»  Taki's Magazine

April 20th, 2011

  Simplify, Simplify

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Stopped in at my local office-supplies megastore for some printer ink cartridges. Total expenditure: $47.78. Total length of printed receipt: 34½ inches — very nearly a yard.

Most of that yard was a Rebate Redemption Form. Had I taken the trouble to fill this out, I would have received a $10 gift card, time- and SKU-limited. I could have walleted that card with my Rewards Card from the same megastore, my Preferred Customer Card from the local home-improvement outlet, my Health and Savings Card from the local pharmacy, my Sears "Shop Your Way" rewards card, and a couple of other tokens of my certified specialness as an enthusiastic consumer … though in proper due diligence I should first have had to read the eight inches — around 300 words— of Terms and Conditions at the foot of my receipt.

I have foregone my gift card. I know too well that if I'd invested the time and effort into signing up for it, the thing would just have sat forgotten in my wallet until past its expiration date. It's nice of the store to favor me with their bounty, but I more and more long for simple transactions: I'll hand over some money, you hand over stuff.

Having torn off and tossed the bottom 25 inches of that receipt (I need the top part to claim a business expense at tax time: there's a limit to how much clutter-reduction one can accomplish), I am in theory poorer by ten dollars, or ten dollars' worth of the relevant SKU codes, but I don't care. If you want to boil the thing down to behavioral economics, I've paid ten dollars for a little simplicity in my life.

From thence to U.S. Representative Paul Ryan and the House Republican's budget plan. To quote from America's leading magazine of conservative opinion: "People over 55 have spent their working lives in the expectation that the government would fund Medicare at a certain level, and Ryan would keep that implicit promise. People under that age would get a new deal. When they retire, they would be allowed to choose among health-care plans, with the government pitching in to help them make their premiums."

Concerning which, Steve Sailer has articulated some thoughts — thoughts I recall having had in less-finished form at the time of George W. Bush's efforts to reform Social Security back in 2005. Steve:

Let's throw together tax subsidies, incredibly complicated health insurance products, customers who are going senile, and corporations staffed by bright MBAs with spreadsheets. What could possibly go wrong?

I can't think of anything I'd rather spend my declining years doing than engaging in an ongoing battle of wits with MBAs with spreadsheets on their own turf over my health insurance.

There are two yes-no questions here, and they're orthogonal. (I.e. YY, YN, NY, and NN are all possible answers.)

1.  Is Ryan-style privatization of Medicare a good idea?

2.  Is Ryan-style privatization of Medicare a vote-winner?

I'm with Steve in the NN box. The key word in his post is actually "spreadsheets." Specialists have been selling financial products to nonspecialists since the South Sea Bubble and before; but the arrival of desktop computing power this past 30 years has massively swung the vendor-purchaser balance in the vendor's favor, as we saw in the mortgage mess. Conservatives seem not to realize how much this fact has degraded magic-of-the-market arguments all around.

Back in my Wall Street days I used to be responsible for writing credit & risk management code for bright young traders buying and selling complex financial products from/to other bright young traders. On the rare occasions these Masters of the Universe deigned to talk to a back-office geek like myself, I more than once came away from the conversation with the impression that the trader didn't altogether understand his product (which generally had a face value in seven or eight digits).

There was at least some symmetry of incomprehension there, though — both counterparties to the transaction flying by the seat of their pants on adrenaline fuel. The thought of one of those yellow-suspenders types up against Grandpa, who never graduated from high school (a thing much more common in Grandpa's time than now) sends shivers down my spine. And things have gotten much more complicated since I left the number-crunching business. I'm not completely sure I understand my own life insurance policy.

Like, I am sure, most readers of TakiMag, I favor there being as little government in our lives as possible. Outside a few garrisons of collective authority — defense, public safety, currency stability, maintenance of customary social norms — society ought to be able to get along on the basis of free citizens freely engaging in consensual contracts with each other. I'm just having trouble convincing myself that this position is tenable in an age of massive information asymmetry.

Consider the second of those questions above. Given that Medicare spending must be reduced, which of course it must, would American seniors at large prefer it reduced via a Ryan-type voucher system that puts them at the mercy of "bright MBAs with spreadsheets" (and quite likely yellow suspenders), or just bluntly by across-the-board reductions in what Medicare, as currently structured, will pay for? Someone should do a poll, preferably before RyanCare settles in as Republican conventional wisdom. Whoa — "Republican" and "wisdom" both in the same sentence! You don't see that too often.

No doubt the bright MBA could give you fifteen reasons why Rep. Ryan's vouchers, wisely invested, are a better financial deal than a Medicare account and the great sluggish federal bureaucracy behind it. Yeah, well: Probably the clerk who checked out my printer ink could have talked me into filling out that receipt tail, filing my gift card, and posting reminders to myself to use it before expiration date … but it all seems like too much damn trouble. Simplicity's looking good right now, and I bet it'll look even better when I'm eighty. Worth paying money for? Definitely.