Economics of Advertising

From one of my favorite shows on television, Mad Men.

Economic Lessons From ‘Mad Men’

By EDWARD L. GLAESER

Photo: Olaf Blecker for The New York Times

Edward L. Glaeser is an economics professor at Harvard.

Widely popular television shows, like “Mad Men,” must appeal to a broad range of tastes. Some watch AMC’s historical drama to enjoy the snazzy fashions of a dressier day. Others enjoy the irony of professional persuaders with pathetic personal lives pushing Popsicles with pictures of domestic perfection.

For me, the appeal of “Mad Men” is its urban economics — the panorama it provides of an information intensive industry in a dense city.

The series opened with its central character, the ad man Donald Draper, trying desperately to come up with a new campaign for Lucky Strikes. He sits in a smoke-filled bar, and asks a waiter why he smokes, and if “I could never get you to try another brand, say, my Luckies.” There couldn’t be a clearer example of someone using urban proximity to get ideas.

That season closes with Draper giving a presentation to the gentlemen from Kodak on how to sell its fancy new technology. He recites the wisdom he learned from “an old pro copywriter,” a Greek named Teddy, about the power of nostalgia. Draper closes the sale by telling them that their machine is “not called the wheel; it’s called the carousel.” Draper’s talent was clearly built with his ability to internalize the information around him.

Advertising is an ideas business.

Its practitioners must constantly produce new images and words that persuade buyers to smoke Lucky Strikes or drink Heineken or use Clearasil. Idea-intensive industries have long tended to locate disproportionately in the cores of urban areas, where — as in New York — the same closeness that once moved garments onto rail cars now speeds the flow of ideas.

The intellectual advantages of proximity keep industries like advertising, publishing and finance — which offer the highest returns to those with the most information — in dense urban cores. Matthew Kahn and I found that the industries that employ the most college graduates, and are presumably the most idea-intensive, are more than twice as likely to locate in an urban center than less well-educated sectors.

The economists Vernon Henderson and Mohammad Arzaghi have recently published an elegant paper called “Networking off Madison Avenue,” which can be read as a primer on the economics behind “Mad Men.”

Much has changed since the early 1960s, but advertising remains highly concentrated in New York. The island of Manhattan is home to 24 percent of the industry’s nationwide receipts. Despite the highly visible advertising giants, the industry is actually remarkably dispersed in small firms. The average advertising establishment has 11 employees, and 55 percent of the sector’s sales go to single-unit firms.

When we see industries that are dispersed in small firms, but concentrated in a single city, there is a pretty good chance that these firms are connected to one another in an urban network.

Professors Arzaghi and Henderson examine the benefits of locating near other advertising firms and conclude that such agglomeration economies are “very large but they dissipate very quickly with distance for advertisers and are gone by 750 meters.” They interpret these results as supporting the hypothesis that “information sharing and information diffusion” are “critical to an agency’s success.”

In “Mad Men,” there is relatively little information-sharing across agencies, but there is still plenty of learning.

The series’s characters learn from each other, their clients and seemingly everyone else in their lives. Draper’s marriage may not be happy, but it does seem to give him advertising ideas. Draper appears as a fully formed advertising talent in the first season, and we can only imagine where he got his skills. We are just given hints, like the story about his Greek mentor.

Peggy Olsen is the character whose evolution on the show illustrates how New York City can be a forge of human capital.

Olsen arrives in the first season as a relatively clueless product of Miss Deaver’s Secretarial School. Her eyes couldn’t be wider and she is a sponge for the information delivered by Draper and others. At first, she picks up the ways of the office from the worldly office manager Joan Holloway. Soon, she’s learning from older copywriters about how to sell a vibrating weight loss device with sexual innuendo. By the second season, she’s tapping into the same veins of nostalgia — in her case for Popsicles — that Draper mined to sell the Kodak Carousel. Her rise reflects her openness to the information constantly being emitted around her.

The far rockier ascent of Peter Campbell is likewise hampered by his tendency to overrate his own innate ability and underestimate what he can learn from others. But even he occasionally succeeds using borrowed knowledge. During his firms’ merger, he is told about the wisdom of remaining neutral, and Campbell promptly walks into Draper’s office and straddles the fence by giving him a key bit of information that Campbell had himself learned from his supposed ally.

Certainly, “Mad Men” is not a perfect description of the advertising industry. And I’m still a little miffed about the line in an early episode that Peter Campbell’s great-great grandfather farmed with Isaac Roosevelt. As every New York schoolchild should know, Isaac Roosevelt, the patriarch of F.D.R.’s line, was a sugar refiner, an early pioneer in the industry that would be Manhattan’s mightiest during the early 19th century.

But far more importantly, the show’s big message about the fast flow of information in the crowded corridors of Madison Avenue is completely correct. That message reminds us about why cities remain so vital in our era of ideas.

New Research About Multitasking

Portrait of a Multitasking Mind

What happens when you try to do three things at once?

By Naomi Kenner and Russell Poldrack

Are you a media multitasker? We know you're reading a blog, but what else are you doing right now? Take a quick inventory: Are you also listening to music? Monitoring the progress of a sports game on TV? Emailing your co-worker?Texting your friend? On hold with tech support? If your inventory has revealed a multitasking lifestyle, you are not alone. Media multitasking is increasingly common, to the extent that some have dubbed today’s teens "Generation M."

People often think of the ability to multitask as a positive attribute, to the degree that they will proudly tout their ability to multitask. Likewise it’s not uncommon to see job advertisements that place “ability to multitask” at the top of their list of required abilities. Technologies such assmartphones cater to this idea that we can (and should) maximize our efficiency by getting things done in parallel with each other. Why aren’t you paying your bills and checking traffic while you’re driving and talking on the phone with your mother? However, new research by EyalOphir, Clifford Nass, and Anthony D. Wagner at Stanford University suggests that people who multitask suffer from a problem: weaker self-control ability.

The researchers asked hundreds of college students fill out a survey on their use of 12 different types of media. Students reported not only the number of hours per week that they used each type of media, but also rated how often they used each type of media simultaneously with each other type of media. The researchers created a score for each person that reflected how much their lifestyle incorporated media-multitasking.

They then recruited people who had scores that were extremely high or low and asked them perform a series of tests designed to measure the ability to control one's attention, one's responses, and the contents of one's memory. They found that the high- and low- media-multitasking groups were equally able to control their responses, but that the heavy media-multitasking group had difficulties, compared to the low media-multitasking group, when asked to ignore information that was in the environment or in their recent memory. They also had greater trouble relative to their counterparts when asked to switch rapidly between two different tasks. This last finding was surprising, because psychologists know that multitasking involves switching rapidly between tasks rather than actually performing multiple tasks simultaneously.

It seems that chronic media-multitaskers are more susceptible to distractions. In contrast, people who do not usually engage in media-multitasking showed a greater ability to focus on important information. According to the researchers, this reflects two fundamentally different strategies of information processing. Those who engage in media-multitasking more frequently are "breadth-biased," preferring to explore any available information rather than restrict themselves.AsLin Lin at the University of North Texas puts it in a review of the article, they develop a habit of treating all information equally. On the other extreme are those who avoid breadth in favor of information that is relevant to an immediate goal.

So what does this mean for you, reading this blog while checking your stocks and playing solitaire? Are you in trouble? Should you curb your media congestion? Not necessarily. Breadth-bias may still serve a purpose in our media-heavy society. While the researchers focused on a type of control known as "top-down" attention, meaning that control is initiated by higher-level mental processes such as cognition in service of a specific goal, they suggest that heavy media-multitaskers might be better at "bottom-up" attention. In this type of control, cues from the external world drive your attention through lower-level mental processes such as perception and habit. In our fast-paced and technologically advancing society, it may be that having a single goal on which to focus our efforts is a luxury. We may often be better served by a control strategy that is cued by the demands of our surroundings. Look around yourself - do you see notes and to-do lists? Piles of objects meant to remind you about tasks and goals? These sorts of reminders are a great way to take advantage of bottom-up attentional control, and this type of control might in fact be more influential in our lives than we realize.

According to the Dual Mechanisms account of control, proposed in 2007 byTodd S. Braver of Washington University St. Louis, Jeremy R. Gray of Yale University, and Gregory C. Burgess of the University of Colorado at Boulder, this sort of breadth-biased, bottom-up control (which they term "reactive") is particularly good in situations where the environment changes a lot and when the information relevant to a goal isn't all that reliable. For example, if you are trying to decide whether to carry an umbrella on your walk to dinner, your experience upon stepping outside for a moment might lead to a better decision than any plan you made based on the morning's weather report. Braver and colleagues also suggest that relying on reactive control helps us develop habits more easily, which help us respond to common situations with greater speed and less effort than top-down control (which they term "proactive").

The distractibility seen in heavy media-multitaskers could also reflect a basic attraction for novelty or information. Or it could simply reflect the fact that focusing is hard. One interesting but unanswered question noted by the scientists is whether multitasking causes, or is caused by, the weaknesses in cognitive control that were observed in the heavymultitaskers. Does media-multitasking make people more distractible, or are people who are more easily distracted more likely to become media-multitaskers?

The researchers point out that cutting back on media-multitasking could reduce distractibility in the real-world regardless of the causal direction by addressing either the symptom or the cause. If you are a distractible person who uses multiple media at once, take advantage of your reactive control: try organizing your environment so that your distractions lead you in productive directions (project-piles, reminder notes) rather than toward irrelevant (albeit fun or interesting) information. If, however, you are a media-multitasker who thinks that you’re becoming a more distractible person, then maybe it’s just time to turn off the gadgets for a while.

Moral Clarity of the Climate Conference In Copenhagen

Anyone want to fundamentally understand what the climate conference is all about? Take a look at this article and see for yourself.

THE Copenhagen climate summit was pretty much summed up in the high-level segment yesterday when Penny Wong's speech was interrupted by whistles and chanting and Venezuelan President Hugo Chavez got a standing ovation.

The Australian climate change minister may not be the world’s greatest orator but she had some sensible things to say when she stood up on behalf of the so-called “umbrella group” of developed countries, including Australia, Canada, Japan, Norway, Iceland and Ukraine.

She said, for example, that all major economies, and all major emitters needed to make binding emission reduction commitments if a Copenhagen deal was going to help the climate.

And she said that it was time to “seal a deal”, which after nine days of negotiation that have achieved very little and a “text” that remains a sea of brackets – indicating the yet-to-be-agreed bits – that seems self evidently true.

It wasn’t a particularly strong, rousing or detailed statement – the only real commitment was that the umbrella group emission reductions would be “substantial”.

But before she rose to speak the conference proceedings were interrupted by people with whistles and sirens chanting “stop green capitalism” – a sign of the anger in the developing world that the Danish host government is trying to wrest the process from the professional negotiators, who have failed to make any progress, and hand it to politicians, who might have some chance of achieving something before we all leave on Saturday.

Speaker after speaker from the developing world railed against this idea, with the Sudanese vice president Nafie Ali Nafie speaking on behalf of the developing world and declaring that they stood ready to agree to a new commitment period under the Kyoto Protocol. That would be the agreement where developing countries aren’t obliged to do anything. The other proposed agreement that would require big developing country emitters to bind themselves to their own type of emission reductions they are a lot less keen on.

Then President Chavez brought the house down.

When he said the process in Copenhagen was “not democratic, it is not inclusive, but isn’t that the reality of our world, the world is really and imperial dictatorship…down with imperial dictatorships” he got a rousing round of applause.

When he said there was a “silent and terrible ghost in the room” and that ghost was called capitalism, the applause was deafening.

But then he wound up to his grand conclusion – 20 minutes after his 5 minute speaking time was supposed to have ended and after quoting everyone from Karl Marx to Jesus Christ - “our revolution seeks to help all people…socialism, the other ghost that is probably wandering around this room, that’s the way to save the planet, capitalism is the road to hell....let’s fight against capitalism and make it obey us.” He won a standing ovation.

And the Ethiopian President Meles Zenawi – who made a sensible and considered and detailed proposal about how to get financing to help climate change adaptation and mitigation in poor countries? He was far less enthusiastically received.

Obama's Never-Ending String of "Broken Campaign Promises"

Hat tip to Jennifer Rubin at Contentions Blog.

Another “Never Mind”

Jennifer Rubin - 12.16.2009 - 8:41 AM

The number of “never minds” is increasing in the name of health-care “reform.” Candidate Obama promised that no one earning less than $250,000 would have his taxes raised. Oh well, that was then. (The White House cheered as an amendment by Sen. Mike Crapo to strip out taxes on anyone below the $250,000 threshold went down to defeat 45-54, with five Democrat defections.) Candidate Obama was in favor of drug reimportation, allowing U.S. citizens to buy cheaper drugs at rates available outside the U.S. Oh well, that was then. Yesterday the Senate voted down a drug-reimportation measure brought by Byron Dorgan. As Dana Milbank points out, Obama sided with “Big Pharma”:

On the campaign trail, Barack Obama vowed to take on the drug industry by allowing Americans to import cheaper prescription medicine. “We’ll tell the pharmaceutical companies ‘thanks, but no, thanks’ for the overpriced drugs — drugs that cost twice as much here as they do in Europe and Canada,” he said back then.

On Tuesday, the matter came to the Senate floor — and President Obama forgot the “no, thanks” part. Siding with the pharmaceutical lobby, the administration successfully fought against the very idea Obama had championed. “It’s got to be a little awkward,” said Sen. Tom Carper (D-Del.).

Only a little. The Obami really aren’t capable of being shamed by evidence that they have reneged on campaign promises or that positions are taken willy-nilly without regard to any coherent ideology or legislative scheme. They have a higher objective: getting anything passed. Understandably, liberals who don’t like drug companies on principle, and reformists who think the fix is in from moneyed lobbyists, are shocked, shocked, to find that the Obami are without principles.

The result may be a truly awful bill, a lot of disappointed voters, and many, many effective campaign ads for Republicans. At some point a smart Democrat or two looking at this might want to consider whether “never mind” is the best response to a health-care bill that reforms nothing and demonstrates only that Obama snookered a whole bunch of voters.

Roll Out the Welcome Mat!!!

The Passing Scene Cafe would personally like to welcome the detainees from the military prison facility at Guantanamo Bay to the Thompson Correctional Center, located in northwestern Illinois.

The northwestern part of the state of Illinois happens to be solidly Republican, which confirms a suspicion I have had about the wingnuts on the political Left who have agitated for the closure of the facility at Guantanamo Bay and the transfer of its detainees to United States soil: Liberals really wanted the detainees to be transferred to "red" states and/or precincts. They had no interest at all in the detainees being held in, say, Madison, San Francisco, Boston, or the Upper West Side of Manhattan in New York City. This seems to jibe well with their "I really want all these nice things but I don't want to bear the cost or foot the bill---I want YOU to do it!" mentality.

Detainees Coming to Illinois

Jennifer Rubin - 12.15.2009 - 8:45 AM

Apparently, the Obami have not turned a new leaf after all. No, they’re still playing to the netroot crowd and treating the war on terror as if it were about something other than the security of Americans and the defeat of murderous foes. As leaked documents over the weekend indicated, the administration wants to acquire and upgrade the Thomson Correctional Center, located 150 miles northwest of Chicago, and transfer Guantanamo detainees there. They’ll have to spend hundreds of millions to duplicate the secure facility and accommodations already in place in Guantanamo. And — this is key — Congress will have to vote to allow detainees to be housed there. Republicans, especially Rep. Mark Kirk, who is running for the Senate, is raising the red flag, saying it’s an unnecessary risk.

But, as others have pointed out, the Democrats’ delight over the spending spree needed to upgrade the facility is oddly misplaced:

This exorbitant “injection” of funds would be necessary because TCC is not ready to accommodate international jihadists, who are prone to riot, savagely attack their custodians, attempt escape, and plot terror attacks while in U.S. prisons. The jail would have to be hardened before it could become the new Gitmo. So even if financial considerations were the first-order priority here — and they should not be — the administration’s plan would be inexcusably wasteful. Gitmo has already been hardened, at a cost of tens of millions of taxpayer dollars. It is now a state-of-the-art, Geneva Conventions-compliant detention center. It makes no sense to sink those expenditures down a black hole, spending another fortune on a project that won’t generate sustainable growth. Illinois found that out when it built TCC in the first place.

And we risk more than that. Federal court judges will gain jurisdiction over the detainees and will be empowered to release them and/or entertain their claims to enjoy the full array of privileges enjoyed by ordinary prisoners. When you add in the risk that detainees will commit acts of violence, spread jihadist propaganda, and create targets for other terrorists, one has to wonder, once again, why?

The answer, or a partial answer, comes from a noxious speech on human rights given yesterday by Hillary Clinton. In the eyes of the Obami, you see, we’re human-rights violators and miscreants and must atone for our sins by putting our own citizens at risk and tying our hands in extracting information that might in the future save lives. In detailing the four elements of the Obami’s human-rights approach, No. 1 on the list was this:

First, a commitment to human rights starts with universal standards and with holding everyone accountable to those standards, including ourselves. On his second full day in office, President Obama issued an executive order prohibiting the use of torture or official cruelty by any U.S. official and ordered the closure of Guantanamo Bay. …

We know that all governments and all leaders sometimes fall short. So there have to be internal mechanisms of accountability when rights are violated. Often the toughest test for governments, which is essential to the protection of human rights, is absorbing and accepting criticism. And here too, we should lead by example. In the last six decades we have done this – imperfectly at times but with significant outcomes – from making amends for the internment of our own Japanese American citizens in World War II, to establishing legal recourse for victims of discrimination in the Jim Crow South, to passing hate crimes legislation to include attacks against gays and lesbians. When injustice anywhere is ignored, justice everywhere is denied. Acknowledging and remedying mistakes does not make us weaker, it reaffirms the strength of our principles and institutions.

We’re now in the game of hobbling ourselves and, indeed, putting ourselves in greater peril. The Obami, in all their sanctimonious glory, will rise above the mundane concerns for safety and security and throw overboard our own judicial history and precedents. This is nothing more than an exercise in moral preening. We’ll impress our European friends and the academic Left. For the enemy is us. And the Obami are on the case.

Congress need not buy into this insanity. It has the power of the purse and should put an end to the Obama team’s misguided and dangerous gambits. If not, there are elections next year, and the voters can make their voices heard.

ObamaCare and the Polls...

In my last post, I discussed some recent Rasmussen polling data trends. The latest polls showing what Americans think of Obama and the Senate's health care proposal are not good.

Do Nothing, Majority Says

ObamaCare is now almost as unpopular as it is monstrous.

By JAMES TARANTO

This column has long been arguing that the health-care ideas Congress is considering are so bad that inaction would be vastly preferable. Fox News.com reports that a majority of Americans in a new poll now agree with us:

While 41 percent of Americans want Congress to pass major health care reform legislation this year, a 54 percent majority says they would rather Congress "do nothing on health care for now," up from 48 percent who felt that way in July.

The poll finds that 57% of Americans oppose "the health care reform legislation being considered right now."

To be sure, this is Fox, which according to the White House is not a legitimate news organization because it reports the news even when it casts President Obama in a bad light. But a CNN poll found that an even bigger majority--61%--oppose the Senate's version of the ObamaCare bill.

The CNN.com story on the poll ignores this, focusing instead on the finding that Democrats have only a 1% lead, 40% to 39%, when survey participants are asked which party's control of Congress would make the country better off. This is the slenderest advantage for the Dems since July 2002.

A third survey, from Public Policy Polling, found that 52% of registered voters oppose "President Obama's health care plan." On the firm's blog, PPP's Tom Jensen reports on another finding:

Perhaps the greatest measure of Obama's declining support is that just 50% of voters now say they prefer having him as President to George W. Bush, with 44% saying they'd rather have his predecessor. Given the horrendous approval ratings Bush showed during his final term that's somewhat of a surprise and an indication that voters are increasingly placing the blame on Obama for the country's difficulties instead of giving him space because of the tough situation he inherited. The closeness in the Obama/Bush numbers also has implications for the 2010 elections. Using the Bush card may not be particularly effective for Democrats anymore, which is good news generally for Republicans and especially ones like [Ohio Senate candidate] Rob Portman who are running for office and have close ties to the former President.

The question is a fanciful one, and Obama's six-point margin is roughly comparable to the one by which he beat John McCain 13 months ago. But the 44% who say they'd prefer Bush to Obama is twice Bush's approval rating in the final CBS News poll during his term.

With Bush out of office less than a year, it seems unlikely that a revisionist view of his presidency has already taken hold. Thus these results almost surely represent a backlash against Obama and Congress's Democrats. Their insistence on pushing ahead and forcing on the country a health-care scheme that by now is almost as unpopular as it is monstrous is without a doubt a major factor here.

In addition, it can't help the current president that he is constantly whining about the "mess" he "inherited" from his predecessor. Even those who blamed Bush for all the world's problems expected Obama to improve things, not spend his term carping about them.

A Job Stimulus?

from the liberal pages of Washington Post editorial page? I would love to run an informal experiment: suggest these ideas to a sample of admitted liberals (the percentage of whom is declining) and see how many out of ten screech in horror--that is, when they are done muttering something about George Bush and Dick Cheney.

Kill these job-killers

By Charles Lane
Monday, December 14, 2009

With unemployment stuck around 10 percent, President Obama has pledged "to take every responsible step to accelerate the pace of job growth." Here's a thought: Instead of trying to "create" jobs by tweaking this tax break or increasing that spending program, why not stop doing things that destroy jobs?

I suggest starting with these three job-rescuing policy changes, none of which would cost taxpayers a dime.

-- End federal protectionism and price supports for sugar. Since 1982, the federal government has guaranteed the U.S. sugar lobby -- er, industry -- up to 85 percent of the market. The rest gets divided among other countries lucky enough to hold quotas. The government also guarantees minimum prices for raw cane sugar and refined beet sugar.

Sugar is an ingredient in a huge percentage of candy, beverages and baked goods. Expensive sugar makes it expensive to produce those goodies. U.S. candy-makers and other food processors cite sugar costs as a major factor in their industry's recent job losses -- including 70,000 between 1997 and 2004.

In 2006, the Commerce Department estimated that the sugar program cost three confectionery manufacturing jobs for each job it saved in sugar growing and harvesting.

-- Repeal the Davis-Bacon Act. Passed in the 1930s to "stabilize" the construction industry (in part by protecting white workers in the North against competition from migrating Southern blacks), this law requires employers to pay the "prevailing" local wage on federally funded projects. Today, Davis-Bacon applies to about a third of all public construction spending.

A large staff at the Labor Department calculates prevailing wages using a formula skewed to reflect union pay rates. This inflates the cost of labor on public construction by an average of about 10 percent, according to a 2008 study by the Beacon Hill Institute of Suffolk University in Boston. The added cost to taxpayers was $8.6 billion in 2007, the study found.

Repealing Davis-Bacon would enhance the employment impact of Obama's proposed infrastructure spending. In fact, the president has the power to suspend the law by declaring a national emergency. If the job crisis doesn't qualify, what does?

At the very least, Congress could change the size of covered projects from the absurdly low minimum established seven decades ago, $2,000, to a more plausible $1 million. The Congressional Budget Office estimates that would free up half a billion dollars over five years.

-- Reduce the federal minimum wage. In 2007, Congress enacted a three-step increase in the minimum wage, which was then $5.15 per hour. The final installment took effect in July, raising the rate to $7.25 per hour. In the meantime, unemployment climbed from 4.7 percent to 9.5 percent.

I am not saying that the minimum wage increase caused this; far from it. But study after study has shown that this supposed benefit to the poor prices low-skilled workers out of entry-level jobs. It was unwise to keep raising the cost of hiring them in a recession.

Economist David Neumark, co-author of a definitive book on minimum wages, said in a June Wall Street Journal op-ed that the July increase probably killed 300,000 jobs that would have otherwise gone to teenagers and young adults.

None of these measures alone, or even all three together, would eliminate unemployment. But they might significantly decrease it at a time when every job counts. That neither the president nor Republicans in Congress mentioned them in their jobs proposals last week shows that Washington thinks inside a very small box.

Sugar-cane growers in Florida and sugar-beet growers in the Great Plains, geographically distributed for maximum leverage in the Senate, defend their protectionist program. Organized labor argues for Davis-Bacon and the minimum wage with rhetoric about fairness and workers' rights, despite economic evidence to the contrary.

We are experiencing the worst unemployment since 1982 (when Congress enacted the sugar program), and the second-worst unemployment since the Great Depression (when we got Davis-Bacon and the federal minimum wage). Yet these outmoded, job-killing policies linger on the books.

Our politicians would get rid of them if they're really serious about putting America back to work.

Polling and Support for Free Markets Skyrockets....

Rasmussen conducts weekly polls on issues. Looking at these weekly poll results shows the very small microscopic shifts in public opinion on the very pressing issues of our time. Poke around the site if you have time. You can find the public's support for issues like the various health care proposals, a second stimulus package, Obama's handling of foreign policy, as well as individual races for various offices. The Passing Scene Cafe believes that Rasmussen has the most extensive polling outfit in the country. Quinnipiac polling is fairly reliable as well, but its scope is limited to the northeastern region of the country. John Zogby's polling is probably the worst.

Polling public opinion, of course, is an inexact science. Poll results tend to jump around depending on how the question is framed. Supporters of the Democratic Party's health care proposal, for instance, have seized on a New York Times/CBS poll result showing support for a "public option" to be somewhere around 65%. This poll result appears to be an outlier--it not flush with other poll results asking the same question, nor does it comport with other poll questions, e.g. the President's "handling" of health care in particular. Furthermore, the wording of the question emphasizes "competition" between public plans and private plans. Wording the question differently, e.g. emphasizing "government control" or "displacement of private sector" produces markedly lower poll numbers.

I should probably devote another post entirely to the issue of polling. Many allege that sophisticated pollsters like Dick Morris and Karl Rove have used polling to influence or shape public opinion, rather than simply take a snapshot of it. A few examples below:

-"Do you agree with the far Right's view that President Bill Clinton should be impeached for marital infidelity?" This poll makes a lot of assumptions. First, no one to my knowledge has suggested that President Clinton be impeached for marital infidelity. He was to be impeached for charges relating to an independent investigation, e.g. obstruction of justice, lying under oath to investigators, and withholding of evidence. Secondly, people who answer this particular poll might think that support for Clinton's impeachment was relegated only to the far Right. Therefore, an independent voter might think, "well..gee...I'm certainly not one of those Timothy McVeigh/James Dobson wackos, so I better answer 'No.'" As a result, many moderates and independents would answer "no" and President Clinton's pollsters would produce a poll result showing very low public support for the impeachment proceedings.

-"If there was a possibility that Saddam Hussein attacked us on 9/11, would you support the invasion of Iraq?" Again, there was NO evidence at all the Saddam attacked on 9/11, nor did the 9/11 Commission report find evidence of a collaborative effort. However, this question makes it seem as though there was a very good chance that Iraq and Al-Qaeda collaborated, or at least it's within the realm of possibility. Therefore, this poll question can be used to artificially inflate public support for the invasion of Iraq.

I should note quickly that the above examples are for illustrative purposes only. I have no evidence that these questions were asked by the aforementioned pollsters.

Anyways, back to Rasmussen. In the wake of the financial crisis last fall and early this year, Rasmussen uncovered a poll result that showed 53% of Americans prefer capitalism over socialism. This was a period of momentary "dumbness" of America. However, having witnessed a year of what Democratic party rule looks like (three years if you count the 2006 mid-term elections), Americans seem to have wised-up a bit. The latest Rasmussen poll shows "finds that 76% of voters now say a free market economy is better than one managed by the government. Only 10% prefer an economy managed by the government."

Does this spell doom for the Democrat's agenda? The Passing Scene Cafe welcomes the debate. And to all my liberal friends, I personally am throwing the gloves off.

The poll also has these interesting results. Read the whole thing if you have time.

Eighty percent (80%) say Wall Street benefited more from the bailout of the financial industry than the average U.S. taxpayer.

Sixty-eight percent (68%) of Americans say most of the taxpayer money given out as bailouts went to the very people who created the country’s current economic crisis.

Seventy percent (70%) of U.S. voters believe that big business and big government generally work together against the interests of investors and consumers.

A plurality (46%) of Americans say the government is more concerned with making sure that Wall Street is profitable than with ensuring that the financial system works well for all.

Highlighting a preference for free markets, only 29% of Americans believe the U.S. economy will be helped more by decisions made by government officials than by decisions made by business leaders to help their own businesses grow.

Joe Bide, Fabulist Extraordinaire

The Wit and Wisdom of Grandpop Biden

Er, what exactly did they used to say in Scranton?

On Oct. 19, Vice President Joe Biden, that proud son of the Pennsylvania industrial town, shared with the AFL-CIO what his "grandpop" once told him about unemployment. Explained Mr. Biden: "There was a suburb of Scranton called Minooka. He said 'When the guy in Minooka's out of work, it's an economic slowdown. When your brother-in-law's out of work, it's a recession. When you're out of work, it's a depression.'"

About 10 days later, Mr. Biden gave another talk: "My grandpop used to have an expression. We're from Scranton. He'd say -- and I mean this literally. It wasn't viewed as a joke. He said, 'Joey, when the guy in Dixon City' -- a small town above Scranton - 'is out of work, it's an economic slowdown. When your brother-in-law is out of work, it's a recession. When you're out of work, it's a depression.'"

Last week, when the White House had its jobs summit, Mr. Biden once again launched into the treasured anecdote: "There used to be an expression, and I'm not joking, my grandfather always used it. He was from Scranton, Pennsylvania. He said, 'When the guy from Throop is out of work, it's an economic slowdown. When your brother-in-law . . .'"

Mr. Biden long ago moved south to Delaware, but obviously still cares enough to make sure all the towns around Scranton get a vice presidential shout-out. Still, constantly invoking his ancestry in colorful ways that invite skepticism seems a tad risky, given his already-troubled history of borrowed familial flourishes (see the incident that chased him out of the 1988 presidential campaign).

Mr. Biden's endlessly recycled grandpop story, of course, is itself a twist on a hoary political cliché. In 1958, Harry Truman supposedly became the first president to utter the line: "It's a recession when your neighbor loses his job; it's a depression when you lose yours." Ronald Reagan at least understood what a cliché is for. He campaigned in 1980 on the clever riff: "A recession is when your neighbor loses his job. A depression is when you lose yours. A recovery is when Jimmy Carter loses his."

-- Kim Strassel

Obama and the Democratic Establishment

This opinion article by Elizabeth Drew from Politico.Com is a few weeks old, but it is instructive nonetheless. It comes on the heels of a) Obama's trip to China, which both the left and the right felt was a complete disaster, and b) Obama's firing of Greg Craig of White House Counsel, most likely for his handling of the Americorps inspector general scandal.

Is Obama losing his touch to other Democrats? His shoddy treatment of his friends in the Beltway and his "Chicago style" belligerent ways suggest that he is. Read below:

Why the Greg Craig debacle matters By: Elizabeth Drew November 19, 2009 11:58 AM EST
Why the Greg Craig debacle matters By: Elizabeth Drew November 19, 2009 11:58 AM EST President Barack Obama is returning from his trek to Asia Thursday to a capital that is a considerably more dangerous place for him than when he departed. While he was abroad, there was a palpable sense at home of something gone wrong. A critical mass of influential people who once held big hopes for his presidency began to wonder whether they had misjudged the man. Most significant, these doubters now find themselves with a new reluctance to defend Obama at a phase of his presidency when he needs defenders more urgently than ever. This is the price Obama has paid with his complicity and most likely his active participation, in the shabbiest episode of his presidency: The firing by leaks of White House counsel Gregory Craig, a well-respected Washington veteran and influential early supporter of Obama. The people who are most aghast by the handling of the Craig departure can’t be dismissed by the White House as Republican partisans, or still-embittered Hillary Clinton supporters. They are not naïve activists who don’t understand that the exercise of power can be a rough business and that trade-offs and personal disappointments are inevitable. Instead, they are people, either in politics or close observers, who once held an unromantically high opinion of Obama. They were important to his rise, and are likely more important to the success or failure of his presidency than Obama or his distressingly insular and small-minded West Wing team appreciate. The Craig embarrassment gives these people a new reason – not the first or only reason – to conclude that he wasn’t the person of integrity and even classiness they had thought, and, more fundamentally, that his ability to move people and actually lead a fractured and troubled country (the reason many preferred him over Hillary Clinton) is not what had been promised in the campaign. This may seem like a lot to hang on a Washington personnel move. After all, intramural back-stabbing or making people fall guys when things go wrong (think Bill Clinton’s Defense Secretary Les Aspin after the disaster in Somalia) are not new to Washingtonians. But Craig’s ouster did not occur in a vacuum. It served as a focal point to concerns that have been building for months that Obama wasn’t pressing for all that might be possible within the existing political constraints (all that one could ask of a president); that his presidential voice hadn’t fulfilled the hopes raised by his campaign voice (which had also taken him a while to find); that he hadn’t created a movement, as he had raised expectations that he would; that would be there to back him up and help him fulfill his promises. That is why it is worth pondering how the Craig story, unfolded in detail – its consequences likely will echo far longer than anything Obama said or did in Asia. Briefly, here’s what happened, some of it told for the first time: Craig, who had known the Clintons since they were all at Yale Law School together, had served as a senior adviser to Secretary of State Madeleine Albright, but in 1998 gave up that job to help defend Bill Clinton against impeachment. Yet in 2008, he supported Obama for the nomination – not so much a turning against Hillary Clinton as being impressed early, as were some other prominent Washingtonians, by the then-state senator but would-be U.S. Senate candidate at a fundraiser held by Vernon Jordan, seeing Obama as the first potentially inspiring Democratic figure since Robert Kennedy. In the course of the campaign, Craig wrote a highly publicized memo questioning some of Hillary Clinton’s claims of foreign policy experience, such as coming under enemy fire in Tuzla, Bosnia. During the campaign, Craig coached Obama for the debates (playing McCain), and praised him highly. Craig’s imprimatur helped the neophyte Obama in certain influential circles. He hoped to get a high foreign policy position in an Obama administration, but when Clinton was named secretary of state, this of course became untenable. The Clintons are an unforgiving lot. So, Obama and Craig agreed that Craig would take the job of White House counsel for a year, and then they’d discuss what he’d do next. Thus, Craig was handed a very tricky portfolio. During the transition, about mid-December, Craig presented to a group of the president’s newly named national security advisers meeting in Washington – including Clinton, Defense Secretary Robert Gates, national security adviser General James Jones, and others – three proposed executive orders: One ordered the shutting down of Guantanamo in a year. (The others banned torture and closed down the C.I.A.’s “black sites”; and addressed future detainee policy.) The one-year target for closing Guantanamo resulted from consultations with human rights and detainee rights groups, who argued that Guantanamo could be shut down in three months, and with Pentagon officials, who had no united position but argued that it would take from a year to 18 months. At the meeting, only the newly named Homeland Security Secretary Janet Napolitano, beamed in from Arizona, questioned whether a year was realistic. When Gates, as he later confirmed publicly, said that though it was an “ambitious” deadline, he supported it because setting it was the only way to get things, especially the bureaucracy, moving toward that end, and that it could be extended if it couldn’t be met, that was it. Obama’s new national security team signed off on the executive order to close Guantanamo in a year. This was passed along to the president as well as his top aides; Craig was never in a meeting with the political side of the White House on the Guantanamo matter – and the president-elect and then president raised no objection before, when, or after he signed off on it. Unsurprisingly, the deadline became hard to meet, for various legal and political reasons – including the congressional outburst of NIMBYISM (similar to its earlier outbursts on Dubai Ports and even Terri Schiavo – short-term, irrational, and politically motivated fits that erupt from the Congress from time to time). If Craig failed to foresee this (as some later charged), he had a lot of company. The closing of Guantanamo is undoubtedly far further along than it would have been without the executive order. But along the way, Craig fell out of favor with the president’s political aides and, apparently, the president himself. Whether he was simply being made the fall guy, or the tight circle of Chicagoans in the White House didn’t care for this outsider, or he committed some unknown errors, suddenly, in August, leaks began to surface that his job was in danger. Non-denial denials were issued from the White House. The leaks became a pattern, a systematic, anonymous, tipping off of reporters that Craig would soon be gone. Craig was accused, anonymously of course, of a welter of charges: of being “too close to the human rights groups” (if so, what was wrong with that?), of not playing well with others, of being a bad manager, of being fixated on Guantanamo to the detriment of other issues. In the summer, Obama offered Craig another job, which Craig declined, and the two agreed that they would discuss the matter further later in the year. But the leaks continued, and Craig decided that his situation was untenable, and he had to leave. To make sure he did, he was leaked his way out, up to the day before he planned to resign. What caused so many Obama supporters’ stomachs to turn was that Obama could have stopped the leaking at any time; he or White House Chief of Staff Rahm Emanuel could have arranged a dignified departure. (They’re within their rights to get rid of someone if they’re dissatisfied, for good reasons or not – but a preferred route would be to call that person in and ask what day would suit him or her to resign, and then just let that person do it. This happens a lot in administrations; even if people don’t believe the resignation was voluntary, there’s a soupcon of dignity left to that person.) Even some Hillary Clinton supporters, who still hold no brief for Craig, think he was treated shabbily. And this opinion is not confined to “political junkies.” Thomas Wilner, a distinguished Washington attorney who challenged Bush administration detainee policies, particularly on Guantanamo, and had worked with Craig on these issues, told me, “There's a lot of concern among a lot of lawyers in this town, especially those who were supporting Obama, that somebody this bright, this respected, this good, and with this integrity, was treated in such a way." Yes, we knew, or should have, during the campaign that the supposed idealist Obama had a bit of the Chicago cut-throat in him, but there was little sign that he could be as brutal and heedless of loyalty as he was in the Craig affair. An unexpected climate of fear emanates from the Obama White House. The incident underscored worries that several had held about the Obama White House for some time: that it was too tightly controlled and narrowly focused by the Chicago crowd; that it seemed from the outset to need an older, wiser head, someone with a bit more detachment. The current crowd displays a certain impulsiveness and vindictiveness that do it no good – as in the silly war-let on Fox News that it is now trying to back out of. Even if Craig was making a hash of his job – and there’s no independent evidence of this – it just wasn’t smart to treat someone widely held in such high respect in this manner; once again, the impulsiveness backfired. The replacing of Craig with Washington attorney Robert Bauer, Obama’s own attorney for years as well as counsel for the Democratic National Committee and the Obama campaign, further narrowed the White House circle just when it needed broadening, lowered the stature of the office, and choosing the president’s personal attorney for a position that calls for dispassionate judgment is hazardous. (Does anyone remember Alberto Gonzalez?) The Obamas themselves hang tight with a small Chicago crowd. Yes, he talks to others, and yes, a president’s time is very limited, but the Obamas themselves seem as closed-off and unto themselves as does his inner White House circle. (Is this a coincidence? What is all this wariness about?) When the Obamas go to someone’s house for dinner, almost invariably it’s to that of Valerie Jarrett, the old friend from Chicago who serves as a counselor and whom they see all day. Old Chicago friends fly in for weekends frequently. At the same time as the Craig imbroglio happened, many people who had defended Obama against charges that he wasn’t what he’d been cracked up to be were now becoming concerned themselves: though it was a relief to have a president who thought through crucial decisions about sending the country’s young to war, it was taking him awfully long to make up his mind about what to do about Afghanistan and Pakistan, and the decision-making was bafflingly leak-ridden (was this a deliberate airing of ideas or a loss of control over the process?); that the health care debate had in fact careened out of his control and it seemed less and less likely that, having used up almost a year of his presidency on it (his “deadlines” had become irrelevant, and so, in a way, had he), he would end up with a bill, if at all, that did enough net good. Certain things are not his fault: the unprecedented truculence of the Republican Party, scared silly by right-wing ranters on cable television; the unholy economic and foreign-policy mess that he inherited; the fact that he never had, as so many liberal commentators asserted, the 60 (or 58 or 59) Senate votes that would enable him to get what he wanted from the Congress. It’s not his fault that unemployment rates remain stubbornly high following a traumatic recession. And it’s always risky to project the long-term from the moment. Perhaps this will prove to have been a passing moment. Perhaps Obama will still salvage a health care bill that is a real step forward (though there will be a humongous fight over its definition); maybe he’ll come up with a smart strategy – or the best of bad options – on Afghanistan and Pakistan; it’s not impossible that he’ll add real progress on climate change and regulatory reform to his list of achievements, and that he’ll start to get the deficit under control. Maybe there’ll be enough examples of grace that will make people forget this period of pettiness. He’s been lucky before; maybe he’ll get lucky again. Meanwhile, serious people who had a lot of hope about him and who defended him are more worried than ever, and in this if anything over-communicative society the White House can’t write them off as “a bunch of Washington insiders.” So meanwhile, there’s a palpable mood change in Washington that could signify that Barack Obama is in deeper trouble than he was even a week ago. Elizabeth Drew is a journalist and author in Washington. She is the author of 14 books, most recently "Richard M. Nixon" (Times Books, 2007) © 2009 Capitol News Company, LLC

Dirty Harry and the Health Care Bill

Harry Reid's History Lesson

Majority Leader Harry Reid tarred opponents of his health care bill yesterday as the equivalent of those who opposed equal rights for women and civil rights for blacks.

In a remarkable statement on the Senate floor, Mr. Reid lambasted Republicans for wanting to "slow down" on health care. "You think you've heard these same excuses before? You're right," he said. "In this country there were those who dug in their heels and said, 'Slow down, it's too early. Let's wait. Things aren't bad enough' -- about slavery. When women wanted to vote, [they said] 'Slow down, there will be a better day to do that -- the day isn't quite right. . . .'"

He wrapped up his remarks as follows: "When this body was on the verge of guaranteeing equal civil rights to everyone regardless of the color of their skin, some senators resorted to the same filibuster threats that we hear today."

Senator Reid's comments were quickly condemned. "Hyperbole. It is over the top. It reminds me of earlier people talking about Nazis," said Juan Williams of NPR and Fox News, author of "Eyes on the Prize," a definitive history of the civil rights movement.

Historians also faulted Mr. Reid's curious reference to the Senate civil rights debates of the 1960s. After all, it was Southern Democrats who mounted an 83-day filibuster of the 1964 Civil Rights Bill. The final vote to cut off debate saw 29 Senators in opposition, 80% of them Democrats. Among those voting to block the civil rights bill was West Virginia Senator Robert Byrd, who personally filibustered the bill for 14 hours. The next year he also opposed the Voting Rights Act of 1965. Mr. Byrd still sits in the Senate, and indeed preceded Mr. Reid as his party's majority leader until he stepped down from that role in 1989.

The final reason Mr. Reid's comments were so inapt and offensive is that the battles for women's suffrage and civil rights he referred to were about expanding freedom. That's not what the 2,074-page health care bill being debated in the Senate today does, with its 118 new regulatory boards and commissions. Mr. Reid may reach his needed 60 votes to pass his bill this month, but he is pursuing it using the most tawdry and deplorable of tactics.

-- John Fund

Grey Lady's Columnists Whitewash Socialized Medicine's Record

Great Moments in Socialized Medicine

"Poor nursing care, filthy wards and lack of leadership at Basildon and Thurrock University NHS Hospitals FoundationTrust led to the deaths of up to 400 patients a year," London's Daily Telegraph reported Thursday:

Figures compiled by a health watchdog showed death rates at the Essex trust were a third higher than they should have been.

Among the worst failings discovered by the Care Quality Commission were a lack of basic nursing skills, curtains spattered with blood on wards, mould in vital equipment and patients being left in A&E for up to ten hours.

Concerns about death rates at the foundation hospital trust were first raised a year ago, but an internal investigation failed to find anything wrong and managers dismissed the concerns.

But the new report found "systematic failings" in the trust's management, all of whom are still in their jobs. The CQC said its confidence in the management's ability had been "severely dented."

Perhaps the only good news in the whole story comes from former Enron adviser Paul Krugman, who observes: "And as I watched the deniers make their arguments, I couldn't help thinking that I was watching a form of treason--treason against the planet."

Sorry, wrong quote. We mean this one: "I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society."

Whoops, wrong again. OK, let's try once more: "In Britain, the government itself runs the hospitals and employs the doctors. We've all heard scare stories about how that works in practice; these stories are false."

That's it. Third time's the charm. And do you know what, Krugman is right. The Daily Mail has the number of deaths cited in the "shocking report" as just 70--well, "at least 70." Oh, but wait, the Mail's Saturday follow-up raises the figure to 3,000. The left-wing Observer, a Sunday paper, says 5,000.

But does it really matter? As Stalin is said to have observed, while one death is a tragedy, a million are a statistic. And here's a first for this feature: a tragedy--or prospective tragedy--here in the U.S. It comes from Krugman's New York Times colleague, Nicholas Kristof, who has no connection to Enron.

It seems that 23-year-old John Brodniak has a cavernous hemangioma, "an abnormal growth of blood vessels, and in John's case it is chronically leaking blood into his brain." He suffers from constant pain, impairments of memory and coordination, and nausea and vomiting. There is a danger of premature death should a blood vessel burst. Surgery could relieve his condition, but he says doctors won't operate on him because he's uninsured, and he can't get insurance because he has a pre-existing condition.

If any of our readers are in a position to help this young man, please email us and we'll pass the information along to Kristof.

From the standpoint of public policy, though, the key passage in the Kristof column is this one:

In August, he qualified for an Oregon Medicaid program, but he hasn't been able to find a doctor who will accept him as a patient for surgery, apparently because the reimbursements are so low.

Somehow Kristof thinks he has made an argument for more government control over health care, when in fact the case he has made against it is nothing short of devastating.

Capitalism and Poverty

In Kevin Hassett’s National Review article “The Poor Need Capitalism,” he points to a new NBER study, “Parametric Estimations of the World Distribution of Income,” and writes:

The chart [below] draws on a landmark new study by economists Maxim Pinkovskiy and Xavier Sala-i-Martin. The authors set out to study changes in the world distribution of income by gathering data from many different countries. As a byproduct of their work, they are able to count the number of individuals who live on $1 per day or less, a key measure of poverty.

According to their calculations, the number of people living in poverty so defined has plummeted, from 967,574,000 in 1970 to 350,436,000 in 2006, a decrease of a whopping 64 percent. Whence the reduction? The biggest factor is the emergence of middle classes in previously poverty stricken China and India. And the spread of capitalism to other countries has similarly been followed by prosperity. The trend is even more impressive if one considers that the world population skyrocketed over that time, increasing by 3 billion.

If the trend continues for just 40 more years, poverty will have been essentially eradicated from the globe. And capitalism will have done it. There are those who have argued that the current financial crisis has served as proof that capitalism is a failed ideology. The work of Pinkovskiy and Sala-i-Martin suggests that there are about a billion people whose lives prove otherwise.

The NBER paper also finds that the world poverty rate fell by 80 percent, from 26.8 percent in 1970 to only 5.4 percent in 2006 based on the $1 per day poverty measure (see chart below).

The study also estimates poverty rates separately for five geographical regions (see chart below), with some pretty amazing results for East Asia (China, Taiwan, and S. Korea), which in 1960 had the highest regional poverty rate in the world by far, at 58.8 percent, compared to 39.9 percent for Africa, 11.6 percent for Latin America, 8.4 percent for MENA (Middle East and North Africa), and 20.1 percent for South Asia. In the 36-year period between 1970 and 2006, the poverty rate in East Asia fell to only 1.7 percent, which is now below all of the other regions: Africa (31.8 percent), Latin America (3.1 percent), MENA (5.2 percent), and South Asia (2.6 percent). Bottom Line: The 80 percent decrease in the world poverty rate between 1970 and 2006 has to be the greatest reduction in world poverty in such a short time span ever in history, and the 97 percent reduction in the poverty rate of East Asia (from 58.8 percent to 1.7 percent) has to be the most significant improvement in a regional standard of living in history over such a short period. Thanks to Hassett for pointing out that capitalism is alive and well, and is spreading around the world helping to eliminate poverty.

The Dean of Harvard Medical School Weighs In..

Health 'Reform' Gets a Failing Grade
The changes proposed by Congress will require more draconian measures down the road. Just look at Massachusetts.

As the dean of Harvard Medical School I am frequently asked to comment on the health-reform debate. I'd give it a failing grade.

Instead of forthrightly dealing with the fundamental problems, discussion is dominated by rival factions struggling to enact or defeat President Barack Obama's agenda. The rhetoric on both sides is exaggerated and often deceptive. Those of us for whom the central issue is health—not politics—have been left in the lurch. And as controversy heads toward a conclusion in Washington, it appears that the people who favor the legislation are engaged in collective denial.

Our health-care system suffers from problems of cost, access and quality, and needs major reform. Tax policy drives employment-based insurance; this begets overinsurance and drives costs upward while creating inequities for the unemployed and self-employed. A regulatory morass limits innovation. And deep flaws in Medicare and Medicaid drive spending without optimizing care.

Speeches and news reports can lead you to believe that proposed congressional legislation would tackle the problems of cost, access and quality. But that's not true. The various bills do deal with access by expanding Medicaid and mandating subsidized insurance at substantial cost—and thus addresses an important social goal. However, there are no provisions to substantively control the growth of costs or raise the quality of care. So the overall effort will fail to qualify as reform.

In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it. Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care's dysfunctional delivery system. The system we have now promotes fragmented care and makes it more difficult than it should be to assess outcomes and patient satisfaction. The true costs of health care are disguised, competition based on price and quality are almost impossible, and patients lose their ability to be the ultimate judges of value.

Worse, currently proposed federal legislation would undermine any potential for real innovation in insurance and the provision of care. It would do so by overregulating the health-care system in the service of special interests such as insurance companies, hospitals, professional organizations and pharmaceutical companies, rather than the patients who should be our primary concern.

In effect, while the legislation would enhance access to insurance, the trade-off would be an accelerated crisis of health-care costs and perpetuation of the current dysfunctional system—now with many more participants. This will make an eventual solution even more difficult. Ultimately, our capacity to innovate and develop new therapies would suffer most of all.

There are important lessons to be learned from recent experience with reform in Massachusetts. Here, insurance mandates similar to those proposed in the federal legislation succeeded in expanding coverage but—despite initial predictions—increased total spending.

A "Special Commission on the Health Care Payment System" recently declared that the Massachusetts health-care payment system must be changed over the next five years, most likely to one involving "capitated" payments instead of the traditional fee-for-service system. Capitation means that newly created organizations of physicians and other health-care providers will be given limited dollars per patient for all of their care, allowing for shared savings if spending is below the targets. Unfortunately, the details of this massive change—necessitated by skyrocketing costs and a desire to improve quality—are completely unspecified by the commission, although a new Massachusetts state bureaucracy clearly will be required.

Yet it's entirely unclear how such unspecified changes would impact physician practices and compensation, hospital organizations and their capacity to invest, and the ability of patients to receive the kind and quality of care they desire. Similar challenges would eventually confront the entire country on a more explosive scale if the current legislation becomes law.

Selling an uncertain and potentially unwelcome outcome such as this to the public would be a challenging task. It is easier to assert, confidently but disingenuously, that decreased costs and enhanced quality would result from the current legislation.

So the majority of our representatives may congratulate themselves on reducing the number of uninsured, while quietly understanding this can only be the first step of a multiyear process to more drastically change the organization and funding of health care in America. I have met many people for whom this strategy is conscious and explicit.

We should not be making public policy in such a crucial area by keeping the electorate ignorant of the actual road ahead.

Dr. Flier is dean of the Harvard Medical School.

How Is That Stimulus Doing?

This is NOT good.

http://www.recovery.gov/Pages/home.aspx

New York has received $1.2 billion dollars and "created" or '"saved" 40,000 jobs. Michigan has received $1.2 billion and has "saved" 22,000 jobs. You do the math. Where is the outrage?

Breaking News: There's Still No Free Lunch

Milton Friedman taught us "there's no such thing as a free lunch," and there still isn't. The $787 billion Obama stimulus plan was supposed to create jobs and get the economy moving again, raising incomes for everybody. Instead, three million more jobs have been lost. A new report by the Tax Foundation helps explain why.

It finds that federal spending for bank bailouts, stimulus plans, auto rescue plans, and cash for clunkers has been so high that future tax rates will have to skyrocket to pay the tab. "Federal income tax rates would have to be nearly tripled across the income spectrum if Congress were to close the deficit," the group calculates. If the gap were to be closed with income taxes alone, we'd need a new lowest bracket of 27.2% and a highest bracket of 95%.

These tax rate projections, by the way, are not much different from what the Democratic-controlled Congressional Budget Office projects. CBO estimates that tax rates would have to rise about 80% to pay for the Bush-Obama spending frenzy of recent years.

According to the Tax Foundation, if state and local taxes are included, some income earners could face marginal rates that would confiscate virtually all their earnings after a certain point. "Yes," says Scott Hodge, president of the Foundation, "we would have to have 100% tax rates to balance the budget given how high spending is now."

All this may explain why jobs remain scarce, and why the stimulus plan has backfired. Steve Entin, an economist with the Institute for Research on the Economics of Taxation, points out that the mere threat of future taxes can do serious damage to an economy: "No one wants to invest when tax rates are going to shoot up. The combination of higher income, capital gains and dividend taxes are putting a damper on business investment."

So enjoy your "free" lunch while it lasts -- because when the bill comes, it will be a whopper.

-- Stephen Moore