Search Results for: moral hazard

Understand the Moral Hazard of Psychological Disability Welfare

How To Retire At Age 27

A doctor’s primary responsibility is to heal, and all of our efforts and resources should be devoted to that goal.  At times, it is impossible to restore a patient to perfect health and he or she must unfortunately deal with some degree of chronic disability.  Still other times, though, the line between “perfect health” and “disability” is blurred, and nowhere (in my opinion) is this more problematic than in psychiatry.

To illustrate, consider the following example from my practice:

Keisha (not her real name), a 27 year-old resident of a particularly impoverished and crime-ridden section of a large city, came to my office for a psychiatric intake appointment.  I reviewed her intake questionnaire; under the question “Why are you seeking help at this time?” she wrote: “bipolar schizophrenia depression mood swings bad anxiety ADHD panic attacks.”  Under “past medications,” she listed six different psychiatric drugs (from several different categories).  She had never been hospitalized.

When I first saw her, she appeared overweight but otherwise in no distress.  An interview revealed no obvious thought disorder, no evidence of hallucinations or delusions, nor did she complain of significant mood symptoms.  During the interview, she told me, “I just got my SSDI so I’m retired now.”  I asked her to elaborate.  “I’m retired now,” she said.  “I get my check every month, I just have to keep seeing a doctor.”  When I asked why she’s on disability, she replied, “I don’t know, whatever they wrote, bipolar, mood swings, panic attacks, stuff like that.”  She had been off medications for over two months (with no apparent symptoms); she said she really “didn’t notice” any effect of the drugs, except the Valium 20 mg per day, which “helped me settle down and relax.”

Keisha is a generally healthy 27 year-old.  She graduated high school (something rare in this community, actually) and took some nursing-assistant classes at a local vocational school.  She dropped out, however, because “I got stressed out.”  She tried looking for other work but then found out from a family member that she could “apply for disability.”  She applied and was denied, but then called a lawyer who specialized in disability appeals and, after about a year of resubmissions, received the good news that she can get Social Security Disability, ensuring a monthly check.

How is Keisha “disabled”?  She’s disabled because she went to see a doctor and, presumably, told that doctor that she can’t work because of “stress.”  That doctor probably asked her a series of questions like “are you unable to work because of your depressed mood?”, “Do you find it hard to deal in social situations because of your mood swings?” etc., and she answered them in the affirmative.  I’ve seen dozens—if not hundreds—of disability questionnaires, which ask the same questions.

I have no doubt that Keisha lives a stressful life.  I’ve driven through her part of town.  I’ve read about the turf wars being waged by the gangs there.  I know that her city has one of the highest murder rates in America, unemployment is high, schools are bad, and drug abuse and criminal activity are widespread.  I would be surprised if anyone from her neighborhood was not anxious, depressed, moody, irritable, or paranoid.

But I am not convinced that Keisha has a mental illness.

Lest you think that I don’t care about Keisha’s plight, I do.  Keisha may very well be struggling, but whether this is “major depression,” a true “anxiety disorder,” or simply a reaction to her stressful situation is unclear.  Unfortunately, psychiatry uses simple questions to arrive at a diagnosis—and there are no objective tests for mental illness—so a careless (or unscrupulous) provider can easily apply a label, designating Keisha’s situation as a legitimate medical problem.  When combined with the law firms eager to help people get “the government money they deserve,” and the very real fact that money and housing actually do help people like Keisha, we’ve created the illusion that mental illness is a direct consequence of poverty, and the way to treat it is to give out monthly checks.

As a physician, I see this as counter-therapeutic for a number of reasons.  With patients like Keisha, I often wonder, what exactly am I “treating”?  What constitutes success?  An improvement in symptoms?  (What symptoms?)  Or successfully getting her on the government dole?  And when a patient comes to me, already on disability after receiving a diagnosis of MDD (296.34) or panic disorder (300.21) from some other doctor or clinic, I can’t just say, “I’m sorry about your situation, but let’s see what we can do to overcome it together,” because there’s no incentive to overcome it.  (This is from someone who dealt with severe 307.51 for sixteen years, but who also had the promise of a bright future to help overcome it.)

Continue reading…

From Thought Broadcast, here.

The MORAL Case for Fossil Fuels…

Putting People’s Well-Being First: A Review of Alex Epstein’s The Moral Case for Fossil Fuels

by Pierre Desrochers

To most environmental activists, many of my students and some of my colleagues, life before the era of “carbon fuel pollution” was somewhat similar to the idyllic and carefree existence of the Hobbits. Indeed, looking at the support that organizations like Toronto350 have garnered in their quest to get universities to divest from “socially injurious” fossil fuel companies, one must admit that (re)creating the Shire is a political program with much wind in its (one must assume organically grown and ethically woven) sails…

So how should an energy realist go about reminding a University of Toronto Presidential Advisory Committee that the “good old days” were more akin to trying times, that poverty is something that most human beings have historically tried to escape from rather than a virtue, and that (energy) reality is not optional?

One option is to explain once more that coal, petroleum and natural gas came to dominate our energy system for good practical reasons, and that truly superior alternatives would not need taxpayers’ money to be mandated into our houses or shoveled down on our landscape.

For instance, a few days ago my friends Germain Belzile and Youri Chassin published a study on the costs of an accelerated transition toward green energies and the willingness of Canadians to pay for these costs. Looking at some proposals of Québec-based Équiterre and Vivre en ville for reducing oil consumption for personal transportation that ranged from bicycle sharing services to high-speed rail service, they concluded that these “sustainable” options would come with an annual price tag of approximately $6.4 billion for Quebec as a whole, or $1,875 per household. In Quebec as in other jurisdictions that have already gone down green roads paved with (feel) good intentions, subsidizing inferior alternatives will result in massive wealth destruction without any meaningful beneficial environmental outcome.

The problem, of course, is that energy reality doesn’t accord with the ethical preferences of self-appointed guardians of the greater good who would rather dismiss or heckle their critics as corporate shills than address their arguments. After all, who could be against unspoiled nature, communal bliss and subsidized elitist artistic expressions but people in the pockets of greedy corporations? And who will dare to keep consumers in check for their own good and that of future children, to say nothing of voiceless critters and ecosystems, if not virtuous individuals like themselves (even though they might have to use a fair amount of carbon fuels to get their message across)?

“As one expects, The Moral Case for Fossil Fuels debunks most of the nonsense that has now become the common wisdom of the chattering classes on energy issues.”

But while it was perhaps unavoidable that pampered academic rebels looking for a new cause would eventually settle on telling energy-starved masses to eat little, distant, costly, intermittent, unreliable, and low-density energy cupcakes, what has been especially disheartening for energy realists is how many energy executives have been shamed into paying lip-service (and a fair amount of “sustainability” and “green partnership” consulting fees) to their most virulent detractors.

Enter Alex Epstein, the young dynamo behind the Center for Industrial Progress (CIP) (Disclaimer: Alex is a virtual friend, meaning we’ve met through Skype rather than face-to-face, something which would have required burning much more carbon fuel…)

A philosopher by training, Epstein is now an energetic happy intellectual warrior who takes the case for fossil fuels into the most hostile corners, be they academia or the People’s Climate March. Even better, he managed to organize a debate in which he confronted the 350 éminence grise Bill McKibben himself!

Apart from his intelligence, passion and youthful drive, Epstein’s success is largely attributable to his re-framing of old energy debates in a moral light. As he explains in his recent book, the question of what to do about fossil fuels should come down to what will promote human life and flourishing rather than “holding human nonimpact as one’s standard of value, without regard for human life and happiness” (page 30). (Of course, the fact that Epstein even has to make the case against the “irrational moral prejudice” against cheap and reliable energy tells us how far some sizeable segments of the political left have gone on the misanthropic side of the intellectual universe, a corner once mostly populated by aristocrats, romantics, nouveaux riches and academic ecologists. Truth be told though, not all self-styled progressives are comfortable with the now dominant “reactionary apocalyptic pastoralism” and some, like my [again virtual] friends at Spiked! are actually remarkably sensible and creative on the issue.)

As one expects, The Moral Case for Fossil Fuels debunks most of the nonsense that has now become the common wisdom of the chattering classes on energy issues. Do you want to know why you can’t power light rail systems or simply manufacture smart phones, bicycles or triple glazed windows with wind turbines, solar panels and anaerobic digesters? Or why being operated on in a hospital powered only by “alternatives” might be harmful to your health? Epstein will not only tell you with clarity and gusto, but with a knack for witty one liners that this (arguably less articulate and funny) energy writer hasn’t encountered before.

Most importantly, Epstein dares to venture where many energy realists won’t go by explaining at some length that cheap, plentiful and reliable energy, combined with human ingenuity, “gives us the ability to transform the world around us into a place that is far safer from any health hazards (man-made or natural), far safer from any climate change (man-made or natural), and far richer in resources now and in the future” (page 33).

Whatever your reason might be for buying gifts in late December, please consider (on top of your own) offering a copy of The Moral Case for Fossil Fuels to both your loved ones and those sanctimonious green hipsters in your life. It is, as far as I know, the best accessible moral case made on behalf of an issue that is, in the end, a matter of life and death.

From QL, here.

An Indian’s Indictment of Pagan Hindustan

India’s “Structure”—Addendum

By 

January 8, 2024

 

In the previous article, I delved into the absence of moral foundations in India and elsewhere in the Third World. Considering this, the institutional structure left by colonizers cannot survive. Each of these Third World countries, in its unique way—civil wars, over-population, self-destruction, hedonism—will negate the benefits bestowed by the colonizers, Christian missionaries, and Western technology, reverting to its pre-colonial state of subsistence living, savagery, and barbarianism.

Without a rational, moral fabric—the essential civilizational factors—entropy reigns, and nature asserts itself. Intellectual or financial capital cannot coalesce, fails to hold together, and gets frittered away. The following focuses on exemplifying the decay and degradation which are gaining pace in India.

A staggering 800 million Indians get government-provided free rations, equivalent to the total populations of the USA, Canada, and the twenty-seven countries comprising the European Union. The majority of the remaining 1,435 million Indians receive subsidized rations.

Su, JonathanBuy New $3.99(as of 04:42 UTC – Details)While extremely low, India’s GDP per capita of U$2,389 (2022) still gives you a misleading glimpse of reality. A significant portion of the GDP benefits a minority with political connections or a business façade.

Strategic thinking among Indian businessmen revolves around the art of transferring money—by any means necessary—from your pocket to theirs, devoid of a need to provide a product or service. The absence of shame or guilt in engaging in scams or reneging on commitments is pervasive. Even financial institutions, without exception, impose fabricated charges, including for the spam messages they generate. Social workers, engineers, and intellectuals—whose work is difficult to quantify and is distant from customer feedback—exhibit worse conduct.

Remarkably, those at the receiving end have no righteous indignation and do not complain but look for someone else to “recoup” their losses. With people around you looking for an occasion to usurp your property and money, you must forever be on guard, wasting most of your time defending yourself. Surpluses, if any, in such an ecosystem tend to get frittered away—no one knows where they come from, so society cannot focus on nurturing or preserving them.

Unless the individual in society is moral and wants to provide more value than he receives and honor his part of the deal, any economic value created is incidental and unquantifiable.

Forget about being able to operate in the globalized world, such no-trust behaviors make it very challenging to conduct any business beyond the immediate family, with the latter already laden with significant issues. Managing large firms, achieving economies of scale, or undertaking complex endeavors becomes formidable. That is why, even in today’s high-technology world, India leaves much of its society at the edge of starvation.

This environment fosters a moral hazard and a rationality trap, encouraging individuals to prioritize street-smart tactics over being value-creators with moral and rational inclinations. During my tenure working in India, expressing my refusal to engage in bribery for the sake of outcompeting others or securing an overnight train berth at the expense of someone else was met with laughter, dismissed as overly romantic.

Considering the wages of the protagonist, the daily wage worker, from the earlier article, a foreign investor might be enticed by the potential profit margins achievable by relocating manufacturing operations to India. However, many entrepreneurs encounter an immediate roadblock when attempting to move their operations to India, with most never progressing—those who do often lose money and get stuck in chaotic legal entanglements.

Some persevere, often backed by the unending monies of big corporations. When they fail, they concoct a politically correct explanation. Or perhaps, spending most of their time in five-star settings in India, their bureaucrats never figure out what happened. Why bother looking for truth when doing so might be politically incorrect and risk your lifestyle and six-figure packages?

In the early 90s, after completing my MBA from the UK, with great aspirations to participate in India’s growth, I was in Delhi setting up the Indian subsidiary of a British company. I was obsessed with “incentives.” I hired an assistant. Within a year, I tripled his starting salary in an attempt to address some of his shortcomings. Soon, he was skipping two-thirds of the days as if he had done a perfect mathematical calculation—his instincts were not to go beyond subsistence living and didn’t include any plans for the future. When the company offered him a lump sum, he vanished for six months, returning with the appearance of having spent that time in a perpetual state of inebriation.

In a society devoid of civilizational values, might-is-right is the operating principle, and the individual—across the spectrum of class hierarchy—is driven solely by resource acquisition, power, and sex. The concept of work ethic does not stick in his mind. You can pay as much as you want, but given the slightest chance, he will shrug off. Lacking reason, he cannot see the causality between his lack of work ethic and his $4 per day wage.

The cultural underpinnings of magical thinking, resulting from the absence of reason and moral values, fail to see how prosperity is generated.

Continue reading…

From LRC, here.

US Government Profligacy Knows No Bounds

When Penitentiary Lifers Got Free Stuff From Joe Biden

By 

David Stockman’s Contra Corner

September 5, 2022

President Joe Biden’s Internal Revenue Service (IRS) gave a huge number of prison inmates at least $1.3 billion in COVID-19 stimulus checks, the Washington Free Beacon reported.

There are more than 1.1 million incarcerated individuals who took in the stimulus money, according to IRS data provided to the Free Beacon, as part of Biden’s $1.4 trillion American Rescue Plan. Those incarcerated who received the stimulus money includes roughly 163,000 people serving life sentences without parole, the IRS told Republican Nebraska Rep. Don Bacon in a letter obtained by the outlet.

Arkansas Sen. Tom Cotton had raised concerns in 2021 about the fact that under the plan prisoners would receive money, slamming the idea that someone like Dzhokhar Tsarnaev, the 2013 Boston Marathon bomber, would get $1,400. Tsarnaev ended up raking in $1,400 in connection to the plan, the Boston Herald reported in January 2022.

The point here is not simply that inmates and lifers got $1,400 in free stuff from Uncle Sam, but that Washington’s fiscal culture has gotten so lax that no one even bothered to append an inmate exclusion to Joe Biden’s $1.4 trillion boondoggle.

Nor is this a unique case of fiscal profligacy. Even setting aside the $400-$600 billion cost of Joe Biden’s student debt cancellation plan, the fact remains that every single one of the 43 million student borrowers has received a huge windfall from the payments moratoriums initiated in the spring of 2020. And that includes millionaires and billionaires.

With the latest four-month extension, student loan payments will have been paused seven times during the last 33 months. The nominal budget cost of these pauses since the beginning of the pandemic, therefore, will end up totaling $155 billion.

From the students point of view, however, the forgiveness is even more fulsome, owing to the inflation-caused erosion of principal during the last three years. In the case of average student debt owed by recent medical school and law school graduates, for instance, the effective forgiveness amounts to $68,000 and $41,500 respectively.

But here’s the thing. All of this largesse was justified by the alleged alleviation of harms from the pandemic, but in the case of most student borrowers under the age of 50 years, the harms were minimal.

That’s evident from the data on the ultimate harm—death. In this context, the normal annual mortality rate from poisonings and suicides is 67 per 100,000 population for age cohorts between 30-50 years. That’s 2.6X the 25 per 100,000 “with Covid” deaths reported by the CDC for the same age cohort during the first year of the pandemic.

Indeed, the profligacy seems to know no bounds. As the good folks at the Committee for a Responsible Budget (sic!) have pointed out, the $500 billion reduction in the $1.6 trillion outstanding level of Federal student debt from Joe Biden’s debt forgiveness plan will be replaced in a jiffy.

That’s because new borrowing would continue to accrue at at least the previous pace. In reality, it would likely accrue faster due to moral hazard from debt cancellation and the new IDR program (income driven repayment).

Continue reading…

From LRC, here.

Do Government Building Codes Blunt Earthquakes’ Effects? NO WAY!

Statist Myths About the Japanese Earthquake

Walter Block refutes them.

Posted Jun 25, 2012

The usual Keynesian suspects have come out from under the rocks of economic illiteracy which they inhabit, to claim that the Japanese earthquake of 2011 will actually help the economy of that country. We need not spend too much time refuting this broken window fallacy yet again. Bastiat and Hazlitt have already done so. Perhaps it will suffice to point out that these advocates of the benefits of destruction are guilty of a performative contradiction. If it is so advantageous for a city to be destroyed by a tsunami, why don’t these Krugmanites obliterate their own properties? That is, they could enrich not only themselves, but society as a whole, by taking the wrecking ball to their homes, yachts, automobiles, factories, fancy restaurants, night clubs. Yet, we never see any such thing happening. If it is argued that this can only be done on a massive, not an individual scale, then we would expect entire communities, such as the Peoples’ Republics of Santa Monica, Ann Arbor, San Francisco, Cambridge Mass, the upper west side of New York City, etc., wherever “progressives” congregate, to engage in such activities. We await with baited breath these occurrences. The fact that the Keynesians continue to drive around in their cars, inhabit their homes ought to put paid to this malicious and erroneous theory. And this would indeed likely occur, if we did not live in a world where the mainstream media still hold sway.

Another error takes this form: All thanks to the Japanese government. It had the wisdom and foresight to mandate strict building codes, which safeguarded its people. Japanese skyscrapers were built so as to bend, not snap, in the wind. All of their edifices withstood the challenges of the earthquake to a far greater degree than would otherwise have been the case, due to these benevolent statist regulations. For example, states a USA Today editorial of 3/14/11 entitled “Japanese earthquake sends sobering message for USA” (the message: we have to strengthen, and attain greater compliance with our own building codes): “If any country understands this interplay of earthquakes, waves and buildings it is Japan, which has developed stringent building codes….” According to this fallacious argument, the Haitian government fell down on the job of inculcating such building codes. The latter country lost a greater proportion of its population with a lower intensity earthquake than the former, with a higher count (8.9) on the Richter scale because it did not enact strict building codes.

Nothing could be further from the truth. The reason the Japanese suffered relatively fewer losses had little to do with statist real estate regulations. Rather, they were able to build better because they were richer, and “wealthier is healthier.” And why, in turn, were the Japanese more prosperous than the Haitians? This was at least in large part due to the fact that the country in the Far East had a far freer economy than the Caribbean nation. (The Fraser Institute study of 2008 ranked Japan as the 27th most economically free country out of 141 nations they surveyed, while Haiti took 96th place.) Economists all the way from the Salamancans to Adam Smith to Mises to Hayek to Rothbard have demonstrated why it should be the case that to be economically freer is to be more affluent. Private property rights, free market prices, allow for economic growth, rational calculation, proper allocation of resources and spread of vital economic information. They provide incentives for innovation. In contrast, central planning, socialism, government regulation, the mixed economy, are recipes for economic stultification. Mises, in his book Socialism, has done more than anyone else to drive home this point.

Why should wealthier be healthier? Because, in a word, the richer is an economy, the more wherewithal it has with which to purchase all sorts of things, safety among them, and, usually, preeminently so.

But are not government building codes of help too, in this context? Are they not at least sufficient, if not necessary? No. This may be seen by assuming that Haiti had adopted the selfsame earthquake protection building codes operational in Japan (or in the U.S.). What, then, would have occurred in Haiti, had they engaged in this “progressive” legislation? Nothing, that is what. Namely, if these regulations were scrupulously adhered to, either no building would have occurred at all, or very little, and the people would not have been sheltered at all (or to an inadequate degree, leading to many more deaths.)

It is the same old story. An economy, such as that of the US, or the UK, or Japan, benefits from economic growth. As it does, regulations mandating good things that would have occurred anyway are promulgated, in order to falsely take credit for them, when they are due to the greater wealth. For example, this occurred with child labor laws, maximum hours legislation, regulations stipulating minimum numbers of years of education, etc., and, in the present case, requirements that dwellings be constructed more safely. These gains would have been registered in any case; they are due, solely, to economic progress, which takes place in spite of such bureaucratic regulations, not because of them. The proof of the pudding? Suppose that the UK banned child labor in the early 17th century. Would the kiddies all been placed in nice schools? Not a bit of it. They would have, instead, starved in droves, because the economy simply was not well enough developed at that time so as to afford this luxury of universal schooling.

One objection to the foregoing is that people, even rich ones, are simply too stupid to insist upon earthquake-protected buildings. If so, then by what magic do they become smart enough to elect politicians who will then turn around and force the populace to do what it refuses to do in the first place? This premise, moreover, must be rejected at the outset. Even ordinary folk are smart enough to purchase fire insurance (if they have a mortgage, and there is even a vestige of free enterprise, their bank will insist upon this). Why, not, then, expect the average man to be willing to pay a bit more for housing with built-in protection against earthquakes, vis-à-vis residences that do not boast of these benefits?

Private insurance, moreover, would not cover geographical areas located in dangerous areas subject to storms, flooding, or lying below sea level (e.g., New Orleans). Or, rather, would charge prices that fully reflect these threats. Government “insurance” in sharp contrast, typically bails out those foolish enough to again and again locate in these areas, as if the phenomenon of moral hazard did not exist. Thus, the state subsidizes irrational geographical location decision-making, unlike private insurance that can be bankrupted if it erred in any such manner.

From Psychology Today, here.