• Category Archives News and Politics
  • Socialized Medicine Is “Free” But Leads To Really, Really Long Wait Times

    Last November, CTV News in Canada ran this incredible story about growing wait times for medical care in Canada due to its socialized medical system: “‘It’s insane’: Ont. patient told she’d have to wait 4.5 years to see a neurologist.” Here’s a slice:

    An Ontario doctor says health-care wait times have reached “insane” lengths in the province, as one of her patients faces a 4.5-year wait to see a neurologist. When Dr. Joy Hataley, a family practice anesthetist in Kingston, Ontario, recently tried to send a patient to a neurologist at the Kingston General Hospital, she received a letter from the specialist’s office telling her that the current wait time for new patient referrals is 4.5 years. The letter said that, if the delay is “unacceptable” to Dr. Hataley, she should instead refer the patient to a neurologist in Ottawa or Toronto.

    Dr. Joy Hataley said she was shocked when she received this letter from a neurologist’s office. Dr. Hataley, who has been outspoken about wait times and other issues plaguing Ontario’s health care system, said the wait time “shocked” her. She wanted to shock others as well, so she tweeted a photo of the letter above and tagged Ontario Health Minister Eric Hoskins and Kingston-area MPP Sophie Kiwala. Dr. Hataley said she’s used to hearing back from specialists who are unable to see her patients for months, and even up to 2.5 years.  But a 4.5-year wait is “insane,” she told CTVNews.ca in a telephone interview. “This is an alarm bell,” she said. “What it is to me is a red flag to the system.”

    “When Dr. Hataley first pulled up the response from the referral, both of us were just seeing the wait time first hand, I was just in disbelief and shocked,” Wooldridge, a 40-year-old developmental service worker, told CTVNews.ca in an email. “The more I thought about it after leaving her office I was just annoyed and felt that this is ridiculous and not in any way okay.” Wooldridge said she will continue to live with chronic pain and be cared for by Dr. Hataley until she can see a neurologist. She said she shouldn’t have to travel outside of Kingston to see a specialist.

    “I don’t honestly feel that I should have to go to another city when we have a neurologist 4.5 minutes up the road and I’m a resident of the city in which my taxes help go towards,” she wrote. “I don’t think it’s right or fair to drive to another city…it’s financially not easy for me to just pick up and go, as much as I would like to.”

    (h/t Peter Krieger)

    Related: This is from the executive summary of Canada’s Fraser Institute’s most recent annual report “Waiting Your Turn: Wait Times for Health Care in Canada, 2017 Report” (emphasis added):

    Waiting for treatment has become a defining characteristic of Canadian health care. In order to document the lengthy queues for visits to specialists and for diagnostic and surgical procedures in the country, the Fraser Institute has—for over two decades—surveyed specialist physicians across 12 specialties and 10 provinces. This edition of Waiting Your Turn indicates that, overall, waiting times for medically necessary treatment have increased since last year. Specialist physicians surveyed report a median waiting time of 21.2 weeks between referral from a general practitioner and receipt of treatment—longer than the wait of 20.0 weeks reported in 2016. This year’s wait time—the longest ever recorded in this survey’s history—is 128% longer than in 1993, when it was just 9.3 weeks (see graphic above).

    In the video below, Ronald Reagan tells the joke about waiting ten years to get a new car in the Soviet Union. Here’s my variation of that joke for the Canadian medical system.

    A patient in Canada is told by a hospital administrator that there will be a five-year wait for an appointment with a neurologist. The patient asks, “Will that be in the morning or the afternoon.” The hospital administrator asks, “What difference does that make, it’s not until five years from today.” The patient says, “Well, I have my next dental appointment on that day in the morning.”

    Reprinted from the American Enterprise Institute.


    Mark J. Perry

    Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

    This article was originally published on FEE.org. Read the original article.




  • The Promise of Smart Contracts

                         STAN
    Jerry, we’re not just going to
    give you seven hundred and fifty
    thousand dollars.

    WADE
    What the heck were you thinkin’?
    Heck, if I’m only gettin’ bank
    interest, I’d look for complete
    security. Heck, FDIC. I don’t
    see nothin’ like that here.

    JERRY
    Yah, but I — okay, I would, I’d
    guarantee ya your money back.

    WADE
    I’m not talkin’ about your damn
    word, Jerry.

    Fargo (1996)

    Fargo is primarily a movie about promises, implicit and explicit. It asks whether we will keep our promises to others, even against our own self-interest. What makes the movie fascinating is that many of the promises aren’t backed by the court system, for very good reason — the deals are illegal. Fargo asks if we can trust each other even if there is no government force making us comply. In other words, can we make contracts in the state of nature? In 1651, Hobbes argued that we couldn’t:

    “If a covenant be made wherein neither of the parties perform presently, but trust one another, in the condition of mere nature (which is a condition of war of every man against every man) upon any reasonable suspicion, it is void: but if there be a common power set over them both, with right and force sufficient to compel performance, it is not void. For he that performeth first has no assurance the other will perform after, because the bonds of words are too weak to bridle men’s ambition, avarice, anger, and other passions, without the fear of some coercive power…”

    In other words, we need some external mechanism to enforce our promises, to make it so that other people can depend on our commitment. Making credible commitments is the foundation of business and society in general. Like Hobbes, we tend to assume that the government’s coercive power is the only way to create contracts. Nobel Prize-winning economist Oliver Williamson called this view legal centralism, the assumption that “the legal system enforces promises in a knowledgeable, sophisticated, and low-cost way” (Williamson, 1996, 121).

    Williamson and other Nobel laureates, such as Elinor Ostrom, built their careers on proving this assumption wrong. In many instances, the court system is costly and time-consuming, and sometimes corrupt. Moreover, people are often surprisingly able to enforce promises and maintain order in their own communities without government.

    Promises, Promises

     

    Trust is the bedrock of society. Without it, life would look a lot like Hobbes’ state of nature — constant suspicion, backstabbing, and insecurity. A person might make a promise, but given the opportunity, they might break it and pursue their own self-interest, a scenario which Williamson calls opportunism. However, business deals depend on being able to trust that a promise will be kept, otherwise our society would be limited to instantaneous exchanges. Fortunately, there are a number of mechanisms that can be used to secure a promise, all of which have advantages and disadvantages [1].

    For instance, we might depend on personal ethics and only make promises with people who have a strict moral code. The advantage of relying on personal ethics is that they don’t require institutions or outside coercion, but ethics also have a severe limitation: it’s difficult to know very many people well enough to trust them to do the right thing, and even the best people might break their promises.

    Another enforcement mechanism is reputation. Before making a contract with someone, we can ask around and find out how their previous interactions went. Reputation is extremely useful in small communities with repeated transactions since, if someone breaks their promise, they will be labeled untrustworthy and will be excluded from future interactions. However, reputation is more difficult to apply when interacting with strangers.

    Other enforcement mechanisms for promises include strategies like vertical integration in business (where opportunism is curbed through the alignment of incentives) and the use of collateral.

    The Internet Problem

    But the Internet, currently a state of nature if there ever was one, presents new difficulties. Personal ethics, of course, are always helpful, but there is no guarantee that a random stranger will be ethical. Reputation is more difficult because pseudonyms like email addresses and usernames are often used instead of true names. When a person breaks their promise, they can simply erase their history by creating a new pseudonym with a clean reputation.

    Being able to cheaply create a new pseudonym in order to dodge a bad reputation is called whitewashing (Nisan 2007, 682). There are various ways to handle the problem of whitewashing. One is to distrust all newcomers since they could have a new identity to hide a bad reputation. Another possibility is to ensure that any pseudonym is tied to a real person or business so that a bad reputation can’t be escaped.

    So why don’t we just create a global reputation system connected to our real-life identities? China is doing just that. As Wired explains, people with low ratings (including those who speak out against the government) will be punished in nearly every aspect of their lives: slower internet speeds, restricted access to restaurants, and the removal of the right to travel. They will have extreme difficulty being hired, renting apartments, and getting loans. In other words, a global reputation system can become less about trustworthiness and more about allegiance to authority.

    It’s clear that many of the enforcement mechanisms are hard to apply to the Internet. Personal ethics are ideal but unreliable. Reputation systems that attempt to enforce societal or organizational norms must be carefully designed lest they turn into “basically a big data gamified version of the Communist Party’s surveillance methods” (Botsman 2017).

    Lastly, laws cannot be easily applied to people in different countries, since each geographic jurisdiction has its own separate legal system, and there’s little chance of forcing a person from the Internet (especially if they are anonymous) to appear in court in a different country.

    A Tool Is Only Good if It’s Useful

     

    It is important to realize that all of our enforcement mechanisms are merely tools to be used when helpful. Like a hammer or a screwdriver, each tool might apply in a different situation. Moreover, like tools, our enforcement mechanisms are subject to innovation. For hundreds of years, since Hobbes, we’ve tended to think of contracts as legal agreements that must be enforced by the court system. However, court enforcement is only one of many ways to enforce promises, and we need to hold open the possibility that we can improve on it.

    As public choice economist Gordon Tullock pointed out, “We tend to forget that there is such a thing as technological progress in contracts. People discover new ways of making agreements, and over a period of time we obtain considerable benefit from this sort of technological progress” (Tullock 1970).

    One such example of technological progress is the invention of smart contracts. Smart contracts are a new mechanism for enforcing promises, allowing us to make credible commitments with each other on a blockchain, including commitments with strangers in other countries. To be clear, smart contracts are not legally enforceable, but that’s part of their unique advantage. Smart contract commitments are enforced outside of the law, outside of legal jurisdictions, without government enforcement.

    Given that our legal jurisdictions are primarily tied to our geographic location, and many countries have frail or unreliable legal institutions, this is a huge societal advance. It means that given an Internet connection, someone from one of the poorest countries in the world can make business deals and credible commitments with someone in the US as easily as if they were American. By creating trust where there was none, the world will be opened like never before.

    Smart Contracts

    The idea of smart contracts originated in the mid-90s when programmer and legal scholar Nick Szabo published a series of articles explaining their potential [2]. Like a vending machine, smart contracts rely on machinery for enforcement. However, instead of using physical machinery, smart contracts are literally code that runs on a blockchain, a kind of open, distributed ledger that runs on the computers of thousands of users, and which has no central authority.

    Contrary to their name, smart contracts have nothing to do with artificial intelligence. “Smart” refers to their self-enforcing quality. Smart contracts are immutable, meaning that the code by default cannot be changed. For the purposes of the contract, this is a good thing, since it’s impossible to break a promise if you have no opportunity to do so.

    However, for programmers, immutability presents a special challenge. All code has bugs, and code that cannot be altered needs to be written carefully to try to minimize the number of mistakes since the bugs can’t be fixed after the fact. Thus, writing a smart contract is like trying to write code for NASA — correctness matters a great deal, and the consequences of bad code can be dire.

     

    A smart contract might be as simple as a transfer of money from one account to another after a certain time, or it might be very complicated. However, one major limitation is that smart contracts can only transfer digital assets that are defined on a blockchain, such as cryptocurrencies. This might seem like a show-stopper given that cryptocurrencies aren’t yet widely accepted, but transferring money subject to certain conditions is all that many contracts do. Also, even contracts that include actions with physical objects can potentially be enforced by putting up bonds that will be lost if the promise isn’t kept.

    Another limitation is that smart contracts cannot access outside information unless it is written to the blockchain. For instance, a smart contract by itself has no access to weather data. To condition a contract on the temperature, for example, there must be a third party that takes the data from a weather API and writes it to the blockchain in a way that is accessible to other users. This trusted data source is called an oracle.

    There Are Advantages and Drawbacks

    Smart contracts have many limitations. However, we tend to forget that the courts have limitations as well. We shouldn’t compare smart contracts to an idealized version of court-enforced contracts. When we view both critically, it becomes clear that court-enforced contracts have intrinsic flaws. First, access to the court system is rationed, and there are many people waiting for their turn simply to use the service. This means that cases may take years or even decades. Because of the slowness of the courts, businesses often use private arbitration clauses in their contracts that allow them to settle out of court.

    Another often-overlooked limitation of the court system is that because the court is an external third party, it can only guess at the true damages if the contract is breached. This is problematic because the court system determines what will be given to the aggrieved party.

    Unfortunately, simply asking the aggrieved party how much the performance of the contract was worth to them isn’t going to work — they have no incentive to be honest in reporting their damages. Therefore, the court system tries to use its best judgment to determine what the damages are, but as Georgetown Law professor Randy Barnett points out, “Any assessment of legal damages attempts to quantity or objectify that which is actually subjective and essentially unmeasurable…” (Barnett 2010).

    The solution is for the parties to write their valuations explicitly in the contract, as liquidated damages. However, the courts may decide not to enforce these if they think they are unfair. Thus, even in countries with the best institutions, court-enforced contracts have intrinsic limitations and paternalistic aims.

    Smart contracts are not legal contracts, and in many cases may not be a good replacement for legal contracts. However, they are a valuable new tool in our limited toolbox. They allow us to make commitments — even with strangers — without government enforcement, something many, for hundreds of years, have assumed was impossible. In the next few decades, smart contracts will give people around the world the power to make agreements with each other despite corrupt and broken institutions, and so transform the lives of millions.

    Footnotes

    1. In Order Without Law: How Neighbors Settle Disputes (Ellickson 1991), Yale Law Professor Robert C. Ellickson studied how cattle ranchers in rural Shasta County, California enforced their promises, and categorizes some of the constraints on behavior thusly: personal ethics, contracts, norms, organization rules, and law. Anthony T. Kronman, also a Yale Law Professor, wrote about the ability to make contracts without using court enforcement in Contract Law and the State of Nature (Kronman 1985). He describes a number of devices, such as “hostages,” collateral, hand-tying, and the alignment of incentives by union.
    2. One of the primary pieces is Formalizing and Securing Relationships on Public Networks (Szabo 1997).

    Works Cited

    1. Barnett, Randy E. The Oxford Introductions to U.S. Law: Contracts. Oxford: Oxford University Press, 2010.
    2. Botsman, Rachel. “Big data meets Big Brother as China moves to rate its citizens.” WIRED. November 28, 2017. Accessed February 05, 2018.
    3. Ellickson, Robert C. Order Without Law: How Neighbors Settle Disputes. Cambridge, MA: Harvard University Press, 1991.
    4. Hobbes, Thomas, and J. C. A. Gaskin. Leviathan. Oxford: Oxford University Press, 1998.
    5. Kronman, Anthony T. “Contract Law and the State of Nature.” Journal of Law, Economics, & Organization 1, no. 1 (1985): 5-32.
    6. Nisan, Noam, Tim Roughgarden, Éva Tardos, Vijay V. Vazirani, and Christos H. Papadimitriou. Algorithmic Game Theory. New York: Cambridge University Press, 2008.
    7. Szabo, Nick. “Formalizing and Securing Relationships on Public Networks.” First Monday. September 1, 1997. Accessed February 05, 2018.
    8. Tullock, Gordon. Private Wants, Public Means: An economic analysis of the desirable scope of government. New York: Basic Books, Inc, 1970.
    9. Williamson, Oliver E. The Mechanisms of Governance. New York: Oxford Univ. Press, 1996.

    Reprinted from Libertarianism.org.

    Kate Sills


    Kate Sills

    Kate Sills holds degrees in Computer Science and Cognitive Science from UC Berkeley.

    This article was originally published on FEE.org. Read the original article.




  • What’s Missing from the Public Land Conservation Debate? Property Rights

    President Trump’s decision last month to shrink Bears Ears National Monument by over 80 percent has elicited an impassioned reaction from environmentalists, conservationists, and recreationists.

    Outdoor sportswear purveyor Patagonia, Inc., perhaps most visibly among the dissidents, launched a campaign to challenge the president’s decision on both legal and moral grounds under the banner: The President Stole Your Land. Whether it is an advertising stunt or a good-faith ode to the company’s values, Patagonia’s effort has heightened public awareness of a topic hitherto unfamiliar to most people: federal lands policy.

    Federal Ownership and Management

    Though our culture mythicizes the rugged individualist ethos of the Wild West, about half of all land west of the Great Plains is actually owned by the federal government and controlled by Washington agencies.

    Over 60 percent of the total acreage in the states of Nevada, Alaska, Idaho, and Utah — the focus of the present controversy — is federal land. Even California is 45 percent federally-owned.

    As a percentage of the United States’ total area, the 640 million acres of federal land make up a whopping 28 percent.

    With so much acreage in the hands of federal agencies, federal land policy has real significance in terms of our environmental quality, asset utilization, and economic output.

    So how is it all managed?

    The over 600 million acres in the federal estate are controlled by an alphabet soup of government entities ranging from the Forest Service to the National Parks Service to the Bureau of Land Management.

    The purposes of these agencies vary, but one standard — the multiple use doctrine — serves as the general guiding principle for most of our federal lands.

    This doctrine, established with the Federal Land Policy and Management Act of 1976, dictates that agencies consider “management of the public lands and their various resource values so that they are utilized in the combination that will best meet the present and future needs of the American people.”

    Land Management and the Knowledge Problem

    Unfortunately, this is often executed poorly. Consider, for example, the longstanding issue of so-called overgrazing on federal lands in the west.

    Environmental protection groups such as the Center for Biological Diversity argue that the Bureau of Land Management is subsidizing the destruction of native vegetation and wildlife habitats by charging ranchers a submarket rate for livestock grazing access.

    While this suits the ranchers, does the practice meet the present and future needs of the Center for Biological Diversity’s thousands of supporters?

    Dilemmas like this in federal lands policy that pit interest groups against one another should come as no surprise. The multiple use guiding principle, which demands the “combination that will best meet” Americans’ needs, holds the Bureau of Land Management and its counterparts to an impossible standard.

    It is not the case that government agencies and their dutiful employees mean ill — we all know how earnest park rangers are — it is that agencies lack the capacity to administer resources in a way that reflects the best combination of uses.

    Economists like Friedrich Hayek teach us that knowledge is diffuse, that valuations differ, and, therefore, that a concentration of economic power in government can lead to inefficient, harmful judgments.

    Applied to federal lands policy, this principle indicates that guidance from Washington cannot tell us how to utilize land to best meet the present and future needs of the American people. What Hayek’s insight suggests, rather, is that the way to best meet present and future needs would be to enable the American people themselves to make determinations based on their own knowledge and valuations in a price-based marketplace.

    Avoiding the Tragedy of the Commons

    There is a popular misconception that markets are “short-sighted” and do not take future needs into account. But if this were true, then farmers would slaughter all of their livestock and would eat all of their seed corn.

    Indeed, the “tragedy of the commons” is a well-known phenomenon in which overgrazing, overfishing, deforestation, and other issues occur because of a lack of property rights. For a recent example, consider the African white rhino, which was in danger of extinction due to black market poaching until private property rights in the rhinos were introduced and the species was saved. For the very same reason, nobody ever worries that cows will go extinct.

     

    With more than a quarter of American land under federal ownership, a market transition would be no small feat, but through a deliberate, judicious process, property rights could gradually be allocated to transfer decision-making from planners in Washington agencies to active market participants. When property rights are allocated, economics teaches us, incentives promote efficient use that reflects the value properties hold.

    Many Americans support federal land ownership as a means of conservation, but this view misses the problems created by public ownership, such as the aforementioned overgrazing and poaching.

    Groups that value land preservation, like the Center for Biological Diversity and Patagonia, Inc., would have just as much of a right to participate in the marketplace as would ranchers or companies that might use the land for commercial development.

    With the implementation of a price-centric system for federal lands policy reform, individuals, advocacy groups, and companies alike would be able to express the value they attach to the land not through lobbying the government, as we see now, but through trading.

    Rather than fuming at President Trump’s Bears Ears downsizing, conservationists and recreationists should consider whether they truly want the lands they love to be controlled from the sterile confines of federal offices in Washington or whether they might benefit from a more open, free system.

    Reprinted from The Hill


    Jordan McGillis

    Jordan McGillis is a policy analyst at the Institute for Energy Research. Follow him on Twitter @jordanmcgilllis.

    This article was originally published on FEE.org. Read the original article.