Liberal bloggers are taking Greg Mankiw to task for his piece in the New York Times this weekend analysing  some popular–and, according to Greg, partly fallacious–statements about US health-care. Greg argues that superior life-expectancy figures for Canada and other countries are misleading; that the numbers for the US uninsured are in some ways exaggerated; and that the anomalously high cost of US health care may be, in part, a sign of success.

I agree with Greg much more often than I disagree, and his site is one of only three or four where I am careful to read every post, but we part company on this subject. What he says about those three statements is correct, of course, as far as it goes–but as an overall assessment offers little reassurance that all is well, so far as I am concerned.

Even if American health-care is better than Europe’s most successful systems–which is debatable at best–one surely cannot argue that at current outlays it delivers equal value for money. And on the numbers of uninsured, I agree with Dean Baker that one might just as easily argue that the usually cited figure of 47m is understated. First, because it does not capture all those who are uninsured at some point during the year. More important, because it says nothing about the justified anxiety suffered by Americans who worry about losing their coverage in future, when they most need it. I think this last point is crucial to the politics of the whole debate. It is an anxiety that tenured academics doubtless feel less acutely than most others.

Greg says:

Any reform should carefully focus on this group [the uninsured] to avoid disrupting the vast majority for whom the system is working. We do not nationalize an industry simply because a small percentage of the work force is unemployed.

If a good part of that vast majority is troubled by the fear that their coverage may evaporate, the system is not working for them as well as it could. And who any longer proposes nationalising the system? Not the  Democratic presidential candidates. They want to do for the country what Mitt Romney did for Massachusetts: universal coverage based on the existing mostly-private model. Does Greg (one of Romney’s advisers) regret that reform? 

My Monday column for the print FT:

The best course in dealing with Iran is not hard to see. The difficult thing is having to accept that its chances of success are poor. If the US and others do all they sensibly can, Iran will probably acquire nuclear weapons anyway. This prospect, much as one might prefer not to think about it, is terrifying. How can such a policy be right in that case? All one can say is that the alternatives are worse.

The right thing is to increase the diplomatic and economic pressure on the Iranian government, to make the threat of military action if that fails more credible and to offer Iran more attractive exits from the confrontation. The right policy, as the cliché has it, is a bigger stick and more carrots.

(more…)

This is from my latest column for National Journal. The piece does not so much as mention Giuliani’s prostate.

The politics of the issue has moved a long way in the Democrats’ favor. Public opinion has shifted, the polls say, in favor of universal coverage as a goal. Worries over the rising cost and availability of health insurance are a big part of the wider trend of rising economic anxiety. Americans’ desire to see this problem fixed is greater now than it was in the early 1990s, when Hillary Rodham Clinton’s previous health reform proposal was shot down.

At the same time, the Democrats — and, above all, Clinton herself — have radically altered their approach to the issue. Look at the way she pitches her plan on her campaign website. If you are happy with your existing health insurance arrangements, she insists, nothing will change. After the "Hillarycare" fiasco, that reassurance is crucial.

The Democrats’ schemes all envisage an expanded government role — as they must, if universal coverage is to be achieved — but they are not single-payer "socialized medicine" plans. Moreover, that fact is obvious. The Republicans’ insistence that these schemes amount to socialized medicine is implausible and smacks of desperation. The voters are not buying it.

You can read the whole column here.  In two weeks the link will point to a new article, and this piece will disappear behind the NJ’s subscription barrier. One more thing. The column refers to brilliant reporting by NJ’s Marilyn Werber Serafini. Her cover package on all the main candidates’ health-care proposals can be reached through this link, which (I think) does not expire.

Occupied elsewhere on Tuesday night, I watched a recording of the Democrats’ Philadelphia debate, and by the time I got around to it I had already read a lot of the commentary. That may bias my view, but the consensus seems right to me: Hillary made a hash of it. Under real pressure from the other candidates for the first time, the charm slipped. She was tetchy, evasive and most of all uncomfortable. I recall writing of the first debate that the other candidates deferred to her, and that she relaxed into the leadership role. No deference on Tuesday–far from it–and no relaxation either. Once or twice her jaws were clenched so tight I thought something would snap.

Here’s a sample on the issue of driver’s licences for illegal immigrants, though in defence of her stumbling performance in this instance I have to say it was not an easy question.  (Chris Dodd evaded as much as she did, but got away with it. "There are ways of dealing with that." Such as what? Tim Russert took Hillary to task for her equivocation but let Dodd off the hook.)

So who won? Not Obama, though he did get better as the debate went on. His delivery is still hesitant and unconfident. His mannerisms are getting tiresome. He is over-rehearsed: he defaults too obviously and too quickly to grand pre-cooked lines (and improbably lame jokes). Edwards, on this occasion, was the winner, and by some distance. Much less waffle than Obama, far more focused and concise, and much more relaxed than either of the two front-runners. Of course, unlike Clinton, he wasn’t getting stamped on by everybody else.

The question is, when Edwards does well, who does that hurt more, Clinton or Obama? On balance, it may make Clinton even safer for the nomination. Still, if Giuliani was watching, he must have loved every minute. Not many people bother to watch these debates, but this time those who did are finding it easier than before to imagine how Hillary might still screw this up..   

In testimony today to the House budget committee, Peter Orszag, the head of the Congressional Budget Office, makes an interesting point about the fiscal implications of a cap-and-trade regime for carbon emissions. Suppose carbon permits are given away to suppliers and industrial users of energy. The proper way to score them in that event–"a solid case can be made", is how Orszag puts it–would be to count the value of  the permits as both revenues and outlays, as though the beneficiaries had bought the allowances at value and then been handed the money straight back. What difference would that make? None to the budget deficit, or to the price signal for carbon abatement. But it would show a rise in public spending in the form of grants to the companies concerned. That would presumably alter the politics, and for the better.

Thanks to Greg Mankiw for the CBO link. Greg sums the issue up this way, in his "fundamental theorem of carbon taxation":

cap-and-trade = carbon tax + corporate welfare

So those who say a carbon tax is politically impossible are not quite right. If we go to cap-and-trade, we will have one. It will be hidden, and most likely badly designed, but we will have one. That is why an even more solid case can be made for auctioning the permits, rather than giving them away. And the most solid case of all is the one for a straightforward carbon tax.

A third and I pray final post on Rudy Giuliani’s prostate.  David Gratzer, the doctor who provided Giuliani with his disputed numbers on cancer survival rates in the US and Britain–numbers which provoked an assault from Paul Krugman and others, and a characteristically calm and judicious response from this desk–has posted his reply at City Journal (an excellent publication, by the way). He’s not backing down, which I think is a mistake. Nothing he says makes me wish to revise my posts one and two.

My friend Robert Wade censures me in this note (posted with his permission) about my column of a couple of weeks ago on globalisation and inequality.

I hate to spoil your fun as you throw bricks at "critics of globalisation", but some of your empirical statements are open to challenge. You say (repeating the IMF’s International Economic Outlook) that trade barriers inhibit growth and worsen inequality, in rich countries and poor countries. Many independent analysts cannot confirm this finding.

To give just one example,  a study of the whole literature on the relationship between globalisation, poverty and inequality concludes, "any claims regarding growth and poverty, or trade liberalization (even globalisation) and poverty, should be interpreted with extreme caution…. If we achieve no more than to convince readers to interpret cross-country evidence on inequality, growth and poverty with extreme caution and to eschew generalisations based on such evidence, we would be content." (Mbabzi, Morissey, and Milner, 2003, "The fragility of empirical links between inequality, trade liberalization, growth and poverty," in Rolph van der Hoeven and Anthony Shorrocks (eds.) "Perspectives on Growth and Poverty". United Nations Press.)

Likewise, you say that global income inequality in the "one world" sense "is almost certainly falling".  In fact, studies which attempt to measure income distribution among all the world’s people show widely varying results, depending on the  measure of inequality, country sample, time period, and data source. But several careful studies find that inequality increased over their time period, within the past two to three decades.

Your Punch and Judy show–good pro-globalisers against bad anti-globalisers–makes for entertaining reading, but it does not advance the cause of understanding.

My unguarded reaction is that "extreme caution" is a lot to ask of a commentator, but I don’t deny that advancing the cause of  understanding is my larger purpose. Robert sent me galleys of a chapter he has written for the forthcoming second edition of "Global Political Economy" edited by John Ravenhill. Moving with extreme caution, I will read those for his latest thinking on this subject before saying any more.