not a statistic that should be used to inform the public policy debate on health care."

Far from defending the current system, Dr. Hogberg seems to imply that it is fraudulent. This may be the case. I am puzzled, though, why the public does not make greater demands for validation of current treatment approaches, and why the public continues to be happy with a system that has minimal effect on life extension (if that is the case). Perhaps as a nation we need to revert to the common sense of earlier generations and demand results. Physicians who do not heal should not be paid.

If health care does not extend life, government should be removed from it. Since they are fakes, doctors do not deserve to be licensed, and the public should not support health care through subsidies of hospitals, tax exemptions or deductions for employer plans. Validation statistics should be published, just as McDonald's publishes the calories in a big mac with cheese, so we can validate whether there is anything to health care's life extension potential.

Not only should the system not be nationalized or socialized; it should be debunked. The public should demand that health care justify itself by proving that its treatments work. Dr. Hogberg suggests that they do not.

Friday, July 6, 2007

Yvonne does it Again

A couple of years ago I wrote a letter to New York Magazine about Yvonne's restaurant on Route 28 past Phoenicia. I said then that dinner at Yvonne's is like a visit to your French grandmother's house, and if you're not French then you're in for a great treat. Yvonne retired two years ago and my wife and I were in mourning/withdrawal in '06, but behold, she reopened in '07 better than ever. The duck is amazing, but I often get the beef bourguignon, the steak, the cassoulet, the boar and several other dishes. Yvonne makes amazing cold cream of fruit soups (last week's was cream of peach) that never cease to blow me away.

On Saturday, rather than a July 4th barbecue, Sharad Karkahnis, Phil Orenstein, Raquel Lacomba Walker and I had dinner at Yvonne's. Personally, I had a blast. Let's hope for many more years!

Wednesday, July 4, 2007


The Steven Head case has a number of important implications. Thirteen months ago, I spoke at a hearing of the Department of Education concerning recognition of the National Council for the Accreditation of Teacher Education (NCATE) as an agency that the government recognizes to accredit education schools. I noted that NCATE has been at the nexus of declining educational achievement in the United States.

In a blog today, Phil Orenstein points out that declining educational attainment is due to the "social justice" education that NCATE advocates:

"I have discussed this with immigrant co-workers and colleagues who are the product of fine technical institutions from Argentina to Israel who lament that the engineering schools and manufacturing programs of America are a joke. The dumbing down of competitive skills, workplace values and discipline in the postmodern academic world has put U.S. scientific and technical education to shame as compared with foreign countries."

The indifference to objective knowledge, factual learning and rigor is characteristic of the anti-foundationalism prevalent in the humanities and in the education schools today. NCATE has adopted failed anti-foundationalist ideology, which it enforces through its accrediting standards. In turn, NCATE's approach to education makes young Americans unemployable. Americans of future generations will starve because of NCATE, but at least they will have NCATE to eat.

Phil Orenstein's point amounts to this. When American jobs leave America, NCATE, the education system and their advocates in the education schools are in no small part to blame.

Steve Head, a Man for All Seasons, Needs Legal Advice

I have previously blogged about Steve Head's courageous pro se lawsuit against the National Council for the Accreditation of Teacher Education, NCATE.

Head had run afoul of the dispositional assessment requirement at San Jose State University College of Education (SJSUCE). His multicultural instructor (sic) told him that he was unfit to teach because he defended the United States in class. Much like an incident at Brooklyn College several years ago involving student Goldwyn and Professor Parmar, SJSUCE used quack "dispositional theory" to fail Head. Head then sued.

Head brought a pro se case to federal court through a section 1983 lawsuit. California State University (CSU), of which SJSUCE is a part, filed a motion to dismiss. The federal San Francisco Northern California District Judge William Alsup agreed with CSU's right to throw out students based on dispositional assessment. Judge Alsup threw out Head's case.

Since then, Head appealed, still pro se, to the 9th Circuit. The briefs (opening, CSU's response, and Head's reply) are filed as of July 2.

Head's is the first federal case and first federal appellate case to consider the constitutionality of using outright quackery, namely dispositions theory, to discriminate against a student. The fight illustrates that the problem with public schools lies partly in their political and legal regulation and partly in the judiciary's willingness to kowtow to their political power, to include NCATE's.

This is a first-impression case that defines the limits of permitted, non-disruptive, classroom speech that challenges the inculcation/indoctrination divide at a time when it is most important in our national life.

Steve's fight is not over multiculturism but rather the use of multiculturalist rhetoric as ideological litmus. Steve's "F" grade was not based on his failure to learn the required materials but due to his professor's dislike for his thoughts, which are entirely mainstream.

The 9th circuit has a reputation for being liberal but also a reputation for defending First Amendment rights such as those Head claims. Typically, pro se appeals in the 9th circuit are assigned to a pro se office in which they are quietly sabotaged by forbidding the pro se litigant to appear before the appellate bar, and instead substituting an in-house lawyer to make oral arguments ostensibly on behalf of the pro se litigant. These steps are implemented in a way engineered to sabotage the case for the sake of reducing 9th circuit caseload and of kowtowing to powerful interests such as teachers' unions and the educationist establishment. What does Judge Alsup care if the schools have let our children down?

Lawyers shy away from representing such cases, I suppose, because they know that if they ever attempted to argue effectively on the record in oral argument, they would run the risk of being blacklisted by judges. In any case Mr. Head finds himself in the situation of having fought CSU legally to a standstill in federal appellate court over whether dispositions, which lack validation, violate first amendment rights of education students.

Head is now in search of a lawyer to represent him to take the heat. He is also looking for amicus briefs and for help with legal fees which he has largely borne himself in the last 3 1/2 years in his fight for better quality public education and students' constitutional rights.

Those interested in helping him may contact him via my e-mail address (mailto:

High Net Worth Needs to Be Adjusted for Risk

Last week, Merrill Lynch and Capgemini released their 11th annual study of high net worth and ultra high net worth households. High net worth means that someone has over one million dollars in liquid assets (excluding primary residence but including second homes, investment real estate and liquid investments) while ultra high net worth means that someone has over thirty million dollars. They find that:

"Driven by a strong global economy, the wealth of the world's high-net-worth individuals (HNWIs1) increased 11.4 percent to US$37.2 trillion in 2006...The number of HNWIs in the world increased 8.3 percent in 2006 to 9.5 million and the number of ultra-high-net-worth individuals (Ultra-HNWIs2) grew by 11.3 percent to 94,970."

According to bar graphs on p. 3 and the appendix to the study (p.31), the United States has the most HNWI's, with the number having increased by 9.4% to 2.9 million. According to the Census Bureau, the US population is currently roughly 303 million, so HNWIs are about 0.95% of the US population. However, the number of millionaires is growing more quickly in developing countries like India than in the US.

There has been concern about growing inequality. Globalization and the Americanization of the world economy, some critics might argue, is now causing increasing inequality around the world.

Measures such as the Merrill Lynch Capgemini study are misleading, though. The study notes that high net worth individuals have benefited from a booming global real estate market. Likewise, several years of stock market valuation increases also have contributed to the increasing number of high and ultra high net worth individuals.

About 31% of HNWI's wealth is in equities, 24% in real estate, 21% in fixed income securities and 14% in cash. This a moderately risky investment profile. Wealth is not static. Should real estate, stock and other financial markets contract, the number of high net worth individuals will contract in tandem.

Measures of HNWIs and ultra HNWIs ought to account for the riskiness of their holdings, for example by showing the historical variance in returns of the assets that HNWIs hold. Given that markets in real estate and stocks have been bubbly in recent years, the global bouyancy in the Merrill Lynch/Capgemini numbers may be misleading.

Tuesday, July 3, 2007

Robert Cherry's New Book on Welfare Reform

Oxford University Press has just published Robert Cherry's new book on welfare reform, Welfare Transformed. The book has already been praised by those who are left of center as well as Ron Haskins who was the Republican point person on welfare reform in the 1990s and was a Bush appointee as well.

In addition, Bob tells me that he has just come out with a book, Rethinking Poles and Jews: Troubled Past, Brighter Future, published by Rowman & Littlefield. The Polish embassy is paying for a Polish translation.

Robert Cherry, who is my colleague and friend at Brooklyn College, is an imaginative and creative scholar, and I am looking forward to reading both of his books.

Monday, July 2, 2007

Warren Buffett Should Stay within His Circle of Competence

Today's New York Sun notes that while Warren Buffett complains that he is taxed too little on $46 million in income, his actual economic income last year, including unrealized capital gains, was more than $10 billion dollars. The reason is the unrealized appreciation in Berkshire Hathaway stock, which meant more than $10 billion to Buffett this year. I own four "B" shares that have climbed to $3,621 each this year so I have probably made $1,500 in unrealized appreciation. Tip money compared to a billionaire, but bless Buffett's soul.

Curiously, Buffett argues that public hedge funds and equity funds should be taxed more heavily. Presumably he includes his firm, Berkshire Hathaway. Buffett argues that because hedge fund managers are earning hundreds of millions in salaries, there should be special taxes on hedge fund managers since in many cases they pay lower taxes than those of us who count our earnings in the lowly thousands.

Those New Yorkers who have managed to survive the New York diaspora (the rest having been driven out by "humane" policies of the kind that Mr. Buffett advocates) hear about the hedge fund billionaires. They are obnoxious, boorish, greedy and, in a phrase, nouveaux riche.

Envy is natural in a free society. Success is sometimes out of proportion. This was true in the 19th century with the success of Standard Oil and John D. Rockefeller, and it was true in the twentieth century with the success of A&P, which was prosecuted for anti-trust and price fixing between the 1930s and 1950s. This also has occurred in the case of the hedge fund managers. But there is a difference. Unlike Standard Oil and A&P, hedge fund managers rely on government to profit and have not been particularly innovative in developing new products or new management methods, as did John D. Rockefeller and A&P's Hartford brothers.

Apologists for hedge fund managers, such as Weekly Standard, claim that private equity and hedge funds improve the management of firms that they buy and then resell. This claim is nonsensical. It is well known that corporate acquistions mostly destroy shareholder value in the long run. If you were to limit your investing to stocks of firms that private equity and hedge fund firms have taken off the market and then made public again my hunch is that you will be spending your retirement holding a tin cup. Mark Sirower's book Synergy Trap explains why outsiders do not make good managers. As well, Hayek noticed that management is primarily a matter of knowledge specific to time and place. Outsiders such as financiers lack specific knowledge. The most famous private equity deal involving Henry Kravis and RJR Nabisco that was immortalized in Barbarians at the Gate ended up a financial embarrassment because KKR held onto it.

Federal corporate welfare has made private equity managers, including Warren Buffett, rich. Corporate welfare takes the form of artificially low interest rates that the Fed has pursued since the 1980s. I have previously blogged that hedge fund managers, such as the Carlyle Group's William E. Conway, are well aware that Keynesian monetary policies that liberal economists and the New York Times advocate have spurred enormous profits for hedge funds and have amounted to a transfer from mainstream America to the financial community. There are other beneficiaries of Keynesian re-distribution, to include corporations, universities, mortgage payers and, of course, Warren Buffett. Those who benefit from low interest rates, which stimulate demand for unproductive investment such as $120,000 to study with Paul Krugman or $800,000 for for a condominium in Bayshore, Long Island naturally favor inflationary policies. These include Buffett, Krugman and hedge fund managers. No wonder Buffett, Gates, etc. are all liberals who support left-wing economic policies.

Buffett's father was a hard-money Republican. When Buffett was a student at Penn, he was photographed riding an elephant. However, the elephant must have smacked him upside his head with his trunk, because Buffett switched to the Democrats. Although Buffett is the greatest investor who ever lived, he lacks competence with respect to policy issues. In investing, Buffett argues that you should only invest in areas in which you have expertise, i.e., are within what he calls your "circle of competence". Perhaps he should take his own advice, and avoid advocating frivolous tax policies.