Friday Book post: Adapt



So, I finished reading Tim Harford’s excellent Adapt: Why Success Always Starts with Failure.  Basic premise: like nature and evolution you simply cannot plan out the most successful route for things.  Rather, you need to simply allow trial and error to see what succeeds, whether it’s in predators on the African Savannah, on-line search engines, financial innovations, or medicines.  They key, then, is to make failure survivable (and to be able to actually recognize when you’ve failed).  That’s obviously where we really went wrong with our financial system in recent years.  Harford gave a nice TED talk on it not all that long ago:

One of his points, is that government is generally unwilling to experiment, which of course then, leads to sub-optimal outcomes.  Perhaps Harford wrote the book before Obamacare was laid out or maybe he didn’t follow it all that closely, but in terms of a number of pilot programs in Medicare, this is exactly what the affordable care act does.   We don’t know which of these pilot provisions will help Medicare really save big money, but chances are at least one of them will, so we’ll just try a bunch and see what works.  Atul Gawande had a great article about this in The New Yorker a while back (and now that I see the date is from December 2009, I’m going to blame Harford for not at least mentioning this).  Here’s Gawande (it’s a great piece– think about reading the whole thing):

The cost problem, people have come to realize, threatens not just our prosperity but our solvency.

So what does the reform package do about it? Turn to page 621 of the Senate version, the section entitled “Transforming the Health Care Delivery System,” and start reading. Does the bill end medicine’s destructive piecemeal payment system? Does it replace paying for quantity with paying for quality? Does it institute nationwide structural changes that curb costs and raise quality? It does not. Instead, what it offers is . . . pilot programs…

Where we crave sweeping transformation, however, all the current bill offers is those pilot programs, a battery of small-scale experiments. The strategy seems hopelessly inadequate to solve a problem of this magnitude. And yet—here’s the interesting thing—history suggests otherwise…

The history of American agriculture[quite fascinating, but too much to excerpt] suggests that you can have transformation without a master plan, without knowing all the answers up front. Government has a crucial role to play here—not running the system but guiding it, by looking for the best strategies and practices and finding ways to get them adopted, county by county. Transforming health care everywhere starts with transforming it somewhere…

Pick up the Senate health-care bill—yes, all 2,074 pages—and leaf through it. Almost half of it is devoted to programs that would test various ways to curb costs and increase quality. The bill is a hodgepodge. And it should be.

Alright, you get the gist.  Ezra Klein frequently wrote about this aspect of health-care reform, but in general, I think it’s been greatly under-appreciated.  Harford’s book really lets us know what an optimal approach this is.  And, just to wrap up, Harford’s The Undercover Economist is excellent, too.

The government doesn’t cause everything

Ezra on John Boehner’s speech yesterday:

If you listened to Speaker John Boehner’s speech before the D.C. Economic Club today, you heard a very specific story explaining why unemployment is stuck at 9 percent: “it’s not because the American people have lost their way,” he said. “It’s because their government has let them down.” But Boehner never mentioned Wall Street, or foreclosures. There was no talk of consumer debt or weak demand. Nothing about underwater homeowners or European crises. If liberals sometimes go too far in thinking the government can solve every problem, conservatives sometimes go too far in thinking the government causes every problem. And that’s where Boehner went today…

…Boehner is right that the tax code is complex and destructive to growth, though wrong to suggest tax increases should always and everywhere be refused. He is right that some regulations go too far, and there’s a case for loosening the rules when the economy falls into recession. He’s right that we need to bring spending roughly into line with revenues. All of that is important to the country’s future growth.

But he’s wrong to suggest that tax reform, spending cuts or deregulation will solve our problems now. The economy isn’t stuck because the American people have lost their way nor solely because the government has let them down. It is stuck because we are in the middle of a worldwide economic crisis driven, in America at least, by household debt and sustained by weak global and domestic demand.

Roger that.  The actions of the US government simply don’t explain everything (for good or bad) when it comes to the US economy.

Change the damn rules

Surely, the US Senate is the most dysfunctional legislative body of any modern democracy.  Or, if not, that, undoubtedly the one with the dumbest rules.  The idea that one single Senator can hold up legislation that 92 of 100 support makes the term asinine and understatement.  But that’s exactly what we’ve got.   The latest is Tom Coburn holding up the funding for the government agency that keeps air travel safe (dare I say an essential government function):

A partial shutdown of the Federal Aviation Administration was averted right around 6:30 p.m., EST. That’s when the U.S. Senate voted 92-6 in favor of a bill to temporarily extend funding for both the FAA and highway projects.

Sounds like an easy vote, right? Think again.

For the past two days Sen. Tom Coburn (R-OK) had been threatening to block the bill. His concern was with part of the bill that directs a small share of highway funding to beautification projects, bike paths and museums. He says states should be able to choose whether they spend money on those things, or direct all of their federal funds to bridge repairs and highways.

“I will not give a unanimous consent as my right as a senator of the United States for us to continue to spend billions of dollars on things that are not a priority when this country is struggling to survive,” Coburn said on the floor Wednesday night as he explained his intention to block the transportation bill.

He’s certainly entitled to that opinion, but it’s a bit much to think he should be able to hold the views of 99 other Senator hostage to his opinion.  And how could we change this?  Short version: a majority of US Senators simply need to vote to change the utterly absurd Senate rules that allow these shenanigans to go on.  That’s it.  51 Senators vote to change the rules.  But they never do and we’re left with this idiocy that passes for politics.  Obviously, the sad conclusion is that the majority of Senators place more value in the knowledge that they can play the Coburn role from time to time (even if they never actually do) than they place value in the ability of the US Senate to actually get things done for the American people.  Bummer.   Not that it would ever happen, but there’s something to be said for abolishing the Senate.

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