2nd and 5th Amendments

The 5th Amendment to the Constitution does not say what most people think it says. They think that it says that the government can take private property if there is just compensation. Instead, it says that there must be just compensation if the government takes private property. Well, courts have interpreted this to mean that the right to take property, eminent domain, is implied. Otherwise, how else could the government find itself justly compensating for taking property.

The 5th Amendment is as follows with our underlining of relevant parts: “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.^“

While there are several points to be made here regarding due process, public use, and just compensation, I want to focus today on the backwards language and interpretations of the right the government has to take property. Again, the amendment does not explicitly state that the government has the right to take property. That right is implied.

Now let’s turn our attention to the 2nd Amendment. What does it say about militias? Does it explicitly say that citizens have the right to form militias . . . as long as they are well regulated? I don’t think so. But just as the right of eminent domain is implied by the 5th Amendment, the right to form militias is implied by the 2nd. Lets review the 2nd Amendment:

“A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”

Well, it doesn’t explicitly say that the right of the people to form militias shall not be infringed. However, this right is implied by the language of the amendment in the same way as the right of eminent domain is implied by the 5th. That is, the word “militia” is mentioned in such a way as one must reasonably believe that the right to bear arms in a militia implies that militias can exist. Yet, it is reasonable to argue about the meaning of the words “well regulated.” Nevertheless, it is not reasonable to exclude the possibility of militias altogether.

But the government does not like competition. It doesn’t want the private sector to compete directly with the USPS, hence you can’t touch somebody else’s mailbox . . .  unless you work for the USPS. It certainly does not want the private sector to raise militias to compete with the government’s police powers. Nevertheless, the implication is that the 2nd Amendment clearly implies that militias may be formed.

So let me try to define what a “well regulated” militia might be like. It would not do anything unconstitutional such as, for example, violate anybody’s right to life, liberty, or property without due process of law. Could it protect persons’ rights to life, liberty or property if they were deprived of these rights without due process of law? For example, what could a militia reasonably do in the face of property confiscations? I’ll leave these and similar questions unanswered.

Justice Stevens and the 2nd Amendment

Former Justice Stevens would like to rewrite the 2nd Amendment as follows:

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms when serving in the militia shall not be infringed. (The bold text would be added by Stevens.)

This change is preposterous, because it does not consider what comes just before service in a militia (let alone the militia). If and when corporate defense breaks down, there must be arms distributed throughout the population in order for a militia to come into existence.

A corporate defense means a governmental force such as a police force or an army. It is completely reasonable to consider the possibility of these governmental forces breaking down under, say, an EMP attack such as by Iran, North Korea, or China. In recent months, it has become clear that EMP warfare plays an important role in Chinese war fighting doctrine. One EMP weapon in low earth orbit exploded over Kansas would immobilize the continental US (along with southern Canada and northern Mexico). The military and police forces would not be able to move or to communicate. Small, local militias would be the principal hope for retaining remnants of civilization for quite a few months.

It is an extension of this understanding that makes the possession and use of arms necessary for home defense. The ability of citizens to defend their homes with force of arms reflects the fact that the police just can’t be everywhere at all times and that crooks try to be where police are not. The police just aren’t local enough, nor could they ever be, nor would we want them to be. One rather instructive source is The Armed Citizen page in the monthly American Rifleman magazine published by the NRA. Each month there are a half dozen or so reports of cases in which firearms have saved the lives of law abiding citizens. I understand the anecdotal nature of such reports. However, we do not need to rely on anecdotes when there are cities like Chicago that stand out as both murder capitals and bastions of gun regulation.

Decoupling health care insurance from employment

The Democrats are waxing enthusiastic about Obamacare having the effect of decoupling health care insurance from employment. Can you believe it; I share their enthusiasm . . . to a point. Health care insurance was originally linked to employers during WWII as a device to get around wage controls. As workers became more footloose in the intervening years, it became more and more obvious that there was a problem. The lack of portability emerged as the problem with people moving and changing employment more readily.

The Democrats view is that ACA actually reduces the need to work. They like the idea that health care insurance has been decoupled from work . . . a little different than being decoupled from employers. This is apparently true, but I do not share their enthusiasm about this. While we all might prefer to become painters and poets and have others provide for our health care (food, housing, etc.), somebody needs to work.

What made insurance work in the past was employer-based groups. These groups kept people insured even thought they developed an expensive health condition. If we diminish the importance of employer-based insurance, we need to find another way to generate groups. I have previously argued that one sort of group that is possible would be based on states. But then you have the problem of portability raising its ugly head. This can be handled by basing insurance on the state of birth. So regardless of where you live, your insurance would be based on your state of birth. Portability solved. Pre-existing conditions solved.

Republicans should take notice that when it comes time to redo the ACA, we need to consider how new groups are to be formed. Perhaps I have been wrong in pressing for groups to be based on state of birth. Instead, we could couple groups to work. One could do this by utilizing unions and other professional associations to be the groups of choice.

Real Health Care Reform

Please, please read John Cochrane’s editorial regarding health care reform. You might also be interested in my version of health care reform.

The Mystical Power of the Minimum Wage

President Obama would like to see the federal minimum wage to go to $9.00 per hour from $7.25. Representative Pelosi wants $10.10. Senator Warren has spoken of $22.00. What thoughts are behind this movement?

In real terms (that is, adjusted for inflation), the federal minimum wage would be $10.52 today if compared to the period of the highest real minimum wage. Similarly, if you compare the minimum wage to average production worker wage when the minimum wage was highest, then the minimum wage would be $10.01. Finally, if you made the minimum wage track the growth of productivity, then the minimum wage would be $22.00. But what is wrong with all this?

The gain in productivity since over the last 45 years has not been associated with the increase in the ability and skill levels of labor. As a result, increased compensation has had to be directed toward technology and management, the source of productivity gains. But why wouldn’t you want today’s minimum wage to reflect the highest minimum wage found in the past? Well, this might reflect the worst possible situation . . . not the best. That is, the highest minimum wage to date represents the greatest suppression of employment opportunities for the lowest skilled workers.

This brings us to the nearly universal thought among economists. The law of downward sloping demand indicates if you fix wages at a higher level than the market the consequence is that fewer workers are hired. It is unlikely that the government can suspend the law of demand, because it is a natural law . . . and not a governmental statute. So raising the minimum wage results in fewer people who are employed at the low end of skills. Now there may be a few more hired and few more paid more at a somewhat higher level of skill. Hence the reason unions are for higher minimum wages. However, few economists believe that higher minimum wages help the very people that they are intended to help, the workers with the lowest skills.

There appears to be a new/old thought starting to creep into the minds of some left-leaning economists. This idea is that the minimum wage should be considered as a macroeconomic policy . . . forget the microeconomics (the law of downward sloping demand). The idea is that if some workers are paid more then benefits accrue to the entire economy by way of a Keynesian multiplier effect. OMG. Filtering down from the left wing.

It is common for talking heads to observe that the minimum wage is not a living wage. That is, one cannot provide all necessities for a family with a single minimum wage. True enough. But this does not suggest what should be done. For example, is no wage at all superior to the current minimum wage or a market wage? Are workers at the low end of skills required to provide all necessities for a family? Well-to-do young people often live in college dorms with roommates. Shouldn’t poorer people also expect to live with roommates to lower the cost of housing? Even though I worked during college, I lived in a dump with roommates, cooked almost all my own food, and could not buy a new pair of shoes (or any clothing or furniture) during that period. In fact, I gave almost no thought to my own poverty during this period. Of course, my poverty was not sustainable. I could not afford to take care of all the needs of a family let alone myself into the future. My expectation was that when I hit the full time labor market after college I would be equipped to earn a living wage. In fact, I consciously designed my program in college to gain the skills to become employable at a reasonable wage. I am not suggesting that everyone should go to college. Instead, everyone should take the responsibility to live inexpensively while gaining the skills necessary to get a good paying job. On the job training is, in some ways, the very best training there is. Young people lacking skills should try to get any lawful job they can get regardless of whether or not the wage is a living wage. While they are in such a job, they should try to learn as much as possible about the work so as to make themselves indispensable to their employers. This is the solution to the problem of low wages.

Republican Health Care Reform

One of the more important features of Republican proposals for health care reform is providing access to health insurance across state lines. Why? They observe health care insurance costs vary across states. They conclude that if people could buy insurance across state lines then people would buy from low cost states.

Why is it that insurance costs vary across states? There are a couple of answers to this question. First, health care costs vary across states. This is primarily because the legal environment varies across states. This is because the state of tort reform varies across states. So malpractice insurance costs vary across states and defensive medicine varies across states. Second, every state has its own insurance regulations. Well, Obamacare steps on the toes of state insurance commissioners, so it is not impossible for Republicans to do it too.

The big question is how to price insurance sold across states given that states have different legal and regulatory systems. The answer to this big question is that you can’t have 70-30 or 80-20 type plans. That is, you cannot have plans that specify cost sharing or deductibles in terms of percentages. Instead, you can have lists of procedures and the absolute amount the insurance company will pay.

While buying and selling insurance across state lines is a part of my health care reform proposal, my purpose is to create natural groups and not primarily to play off of interstate cost differentials. I would hope that the Republicans could come up with something somewhat more comprehensive, like my proposal.

Future of Post Office Design

Picture a McDonalds or BurgerKing or many other fast food restaurants. There is a drive through facility. Upon entering the driver speaks into the mic giving his code to the attendant and any orders for boxes, stamps, or whatever is needed. Then the driver continues to the window where mail and purchases are handed out. Of course there would be a parking area to handle those who need to drop off or pick up packages. Inside is a “hot spot” as well as several computers where people can access their email.

Where would such an experiment begin? Well, rural delivery could be eliminated and the McDonalds model could be substituted. But it could spread to suburban areas and even to urban areas if the concept proves to be successful. One of the problems with the delivery of packages in urban areas is security. Packages tend to be stolen. This model has the potential of greatly improving security.

What would the back-end of the post office look like? There would have to be a warehouse where the mail is kept in, say, plastic tubs. These tubs would be automatically delivered to the attendant when requested.

Truly Affordable Health Care Service

Today, the doctor provided an examination along with the evaluation of a lump. In this regard, she performed a needle biopsy, put the cells on a slide and examined the slide under a microscope. She then reported the good news: the lump is just a fatty blob under the muscle. We were so relieved. But then we got the bill. The total was $69. I was thrilled with that. I think that our dog, Maggie, was thrilled too . . . well, she was thrilled to get out of there. The vet did a great job and was compensated fairly. So why is it that people can’t get this kind of service?

e currency. . . not bitcoin

Here is an interesting idea. Make an electronic currency that holds its true value in a deflation. To do so, it declines in nominal value. I have no idea whether the opposite happens in an inflation. That is, does it maintain its true value by increasing in nominal value? Other questions include how you measure inflation and the impact on all sorts of contracts: labor contracts, credit contracts, etc.

Health Care Insurance Transition

I have offered my opinions about reform of health care insurance and costs in several other posts on this site. The subject of this post is how we get from here to there. First, where are we now? We are mired in the midst of a failed policy commonly called Obamacare. Where do we want to be? Well, I’ll begin by saying that we want to be outta here. Next, we want insurance that cannot be cancelled, except for nonpayment of premiums. Beyond that, we want insurance that is portable. Finally, we want insurance that is affordable. How can we get from here to there? We need a transitional law that can be sold to Republicans  and some Democrats in the House and the Senate in sufficient numbers to override a presidential veto. That is, we would need 2/3 majorities. This can only be obtained if we retain some of the look and feel of Obamacare while changing a few key elements.

Let’s keep State exchanges, but let’s give State exchanges the power to design the policies that will be offered through their offices. How could this work? They could eliminate the subsidies of one part of the population by another if they should wish. Right now, one of the more obvious subsidies that is currently creating problems is the subsidy by the young of older policyholders. If a State exchange were to allow bids by insurance companies to provide different policies for different ages, then the young might be more willing to join in. Similarly, different policies for men and women might possibly be desirable. Suppose that this would be done only by offering policies that include maternity coverage and those that do not. Regardless of what a State exchange tries to accomplish, it is likely that the menu of available policies would typically increase in comparison to the Obamacare offerings. Initially, it would be reasonable to include the current Obamacare offerings, but one would reasonably assume that these plans would soon die from the lack of use.

I would assume that the State exchanges would not provide for premium differences associated with preexisting conditions. Of course, once individuals are in a State exchange, the whole issue of preexisting conditions would go away, because they cannot be cancelled . . . except for nonpayment.

Let’s allow people who currently live in a State and buy a policy in that State to carry that policy or any policy from that State with them . . . regardless of where they might move in the future. This is not quite what Republicans have in mind by buying policies across state lines, but it has some of that flavor. I would assume that such a policy would require a Federal law, since it interferes with State insurance regulations.

Who would pay for the policies on a State exchange? The policyholder could be the residual payer in most situations, but other parties could pay the share that they wish to pay. For example, if the policyholder is employed, his or her employer could pay. Similarly, his or her relatives could pay. Members of a social group such as a church or a club could pay, and of course, governmental entities could pay. Tax benefits could flow to the various payers: employers or other tax payers.

Should you be able to keep the policy you have if you like it? Sorry, but I’m afraid that this particular bridge may have been burned by Obamacare. It is unlikely that insurance companies would be willing to recreate policies that they have had to cancel. Of course, I cannot be sure about this.

What about mandates? Forget mandates! I would suggest that State exchanges utilize pricing policies to encourage residents to join their exchange. This could take the following form: benfits from a policy through the exchange increase with each year of “membership” until a plateau is reached. So if you join in the first year, you get full benefits immediately. However, if you join in subsequent years, then you have to go through this period of increasing benefits.

What is this going to cost the Federal government . . . or any government for that matter? The answer is that it is going to cost whatever these governmental units decide is appropriate to directly subsidize the policies. The beauty of this transitional policy is that it makes most, but not all, subsidies explicit. It does not make the subsidy to those with preexisting conditions explicit, but many people can agree on that one.

My purpose here is to include elements that Democrats like and elements that Republicans like. My hope is that there are sufficient grounds for a compromise. This is not going to get done without compromise.