President Trump wants to impose a 20% tariff on Mexican imports. How many Americans will that kill? Let’s play with some numbers.
The Bureau of Labor Statistics reports (I’m looking at Table 13 in that link) that in 2012, approximately 125 million U.S. households spent an average of $731 on fruits and vegetables. That’s about $91 billion altogether.
I learn from this page that the US imports about $9 billion worth of fresh fruits and vegetables each year from Mexico. That is, then, about 10% of our fruit and vegetable consumption.
I learn from various research reports around the web that the price elasticity of demand for fruits and vegetables is somewhere in the vicinity of .50. (Some say higher, some say lower). This means that a 20% tariff — as the president has just called for — will reduce imports by about 10%.
So the Trump tariff should reduce total U.S. fruit and vegetable consumption by about 10% of 10% — that is, about 1%.
(This is, deliberately, a considerable underestimate, since it entirely ignores the fact that the tariff will also lead to increases in the price of American vegetables, leading to further reduced consumption.)
Now here I learn that low fruit and vegetable consumption is associated with a higher risk of degenerative diseases, including cancer, cardiovascular disease, cataracts and brain dysfunction. “More than 200 studies in the epidemiological literature show, with great consistency, an association between low consumption of fruits and vegetables and high cancer incidence.” Many of the mechanisms for this are well understood. For example, folic acid deficiency leads to chromosome breaks and then to cancer. Your health risks do not drop off continuously with your vegetable consumption; instead there are sudden changes — you’re either above or below the level where chromosome breaks occur. (There are similar issues with at least eight other micronutrients — in addition to folic acid — that we get from fruits and vegetables.) About 10% of the U.S. population is below that critical level. Most of those have very low incomes. (The World Health Organization estimates that worldwide, about 5 million people a year die from inadequate fruit and vegetable consumption, and most of those are very poor.) For a first (very rough) approximation, let’s assume that those with folic acid deficiencies are in fact the poorest 10%. You can see here that these are people with individual incomes below about $10,000.
Of course most Americans’ health will be quite unaffected by a 1% change in their vegetable consumption. But for those who are right on the edge of folic acid deficiency (and other such conditions) — that is, according to our rough calculation, for those with individual incomes around $10,000 — a small change in vegetable intake can mean a great increase in cancer risk.
How many Americans are on that edge? I don’t know, though I’m sure it’s far from zero. I’d love for someone to jump in, improve and enhance my estimates, and help figure out how many Americans will die of cancer in the service of making America great again.
Edited to add: Here is the key number missing from the above: Each daily portion of vegetables reduces overall risk of death (from cancer, heart disease, diabetes, etc.) by about 16%. If we assume that the average American eats about two portions a day, then a 1% reduction is 1/50 of a portion, which should increase death risk by 1/50 of 16%, or about 3/10 of a percent. Three-tenths of 1 percent of the US population is about a million people. That’s a million early deaths.
The peso has dropped by approximately 15% since Trump’s election. So far, the health effect is positive.
Maybe people will just buy fruits and vegetables from other countries? Maybe they will eat less food, and reduce obesity? Maybe it will turn out that those fruits and vegetables are bad for your health?
Maybe the wall will keep out a lot of drug dealers and save lives that way?
This whole calculation seems implausible.
@Roger,
the tariff will very likely cause some small price increase in vegetables within the US.
If you restrict supply, prices increase. That’s what happens.
The only way how it wouldn’t happen is if Trump’s trade policy is so disastrous for Mexico that the Peso either drops substantially more than the aforementioned 20% or the decline in Mexican wages causes an offsetting decline in Mexican production costs (or a combination of both).
It is worth noting that Trump appears to be very serious about changing trade policy, so the potential for serious trade disruption is very real — his rhetoric is not just something he latched onto opportunistically.
I say this because, as the campaign went on, his rally speeches centered more and more on accusations of unfair trade. By contrast, the time he devoted to immigration and the wall declined and was sometimes only an afterthought.
None of this has qualitative relevance to the causative chain:
Higher prices for vegetables > lower demand > DEATH
Steve is quite right about that.
It is true that trade tariffs can be expected to have bad effects overall. There is no reason to measure those bad effects in deaths, although perhaps that can be done.
The same thing is true about the minimum wage: raising it can be expected to bad effects, and it is possible that you can measure those effects in number of deaths. You can certainly measure them in some equivalent of equal disvalue, since a death will be economically equivalent to other effects.
The same is true of any bad policy whatsoever. The post is mainly just a way of expressing dislike of Trump.
(I agree, obviously, that the policy is bad; I am just saying it is bad in the way that any bad policy is bad, not in some super specially awful sense.)
There is a correlation between good health and eating more fruits and vegetable, but I don’t think that it is known that one causes the other. Maybe healthier people just like to eat more fruits and vegetables. That would be consistent with my experience.
Not exactly. You can make a very good empirical case that the minimum wage yields a considerable “free lunch” effect and raises overall utility (primarily because it substantially decreases turnover-related productivity losses).
I don’t see Trump’s protectionism increasing real GDP. The highly unlikely best-case scenario would be that it has positive redistributive effects which yield some kind of utility gain, but really, most likely it’s just going to f*ck things up for everyone.
When politics warp one’s mind sufficiently that one feels compelled to deny the health benefits of eating vegetables, it’s probably a good idea to step back, take a deep breath and try to regain some perspective.
If health risks drop off discontinuously around a critical level, does applying an overall risk factor to the average consumption level provide a good estimate?
The study reference in the last link also concludes that frozen/canned fruit increases your risk of death
Perhaps the demand for fruit and vegetables is more inelastic than you project. Also, I think that you could make an argument about food substitution in this case. Would people simply move to domestic fruit and vegetables when imports aren’t available? And would any other countries move to enter the market in the margin between expected prices and the 20% tariffed goods?
There is also a LOT of food waste in this country between production and sale. The change in supply chains and distribution requirements may provide market opportunity for the “ugly food” movement.
And of course, not that Trump cares, but:
– how many Mexican produce farmers will be unable to pay back their capital loans due to the reduction in profits?
– how many Mexican farm owners and laborers will have to defer basic medical services due to reduced profits and pay?
This does, however, seem like an excellent time to be a produce farmer in a Caribbean state that Trump is not personally fixated on: the Dominican Republic might do pretty well out of this deal, and this might be an excellent time to scout out agricultural investment opportunities in Puerto Rico.
As I understand it, the proposal is not a tariff. It is a proposal to convert the corporate tax from an origin-based income tax to a 20% destination-based cash flow tax. It is not a tariff because imported goods and domestic goods would be taxed at the same rate. It would closely approximate a VAT. It raises extra revenue (to pay for the wall) because the US runs a trade deficit and the tax base is broadened. The wall is a crazy idea but the tax proposal is not.
@Advo: The world is full of ppl with goofy superstitions about what foods are good. Even the recommendations of the highest-status organizations have been shown to be faulty.
Believe what you want, but if tariffs on vegetables kill ppl, why hasn’t anyone ever noticed this effect before? Where is the empirical evidence that the cost of fruits and vegetables has some relation to mortality?
Assuming that vegetables are healthy and have a positive effect on mortality, the rest of that question is a given.
Raising the cost of vegetables will lower the consumption of vegetables, which will have a negative effect on mortality.
I know that weird stuff sometimes happens to demand curves, but I see absolutely no reason why that would be the case here.
So unless you have some kind of reason why the standard demand curve doesn’t apply, I think we should go with the assumption that it does.
Nice. But you behave as if somehow facts and logic matter.
And in the very second sentence you cite the Bureau of Labor Statistics. What? Now you behave as if we can or should believe anything the government says along these lines.
When will you learn that two plus two equals five…
I think then you owe us an analysis of how many lives ending farm subsidies would cost.
This is bad economics. One of the things you (rightly) complain about is people not thinking deeply about economic issues and ignoring second order effects.
There are hundreds of confounding and offsetting factors here. For one, there’d be an offsetting adjustment in the exchange rates. Sure, there’d be inefficiencies created as a result of the tariff (as with any tax), but people dying as a result is a bit of a stretch.
If we care about the health outcomes of people making less than $10K a year, a tariff on mexican agriculture would probably be very low on the priority list.
“I learn from various research reports around the web that the price elasticity of demand for fruits and vegetables is somewhere in the vicinity of .50. (Some say higher, some say lower). This means that a 20% tariff — as the president has just called for — will reduce imports by about 10%.”
I hesitate to confront Steve on microeconomics, so maybe I misunderstand, but surely a 20% tariff will result in a price increase of less (possibly much less) than 20%, and therefore a reduction in consumption of (much) less than 10%. And of course that only applies to those fruits and vegetables that we import, so the overall reduction in consumption will be much less than that.
Of course I agree with the opposition to tariffs (though I haven’t sorted through the point raised by Neil-14).
Upon thinking more about this, I retract my former comment. The cash flow corporate tax proposal would allow all costs of production as a deduction, so the effective tax on domestic goods is small whereas imported goods will be hit by the full 20% border adjustment. This is more like a tariff than a destination VAT.
Back to Steve’s original point, since food consumption is heavily subsidized in the US causing widespread obesity, I am not sure a food tariff wouldn’t save lives.
James Kahn (#20): I assumed that an American tariff can’t much change the price that Mexican farmers receive for their produce, because America is a fairly small fraction of their market. Given this, the full burden of the tariff is felt by American consumers, who see a price increase of fully 20%. I agree that a reasonable person could quarrel with this assumption.
Given that 20% increase in the price of foreign produce, and given that American and foreign vegetables (insofar as they are substitutable) have to sell for the same price, I’d actually expect the price of American produce to rise by the same 20%, yielding a 10% reduction in consumption, which is why I described 1% as a deliberate underestimate.
That only applies in the very short term, until domestic production reacts to the price increase.
The longer-term effect on the price level within the US is determined by two factors:
1. the marginal cost (curve) of vegetable production within the US
2. the cost curve of vegetable production in Mexico
If both curves are very flat, it is possible that you end up with US vegetables completely replacing Mexican imports and a very small price increase.
(Disregarding currency effects and the fact that it’ll be difficult to ramp up US vegetable production if Trump deports half the agricultural labor force)
So, should we subsidize Mexican produce to “save” a million lives?
I can’t decide if this question is serious.
@Advo
I believe if you draw some supply and demand curves you see the quantity demanded is down. I don’t know that this is up for debate.
@Roger
“Maybe the wall will keep out a lot of drug dealers and save lives that way?”
This is a common concern, when it comes to integration, and it is a completely baseless one. In every instance of integration, we only see a net positive effect. The prevailing society sees little to no positive change but among those who would be considered, “would-be criminals” see only net benefits. Yet this baseless and ignorant concern still crops up.
For some of the worst, this common thought is most likely because certain people have a tendency to not think of others as human, in fact they consider some of us as less humane “common criminals”. Or for the less harsh some are completely ignorant, as it does not come to mind, to the poor living conditions these people are submitted to on a daily basis.
People don’t become criminals unless there is an incentive to do so. We are all human looking to do the best we can with what we have been given to us. The argument, “this will stop criminals from entering our society” is baseless. It assumes some people are are angels and some people are demons. We are all human. There is no need for a comically large wall.
@Teddi: You assure me that you are human, but all you have is name-calling and arguments for benefits to would-be criminals.
dave smith (24):
So, should we subsidize Mexican produce to “save” a million lives?
Of course not, any more than we should ban cars to save far more than a million lives. The question “How many lives would policy X save?” is quite separate from “Should we adopt policy X?”.
But of course if a policy (such as a subsidy or a tariff) leads to inefficiency, then it’s interesting to ask what form the inefficiency will take, and that might be useful exercise in terms of getting people to focus on that inefficiency.
@mnalier 25:
I didn’t mean to suggest it was.
Please pardon me if I write stupid things on the topic of trade; since nobody has thought to actually pursue aggressive protectionism in recent, well, decades, this is an issue I haven’t spent so much time on yet.
I suppose if war is god’s way of teaching Americans geography, US politics is his way of forcing everyone to learn economics.
Steve has previously scoffed at looking beyond something like a Kaldor-Hicks analysis to some alleged “real costs” on the grounds the market analysis captures the trade offs. And he posted with approval Scott Adams’s piece on “half an opinion”, which covers similar ground. But the premise of the remark at the end of 28, and of the original post, is a repudiation of that. We can it would seem, for Trump, focus on just the cost, and we can do it emotively.
Hi, Steven:
I have a bone to pick with you, but let me first introduce myself…
I am a big fan of your books; I own and have read Armchair Economist and Fair Play more than once. Both books were also required reading for my now daughter, now 18-years old. I read Armchair when I was first becoming politically/economically aware, and loved it enough to read it at least 4 times over the years. I was voraciously reading von Hayek, Friedman, von Mises, and the modern writers (principally Sowell and Williams) at the same time.
About six years ago, I submitted to this very blog a thought-question concerning Bill Gates being stranded off an island near Japan with nothing but his US-built yacht, and $10 billion in US cash. The question posited a world in which the US was entirely self-sufficient, a world in which not one human being anywhere on Earth, outside the US, was in any way interested in trading anything (good or services) with any American. The question was “Can Bill save himself by purchasing, with his yacht or his $10 billion, a tiny fishing boat from a passing Japanese fisherman?” I thought the answer to the question said something about the real “value” of money, and a great deal about trade and trade “deficits.” Perhaps you remember that exchange I had with you?
We also discussed the question of why sports bettors did not more often bet against their favorite team as a hedge against disappointment.
I say all of that in hopes of demonstrating that I am not merely a critic, on what appears to be my first post on your board.
Now the bone that needs picking…
I detect, very strongly, in your writings and on your board, and in libertarians in general, a passionate belief in the old “Republicans and Democrats are exactly as worthless and stupid, and Trump is not only equally as horrible as Hillary, he is probably a great deal worse.”
First, I must say, I have been anti-Trump for, I believe, twenty years. He first revolted me when I would hear his 30-second radio spots back in the day. These spots came on while I was listening to talk radio, and they almost always centered on how fabulous, wonderful, and sexually superior was Donald Trump. I do not like the man, and find him repugnant. Hillary is, of course, far worse. This can very quickly degenerate into a pointless
“Hillary did this…”
“Oh, yeah! Well Donald did this…”
In order to avoid that, I will focus mostly on general Republican policy vs. general Democrat policy.
While it is certainly true that Republican action does not match Republican rhetoric nearly as often as I’d like, it is also true that Republicans are for lower taxes, regulations, and a smaller government. Democrats want more of all three of those things. I know some people who argue that that is 100% myth and that there is no difference between the two parties, but I’ve never known a Republican governor to enact a rain tax and a flush tax like Martin O’Malley in Maryland. I’ve never known a Republican to vote for Obamacare or promise free college.
Democrats gave us Obamacare. Not one single Republican ever once anywhere at any time voted for Obamacare. Is this a small thing? Do we pretend Democrats and Republicans are the same on this issue?
All Democrats promise to remake the entire US economy to the tune of trillions of dollars and have us living in caves chasing grubs for dinner in order to save the planet from modernity.
Trump does not. Is this a small thing? Do we pretend Democrats and Republicans are the same on this issue?
I know I have heard serious Republicans propose the elimination of the Department of Energy and the Department of Education, among others. I’ve never heard such a thing from a Democrat.
Trump promises massive corporate tax cuts as did Reagan
Hillary promises tax hikes on evil rich people
Trump promises and slashes regulations like crazy
Hillary never would
Trump promises to cut the size of the G, and has already put a hiring freeze in place
Would Hillary or any Democrat do the same?
Hillary promises “debt-free college,” which makes her a deranged lunatic.
In short, Democrats promise gigantic, huge, breathtakingly expensive, federal solutions for every “problem” known to, or possibly imagined, by mankind, and Republicans do not.
Yes, Trump is wrong on free trade, but that just makes him exactly like Hillary, and 99% of all politicians who ever lived, but cutting regs and taxes and not remaking the US economy in order to please Gaia make him a far better choice than Hillary.
Steve,
Suppose you asked a question on an undergrad exam, “Trump proposes a 20% tariff on imports from Mexico. Assess this policy using economics.”
Student A writes verbatim your blog post here, and then concludes, “Because this policy will cause at least 1 million American deaths, it is obvious that it is bad. If President Trump enacts it anyway, he is either dumb or a monster.”
Student B writes a different answer, namely:
“The proposed tariff would greatly reduce the [pre-tax] American demand for Mexican fruits and vegetables. Because the US is such a close market, and because its consumers are so much wealthier than consumers in central or south America, I predict that the market price for fruits and vegetables in Mexico will fall. In effect, Mexican farmers will sell less of their output to American consumers, and more to Mexican consumers.
Now with the tariff, the combined post-tax price will still be higher for American consumers, though not as high as 20%. Consequently many Americans will die as a result of fewer fruits and vegetables in their diets.
However, because fruits and vegetables will be cheaper for Mexican consumers, they will eat more of them. And because Mexicans in general are far closer to the tipping point of a deficiency, on net I think this policy will end up saving lives.
To sum up: I choose to answer this question in the units of “lives.” The cost of the policy is that some Americans will die sooner. But the benefit of the policy is that more Mexicans will live longer. Because the benefits outweigh the costs, it is a good policy and Trump should proceed.”
Steve, am I to understand that you think Student A’s answer deserves more credit, because Student B doesn’t know how to think like an economist?
Nicely done Bob Murphy.
Bob Murphy: I believe that both students are guilty of giving normative answers to positive questions. I also believe that “assess this policy” calls for consideration of many things other than lives, as opposed to what’s called for in, say, a blog post that says upfront that it’s specifically about counting lives.
Hi, Steven:
I tried to post this an hour or so ago, but don’t see it. Was it too long? I’ve shortened it. Anyway…
I detect, very strongly, in your writings and on your board, and in libertarians in general, a passionate belief in the old “Republicans and Democrats are exactly as worthless and stupid, and Trump is not only equally as horrible as Hillary, he is probably a great deal worse.”
First, I must say, I have been anti-Trump for, I believe, TWENTY YEARS. He first revolted me when I would hear his 30-second radio spots back in the day. These spots came on while I was listening to talk radio, and they almost always centered on how fabulous, wonderful, and sexually superior was Donald Trump. I do not like the man, and find him repugnant. Hillary is, of course, far worse. This can VERY quickly degenerate into a pointless
“Hillary did this…”
“Oh, yeah! Well Donald did this…” type of conversation.
In order to avoid that, I will focus mostly on general Republican policy vs. general Democrat policy.
While it is certainly true that Republican action does not always match Republican rhetoric, it is also true that Republicans are for lower taxes, regulations, and a smaller government. Democrats want more of all three of those things. I know some people who argue that that is 100% myth and that there is no difference between the two parties, but I’ve never known a Republican governor to enact a rain tax and a flush tax like Martin O’Malley in Maryland. I’ve never known a Republican to vote for Obamacare or promise free college.
Democrats gave us Obamacare. Not one single Republican ever once anywhere at any time voted for Obamacare. Is this a SMALL thing? Do we pretend Democrats and Republicans are the same on this issue?
ALL Democrats promise to remake the entire US economy to the tune of TRILLIONS of dollars and have us living in caves chasing grubs for dinner in order to save the planet from modernity.
Trump does not. Is this a SMALL thing? Do we pretend Democrats and Republicans are the same on this issue?
I know I have heard serious Republicans propose the elimination of the Department of Energy and the Department of Education, among others. I’ve never heard such a thing from a Democrat.
Trump promises massive corporate tax cuts as did Reagan
Hillary promises tax hikes on evil rich people
Trump promises and slashes regulations like crazy
Hillary never would
Trump promises to cut the size of the G, and has already put a hiring freeze in place
Would Hillary or any Democrat do the same?
Hillary promises “debt-free college,” which makes her a deranged lunatic.
In short, Democrats promise gigantic, huge, breathtakingly expensive, federal solutions for every “problem” known to, or possibly imagined, by mankind, and Republicans do not.
Yes, Trump is wrong on free trade, but that just makes him exactly like Hillary, and 99% of all politicians who ever lived.
OK Steve, I hope you are a sport if I follow-up…
After reading your last answer to me, I think I misunderstood the title of your blog post. Can we fill it in like this?
“How Many Deaths Does It Take Till He Knows That This Blog Post Is Not Evaluating Whether His Tariff Is a Good or Bad Policy?”
Bob Murphy: I am, I hope, always a sport. And always very glad to see you here.
Steve,
OK one more so that if I link to this, I at least get your position correct (while I probably criticize it):
Suppose Steve Moore manages to convince Trump to drop all barriers to imports of agricultural products. In certain regions in Africa and South America, this boosts the domestic price of fruits and vegetables.
Someone does a blog post titled, “How Many Deaths Does It Take Till He Knows…” The post seeks to answer the question, “Just how many Africans will be killed by Trump’s elimination of import barriers?” The conservative answer is at least 1 million Africans who will die in service of making trade free again.
I’m thinking you’d object not merely to the economics, but also the entire tone, of such a post, wouldn’t you?
Bob Murphy:
I’m thinking you’d object not merely to the economics, but also the entire tone, of such a post, wouldn’t you?
I’d have to see the whole post to be sure what I would or would not object to, but I can say this much:
1) I would applaud the back of the envelope calculation, provided it was done thoughtfully (which mine might or might not have been). If Trump eliminates OSHA (which I hope he does), I’m sure some people will die as a result,and I think it would be very interesting to know how many — and even more interesting to see how someone goes about making such an estimate. Likewise, for dropping import restrictions or any of many other policies that are, in my opinion, both desirable and likely to cause a lot of deaths.
2) I’d be happier if the post explicitly pointed out that the cost of those deaths is outweighed by the benefits of the change (be it the elimination of OSHA, the elimination of import barriers, etc), but if that were missing I wouldn’t consider it a dealbreaker.
3) If the change in question were economically undesirable, then of course point 2) becomes moot. I might prefer that the blogger include a caveat that “this is not a full cost-benefit analysis, but perhaps an ingredient thereof”. I’d prefer this especially if the post appeared on a blog where readers need to be told this. I am guessing that doesn’t apply to most of my readers.
There’s a few things wrong with this train of thought.
First of all, you’re basically right. Republicans, as they currently present themselves, have not supported Obamacare, and they’re not in the business of proposing solutions.
The problem with that of course is that solving problems that are not otherwise solvable is precisely the job of government. That is, generally, why people vote politicians into office.
The healthcare/health insurance situation in the US presented/presents such a problem. US healthcare is the most cost-inefficient in the world by a very large margin, in international comparisons among developed nations, it consistently ranks low in overall health outcomes and coverage, but of course highest in cost.
The reason for the problems are well-known to anyone who spends some time educating himself on the various problems of the healthcare/health insurance market: huge information assymmetries, completely opaque markets, free-riding, raisin-picking, externalities, the uncertainty of future cost development etc.
Most dysfunctional markets can be made to work with a relative minimum of regulatory tweaks; this is not the case for the healthcare markets.
If you believe that the right strategy for improving the healthcare/health insurance markets is “to get the government out of it”, or “tort reform”, “healthcare savings accounts”, “insurance competition across state lines”, “high copays and deductibles” or the various other red herrings presented by the current crop of Republicans, then you simply don’t understand the problems these markets face.
The impact of the dysfunctional healthcare markets is huge: compared with other developed nations, the US spends several hundreds of billions of dollars more per year and gets less for it. Without the pre-existing condition prohibition, any freelancer or small-business employer cannot have reliable health insurance. Once he (or one of his employees) develops some kind of expensive long-term problem, the insurance policy will be cancelled or it will become unaffordable.
Pre-Obamacare, the question of health insurance loomed very large in any decisions on employment or self-employment. That’s probably a big reason why entrepreneurship in the US has fallen so drastically over recent decades and why there were so many fewer small businesses than in the more “socialist” countries.
Healthcare pre-Obamacare was a giant problem screaming for a solution.
Obamacare is an attempt at one that greatly improved the situation; if nothing else, consider just how much lower healthcare spending growth and medical inflation has been since the ACA, and that a pre-existing condition (or fear of developing one) is no longer an exclusion criteria for entrepreneurship.
Now the GOP is in the driver seat, and it can have a go at presenting its own – better – solution.
It will not, of course, because it cannot.
Obamacare *IS* the GOP solution. Obamacare is basically Romneycare. With its individual mandate, cross-subsidization, standardized policies and prohibition of pre-existing condition exclusions it is squarely aimed at addressing some of the above-mentioned market problems (free-riding, raisin-picking, some information assymetries).
Obamacare/Romneycare is, generally speaking, what you get when you try to create a functioning market for individual health insurance by addressing the inherent problems of that market, which in a state of nature is necessarily completely dysfunctional.
Obamacare is the solution the GOP would have pursued (did pursue, in Massachusetts) if it was still in the business of solving problems to the benefit of its constituencies.
So yes, you’re right. The GOP is not in the problem-solving business anymore. I suppose that is fine if you think you have reliable health insurance, but you might take into consideration the massive societal and macroeconomic costs of the pre-Obamacare US health care fiasco, and the fact that having large groups of hopeless and angry people will eventually yield highly disastrous election outcomes.
Since you’re advocating this change in policy, how high do you expect the bodycount to be? More generally, why do you think it’s a good idea to abolish it?
@SL:
With regard to the OSHA –
One way of looking at OSHA regulation is that it deals with information problems that are usually impossible or too costly to overcome by the individual actors (businesses and employees).
Any work an employee engages in is connected with some risk of illness or injury (and if it’s only repetitive stress injury).
Historically employers have very, very often failed to analyse and address such risks and employees have generally been unable to assess such risks and make an informed whether to accept them.
Getting rid of the regulator doesn’t make the questions it decides go away.
If the OSHA for example stops regulating the limits of workplace exposure to various chemicals, it’ll now be the job of individual employers and employees to figure out where to set such limits.
Do you suppose that is likely to be an effective or cost-efficient process, in particular at the level of small businesses?
What does historical experience tell you about that?
SL:
“I might prefer that the blogger include a caveat that “this is not a full cost-benefit analysis, but perhaps an ingredient thereof”. I’d prefer this especially if the post appeared on a blog where readers need to be told this. I am guessing that doesn’t apply to most of my readers.”
I am guessing it does, when the topic is Trump.
Addendum regarding OSHA:
I can see a case for abolishing OSHA in so far as the prevention of accidents is concerned. The mechanisms leading to such injuries are generally quite transparent for the employee (stuff falling on your head etc.) and attaching strict liability to the employer for work-related accidents may be sufficient, plus perhaps regulation to require provision of safety equipment (protective goggles, ear plugs).
OSHA is needed, however, for less transparent, long-term hazards such as in particular exposure to chemicals, airborne particles etc.
Steve,
Your comment about OSHA reminded me of your earlier post about McCloskey, so for the record I want to say:
I don’t think the FDA makes drugs inefficiently safe, I don’t think the police keep crime inefficiently low, I don’t think the EPA keeps nature inefficiently pristine, and I don’t think OSHA keeps workplace injuries inefficiently low.
I understand the pedagogical purposes of making a point with each of these issues, but I do want to state for the record that if you actually believe in the real world the above statements, then I think you are giving the State too much credit.
To give a specific illustration, the TSA is expensive (in money and our time) but it certainly is not keeping terrorism inefficiently low. An undercover DHS operation showed the TSA failed 95 percent of the time, across dozens of airports, to catch guns/explosives going through screening.
Bob Murphy – 45: Not sure how you would know those things, but assuming that you are correct, there are at least two possible responses:
1. Give more resources to the FDA, EPA, OSHA, etc. so they can push further in the direction of safer drugs, etc.
2. Reform or shut down the FDA, EPA, OSHA, etc. because they are doing a bad job, and find some other way to get more efficient outcomes.
Your TSA fact is one example that would point to 2. Others include things like biofuel requirements, which apparently have little benefit and high costs; $billions spent on verifying drug efficacy as opposed to safety; and so on.
James Kahn,
Steve presumably understood exactly where I was coming from, but rereading my comment, I see it may have been unclear. I’m 100% in Camp #2 in your options.
I’m saying, not only do the police (to use McCloskey’s park example) have a bigger budget than the analogous private securities would, but there are way more murders and robberies in urban areas than would be in a privatized system. For one thing, drugs wouldn’t be illegal (I predict) in any Western society with privatized police / legal system.
So if McCloskey / Steve actually believe that the government version is giving us an inefficiently low number of murders in city parks, I disagree strongly and think that it’s important for free-market people like McCloskey and Steve to think about.
This may be off topic, but I don’t know that tariffs are what Trump has in mind. Worst case he does (which is insane), but I rather think he plans on using VAT since his trade guru mentions it several times in his policy outline. It this is true a VAT is trade neutral and he is basically just creating a sales tax that looks like a tariff and plays well with his supporters. A VAT looks like a tariff though, and Trump is dumb enough to see no difference.
http://www.heritage.org/research/reports/2005/05/beware-the-value-added-tax
A great impediment to the work of government security forces are things such as “due process” and “constitutional rights”.
I suspect that private security forces would be substantially less encumbered in that regard.
I’m not so sure about that. Would you feel comfortable living (with your family) adjacent to neighbors who have a crack habit?
If the government were to legalize the use of hard drugs, I’m pretty certain that most people would do their best to find private arrangements excluding such behavior in their vicinity.
The attractiveness of gated communities would rise tremendously.
I like this, I like to judge policy dollar against dollar and life year against life year. It can often be done. An example might be: in as much as Homeland security in airports saves x lives from terrorism (assuming that it does) how many years of life are lost because more people drive on trips rather than fly.
“A great impediment to the work of government security forces are things such as “due process” and “constitutional rights”.
I suspect that private security forces would be substantially less encumbered in that regard.”
Nicely put Advo.
Advo-49: They might have other “encumbrances” such as greater vulnerability to criminal charges (Hi, George Zimmerman!), civil suits, and the like, not that police don’t have to deal with that too.
But the other issue with private security forces that might make it less efficient is that they might find it cheaper to push the crime elsewhere rather than reduce it overall. I believe that’s one of the classic arguments for giving the monopoly to the state.
Advo, sounds like you’re in favor of both Obamacare in particular, and socialized medicine in general. I take exception with all that you say, but don’t have time to write essays on the evils of socialism. But… the US healthcare system was the envy of the world before O-care, and rich, sick people came HERE to get well. Period. Secondly, my piece was NOT about debating O-care, but was simply pointing out that next to socialist Hillary, Trump is a golden God, descending from heaven in a flame-spouting chariot.
Actually, it’s more like the rest of the world looked at the US healthcare system and facepalmed.
The US healthcare system used to be held up as a bad example. Whenever healthcare reform was discussed in the developed world, at some point someone would say “we don’t want to end up like the Americans!”, and everyone would agree.
It may be that certain media outlets in the US have given you an inaccurate picture in this regard.
And you think that has changed? Really? Also, the US isn’t exactly the only country with medical tourism.
That aside – contrary to what appears to have become the foundational belief among a large part of the right-wing, how the billionaires make out perhaps shouldn’t be the overriding concern when thinking about policy.
That really depends on who runs the privatized court system, doesn’t it, and what kind of contract you have to sign up for in order to get access to police and court services.
Private police and courts aren’t worth anything unless they are allowed to act with compulsion against parties who violate their rules. This requires some kind of mechanism which subjects unwilling parties to their enforcement.
And so the most likely structure of a libertarian society without a government police force and court system (which would almost classify as a stateless society) is one where homeowner associations or similar organisations assume the role of local governments.
Everyone who enters or wishes to live in the area covered by the homeowner association would have to submit to the jurisdiction of the HOAs police force and court system.
It’s easy to imagine that the standard HOA contract would include some boilerplate that would be rather to the detriment of the citizenry. For example, that the purchaser/entrant/tenant allows HOA emergency workers to access their property, agrees to cooperate with HOA investigations, allows access to their property and papers in the course of an investigation, agrees to abide by the determinations and procedure of the HOA review boards, and agrees to abide by the Terms of Service.
Boom. You’ve just given up all the protections against self-incrimination, against unreasonable search and seizure, of due process and trial by jury, and participation in the legislative process. You actually end up with something more similar to the role of a vassal in a feudalistic society – a Lord (HOA) provides protection to the vassal from criminals, in exchange for tribute and taxes (HOA fees).
You assume that airport security motivates people to drive instead of fly. Are you sure?
I think it’s possible that it would make people really nervous if the invasive screening stopped.
Advo:
I’m sorry your girl hillary lost. Here’s some advice:
1. Get over it
2. Wipe your tears
3. Get a pink vagina hat
4. Leave me alone
@Rick L:
If you wish to be left alone, you should not parade your ignorance in a public forum.
Advo:
I’m sorry your girl hillary lost. Here’s some advice:
1. Stop parading your ignorance
2. Get over it
3. Wipe your tears
4. Get a pink vagina hat
5. Leave me alone
#56. Advo, Security measures deter me from flying. On a simple cost benefit analysis, if I need to allow 3 hours at the airport for security checks it makes the train a lot more attractive. Also, security costs something, and I must pay for that in my ticket, again making the train more attractive.
As you say, it would probably deter me even more if planes kept getting blown up. The proper cost benefit analysis for me as an individual is how many terrorists are really stopped by the security.
I don’t have numbers, but I think the costs outweigh the benefit, and here’s why I think that. Terrorists target plans because it gets much more attention than other targets and the reasons for that are not really rational. See for example the man who put a gun in checked luggage then shot up the baggage reclaim area after he collected it. He could just as easily have shot up the train station, but because it was at an airport there was an uproar about airport security and were the checks doing their job. Much more attention and much more fear for essentially the same costs.
That does not necessarily mean that people would not get more more nervous and stop flying if security were reduced. The cost benefit analysis for me is not the same as the cost benefit analysis for the airlines. They must take into account the irrational fears of the public.
Exactly.
Just consider the reaction to 9-11. Passenger numbers cratered. Completely irrational behavior, of course.
This is something that is useful to keep in mind when considering whether or not relaxing FDA requirements might be a good idea (personally, I think it is, but you want to be careful).
I could imagine, for example, that we could greatly abbreviate the research process and go straight to market, only evaluating safety thoroughly after market introduction.
We might sacrifice 100k people a year to save 200k with the newly introduced medicines.
But the side-effect of such an approach might be that many millions start distrusting ALL pharmaceutical products and you end up with many more deaths due to irrational non-adherence to completely unrelated medication regimes.
Just remember the effect one fraudulent article had on vaccination behavior.
RickL. USA healthcare is not the envy of the world. In WHO rankings it is 37. France is No.1. If anyone is the envy of the world it is France. They have combined up-front charges and freedom of choice with state funding in a way that seems to have worked, which seems to be recognized across the world.
You will not agree with all the factors the WHO uses for its index. Information is here:
http://www.who.int/healthinfo/paper30.pdf
However, your contention was not that the USA system was the best in the world by whatever criteria you want to judge it, but the envy of the world. It is fair to apply criteria that the world is likely to share, even if you don’t.
From a Harris poll:
“Canadians probably know more about the U.S. health care system than people in other countries and, whether or not they are well informed, they certainly do not admire our system. Neither do the British or the French.
People who make statements about what foreigners think (about health care or anything else) might want to check the opinion polls there before they do so. They would learn that the U.S. health care system is not the “envy of the world.” (emphasis mine)
That is pretty clear cut.
Harold:
The US h-care system was the envy of the world.
@Rick:
That Harris poll is from June 2008, before the ACA.
http://www.news-medical.net/news/20090812/US-health-care-system-e2809cenvy-of-the-worlde2809d-not-in-Canada!.aspx
Bob Murphy et al: I think the most basic problem with privatized police is how to resolve disputes between competing agencies (assuming people occasionally venture out of their gated communities). Nozick argued this inherently devolves to the most powerful agency becoming the de facto state, which is why police / justice system was the basis for his minimalist state. Protect and defend really is the first function of government, the reason we would form one in the first instance; doing things we cannot do on our own, not just things we wish people would do (e.g. in a charity state) or whatever strikes us as a nice idea at the time.
Floccina – yes this is economics at its best, at least getting us to consider the unseen trade-offs; I heard a similar argument involving airline travel long before terrorism rose to the forefront, I think it involved how a “silly” rule like requiring people to buy a seat for small children in the name of safety can cause people to drive which is exponentially more dangerous. Personally I don’t give a second’s thought to terrorism when I fly, while cost is a major consideration.
Advo:
The US h-care system was the envy of the world.
Given the contrary evidence presented to you in this thread, do you have any evidence on which you base your conviction?
Advo:
Our h-care system was the envy of the world.
Repeating makes it true.
Indeed
The country rankings of health care have been criticized on a number of grounds: Among other things, the use of longevity, a very crude indicator of health care, as the measure, and giving weight to some measure of equity or fairness. While “fairness” may be laudable, it’s not clear it should be a factor in measuring “efficiency.” Using longevity to measure health care outcomes is kind of like using income or test scores to measure educational quality, without adjusting for other factors. It doesn’t get at the “value added” of medical care. I’m not asserting that the US would come out on top in a better-designed study, I’m just skeptical of the basis of these rankings.
This piece doesn’t talk about the WHO rankings specifically, but makes similar points.
http://www.aei.org/publication/us-health-care-a-reality-check-on-cross-country-comparisons/
@JK
Yes, survival rates and so on are indeed a problem.
The best example is maybe prostate cancer, something which the majority of men will get, eventually, but very, very few will die of, even in the absence of any treatment, because most men will die from something else first.
This has the consequence that a country with an aggressive diagnosis and treatment approach will have much better survival rates than a country with a more conservative approach, even though it’s not necessarily saving any lives (or doing so at enormous cost both in financial terms as well as in terms of loss of quality of life).
What’s unquestionable though is that the US appears to be the only country in the western world where people are pulling out their teeth with pliers and hopping around on a broken foot because they’re scared that a visit to the doctor will bankrupt them.
If you ask people in other countries “If you have a medical emergency, will you be able to get treatment?” the answer will be “yes”.
In the US the answer often will be “only if I’m willing to commit financial suicide”.
This lack of realistic access to medical care for large parts of the population is what tends to drag the US down in many rankings.
Kames Kahn, There are problems with any way to objectively measure healthcare, but to some extent that does not matter to this specific claim that US healthcare was the envy of the world. That is a claim about what people think about USA healthcare and it is pretty clear that the world did not share that opinion in recent time.
” While “fairness” may be laudable, it’s not clear it should be a factor in measuring “efficiency.” ” We were not talking about efficiency, but I think that most people in the world would not claim the USA system was the most efficient.
72 – A broken tooth or foot is not what causes people to go bankrupt. At least if the term bankruptcy is intended to have any significance in terms of the individual / social costs of people forfeiting assets of meaningful value. Just sayin’.
Reluctant to wade into this morass any further other than to say a) to the extent “satisfaction surveys” reflect conditioned expectations they don’t seem to be of much value in cross-country comparisons; and b) I might expect healthcare to be a (the ultimate?) luxury good, particularly innovative / higher-end care, which would seem to confound attempts to compare average costs and quality measures.
Dr. Landsberg said in (28): “But of course if a policy (such as a subsidy or a tariff) leads to inefficiency, then it’s interesting to ask what form the inefficiency will take, and that might be useful exercise in terms of getting people to focus on that inefficiency.”
Then Dr. Murphy said in (32): “However, because fruits and vegetables will be cheaper for Mexican consumers, they will eat more of them. And because Mexicans in general are far closer to the tipping point of a deficiency, on net I think this policy will end up saving lives.”
So, it seems quite possible that free trade in fruits and vegetables between the US and Mexico actually results in a market failure where there is an inefficiency that takes the form of more lives lost to poor nutrition (on net counting lives in both the US and Mexico) than would occur in a regulated market with a 20% tariff on imports of Mexican fruits and vegetables into the US market. Trumps proposed tariff is then actually reducing an inefficiency.
#72. Landbsurg in #22 says that he assumed prices in Mexico are unchanged since USA exports are a small part of Mexican production. He also says reasonable people may argue with that assumption. However, he also says that he makes a very conservative assumption on the effect on USA prices, which for a “back of the envelope” type calculation should more than off-set the assumption of no price decrease in Mexico. I am not saying he is right, but that he probably cannot be accused of suggesting that a 20% tariff would increase efficiency.
Even a minor medical procedure can inflict ruinous cost if you don’t have insurance or if you go to an out-of-network provider.
http://www.nbcnewyork.com/news/local/Hospital-Cost-Emergency-Finger-Injury-17000-Dollars-Bill-Bandage-United-Healthcare-Insurance-Medical-Investigation-360940291.html
And even if it’s just “a few thousand dollars”, that is quite bad if you are among the working poor.
For those of you who think that vegetable reductions kill ppl, see this news:
Maybe someday a paper will tell us how many ppl were killed by this. I am predicting zero.
Advo – 77 –
Not only is it anecdotal, but the story itself doesn’t really support your argument. It’s a story about overcharging an insurer. The patient’s portion of the bill was $1,170, and the hospital is not even likely to go after him for it. So this is not an example of someone going broke from medical treatment.
EMTALA, the law that requires hospitals to treat anyone who walks into an emergency room, is a two-edged sword. It does mean that anyone regardless of means can get emergency treatment at essentially no charge. But at the same time, the hospitals lose money, and consequently you get stories like this, where they try to make up their losses on patients that have insurance.
The other aspect of this case is this: People have to know the terms of their insurance. Don’t go out of network if it is going to cost you a lot of money.
@Bob Murphy,
Let’s assume for the sake of argument that disadvantages of a private police force that Iceman mentions are exactly offset by the advantages that you mention (I don’t see how that’s possible but let’s just pretend). Then there is still a pretty strong case for a public police force. As you probably know public goods such as security will be underfunded due to free-rider effect. So you’d have to make the case that the free-rider reduction in the optimal level is offset by the advantages of a private system.
Using the end of the war on drugs as your justification for thinking that private security forces would be better is also kind of illogical. If the State simply made drugs legal, wouldn’t that negate the benefit you mention? I think it probably politically easier to end the war on drugs, then have the State abolish itself.
SL:
“US imports from Mexico about …. 10% of our fruit and vegetable consumption.
…. the price elasticity of demand for fruits and vegetables
is somewhere in the vicinity of .50. This means that a 20% tariff
will reduce imports by about 10%. So the Trump tariff should reduce
total U.S. fruit and vegetable consumption by about 10% of 10% — that is, about 1%.”
hmmmm…. As noted, Mexico isn’t the sole supplier of guavas and
bananas to USA. Some of the loss will be replaced from elsewhere. What is the price/supply curve for fruit, from suppliers outside Mexico?
It appears your analysis of consequential price is flawed.
SL:
“Fruit and vegetable consumption is associated with a higher risk of degenerative diseases…
More than 200 studies in the epidemiological literature show an
association between low consumption of fruits and vegetables and high
cancer incidence.” …
Your health risks do not drop off continuously with your vegetable consumption; instead there are sudden changes — you’re either above or below the level where chromosome breaks occur. About 10% of the
U.S. population is below that critical level. Most of those have very
low incomes… But for those who are right on the edge of folic acid
deficiency — that is, with individual incomes around $10,000 — a
small change in vegetable intake can mean a great increase in cancer risk.
How many Americans are on that edge? I don’t know, though I’m
sure it’s far from zero. I’d love for someone to jump in, improve and
enhance my estimates, and help figure out how many Americans will die
of cancer in the service of making America great again.”
hmmm… what is the age distribution of those most likely to suffer from cancer, and hence early death, due to diminished diet? And
what is the age distribution of those who will eat fewer greens, in
consequence of making America grate? Getting brussel sprouts down a
child’s gullet entails much more than the market price. I predict
that teens will not be sprouting tumors for lack of sprouts –
You need a future discount rate on value of life, a la the ‘quality
years’ of UK’s health care death panels –
If the tariff is on Mexican imports only (never heard “Brazil will pay for The Wall”) then the fall in imports from Mexico could be partially compensated by a rise in imports from other countries. Possibly even some imports of Mexican produce via other countries (I heard Russia is massively importing seafood and oranges from Belarus, a landlocked northern country). So the increase in prices and the fall in consumption would be smaller. There you go, just saved half a million lives.