Don't leave us Newt!

As a Democrat, I of course am rooting for the optimum amount of chaos and confusion in the Republican primary nomination process. Many Democrats believe (rightly I suspect), that Rick Santorum is the more easily defeated candidate in the Republican field, and as such, are rooting for Newt Gingrich to drop out so it can be (essentially) a two-way race between the bat-shit crazy Rick Santorum and the gaffe-prone, flip-flopping plutocrat, Mitt Romney. They believe (somewhat rightly, somewhat wrongly), that Gingrich's removal would consolidate the conservative voting bloc into a Rick Santorum Voltron that could possibly dethrone the presumptive nominee Mitt Romney. The press has embraced this theory as well. As such, the conventional wisdom has emerged that Santorum needs Gingrich to drop out in order to win the nomination. This, in a word, is wrong.

Why is this so wrong? Well, when the media covers presidential races, they like to cover and create stories (narratives), not report mathematical realities. This is why the media pretended that Hillary Clinton could win the Democratic nomination in 2008 WELL WELL WELL after the race was mathematically conclusive. I mean, these people have newspapers to promote, or blogs to pimp, or commercials on shitty cable television shows to sell. Conflict sells. Inevitability does not.

What does the math tell us in this case? Well, Santorum can't win enough delegates to take the nomination outright. Period. Even if Gingrich dropped out, and Santorum gained every single Gingrich voter (a HIGHLY dubious assertion), Santorum could not win enough of the remaining delegates needed to win the nomination. As it stands, Santorum would have to win 69% of the remaining delegates to reach the magical 1,144 needed to secure the nomination. Romney needs to win 48%. Latest polls show that, at a minimum, roughly a quarter of Newt supporters would jump to Romney. Without full-fledged Gingrich supporter backing, there is no logistical way Santorum wins 69% of the remaining delegates.

No, the best route to the nomination for Santorum (his only route to the nomination), is to prevent Romney from receiving 48% of the remaining delegates and then taking it to a brokered convention, where conservatives can finally coalesce around their conservative lunatic of choice. And the best way to prevent Romney from winning 48% of the remaining delegates is to field as many viable candidates as possible - that includes Gingrich and the increasingly irrelevant (though in our scenario, relevant) Ron Paul. [Ironically, critics of Ron Paul have pointed out that Ron Paul appears to be acting in coordination with the Romney campaign, specifically citing Paul's track-record of attacking every single GOP candidate BUT Mitt Romney. In this case though, Paul's remaining in the race clearly hurts the Romney campaign].

Again, as somewhat who enjoys watching Republicans alienate as many voting groups as possible, I want the clown posse to keep the circus on tour. I mean, I know we say Republicans look out for rich, white men, but perhaps we can narrow that down even further. Maybe Santorum will call all rich West coast men dandies. Maybe Ron Paul will accuse all rich Northeastern men of being NAMBLA enablers. Maybe Newt will claim all white factory workers in unions in the Midwest are enthrall to a Jewish cabal. The sky is limit with these people! I say let's cut to the chase and winnow Republican voters down to its critical essence -  rich, white, racist Southerners!

So don't get anywhere Newt! Stick around Paul! The show's just getting started!

Aligning incentives

Economist rock star Brad DeLong writes here about how healthcare companies essentially waste tons of money in the provision of healthcare services, all in the name of "free market efficiencies". Those familiar with the healthcare debate probably already know that approximately 25% of all healthcare costs are administrative - that billions of dollars are wasted in the U.S. healthcare system filing paperwork, contesting coverage, and shuffling responsibilities between different providers and insurance companies. DeLong doesn't offer a lot of new information, though he does cite some important data provided by Blue Cross. Instead, his more substantiative contribution is the insight that vast healthcare spending on adminstrative costs is the theoretical equivalent of lighting money on fire, at least as far as healthcare provision is concerned.

Now God knows I've made my fair share of poor political prognostications. And I will continue to do so! One such prediction, which I even went as far as to lecture my students on several years ago, was that I believed we would have universal healthcare in this country within 10 years because, ultimately, the Walmarts, and the Best Buys, and the Verizons, would realize that they are wasting billions in the healthcare provision business when they could cut their costs substantially, and increase profits radically, if the government took over these responsibilities. Why should Ford be in the healthcare provision business? Why should Exxon? Why should they need to employ an army of human resource employees to navigate our byzantine healthcare insurance system? But companies have not aligned themselves in battle to reform U.S. healthcare, for reasons, to be honest, I still don't fully understand. And given the last healthcare battle, which only marginally expanded healthcare access in this country and in no way whatsoever introduced a "socialization" of healthcare [I suspect 90-95% of both public citizens and elected officials could not accurately define "socialization"], they seem very unlikely to do so. So I seemed destined to blow yet another prediction. Again, I could not say why. I have no idea why doctors oppose healthcare reform - do they really enjoy the administrative headaches associated with filing insurance claims? Do they enjoy paying the extra salaries needed to file all of this paperwork? And what about the larger corporations - those Walmarts and Verizons I mentioned previously? How come they are not on the reform bandwagon? It is to my bewilderment that the Chamber of Commerce opposes federal government reform that would improve the bottom lines of 90% of their member organizations, but there you have it.

DeLong links to an article in the Washington Post which breaks down how our healthcare dollars are spent.  He finds:

The thing to focus on is the $0.13 of every dollar that Blue Shield spends on "administrative costs"--i.e., trying to make sure that they don't pay for sick people.

To which I would add - well, how do we convince the insurance companies themselves that there is real money to be saved and presumably (har, har) passed on to the rest of us by reducing these administrative costs? I mean, why does Blue Cross BlueShield want to spend $0.13 of every dollar on administrative costs? Why does Wellpoint? Clearly there is money to be saved here! Clearly there are opportunities for efficiencies! There is no money to be profited when Unitedhealth tells the Kaiser Foundation, who tells Aetna, who tells the doctors, who tells the pharmacist, who tells the pharmaceutical companies, who tells the X-ray technician, what will be covered and who will be covering it - these inefficiencies are deadweight losses! Isn't there some kind of political agreement to be forged whereby the government and the insurance companies agree to find ways to substantially reduce those 13 cents? Even if only 2 cents goes back to the consumer, and 8 cents goes back to the insurance companies, isn't that a win for all of us. Why can't we bring these groups together? Our interests would appear to be aligned.

I think I know the answers to some of these questions. 1) I think insurance companies (perhaps rightly) suspect that any government sponsored healthcare reform is really a ploy to begin the process of nationalized healthcare provision. This suspicion is probably not too crazy, but the healthcare industry has proven itself powerful enough in the past to grab subsidies and tax credits for themselves without losing too much political and regulatory control. 2) I think this is an ideology question. The Chamber of Commerce in particular has proven itself to be a greater slave to ideology rather than the bottom line. Because if it cared about the bottom line, it would support Democratic candidates. As I've posted previously, and Larry Bartels has demonstrated in "Unequal Democracy", the economy always does better under Democratic administrations, for rich and poor alike. 3) The "masters of the universe", perhaps blinded by ideology, really don't know what's best for themselves. Again, this is perhaps a function of ideology, but CEOs, bankers and Chicago-based economists almost seem to presume that the status quo is at its profit-maximizing optimization point, merely by virtue of being at that point.  Believing in a "perfect market", rational decision-making, and full information, our Randian overlords are not allowed to believe that markets can be inefficient. If Exxon could have made more money, Exxon believes they already would have made more money! The fact that they didn't make more money is evidence, ipso facto, that they are operating at full profitability. Clearly this is delusional thinking, but I don't think it's difficult to find individuals in high-ranking positions that act and believe this way.

I'm not sure how to overcome these barriers. I don't think, believe it or not, they are impossible. However, I do think it will take some kind of grand CEO to be elected president to grant the other financial and political elites the ideological space needed to overcome these biases. What I mean is that eventually we are going to need a "Nixon goes to China" moment. We will need to elect some unimpeachably brilliant CEO President (don't worry, it won't be Mitt Romney) who will come forward (Bloomberg maybe???) and say, "well of course, businesess can save a shitload of money if we reform healthcare. Of course the government and the taxpayers could save a lot of money if we blow up the current system!" Will this happen within my 10 year timeline? Er, probably not. Will it happen in my lifetime? Well, I'm still betting on that...

The triumph of Mitt Romney?

I have to say, the coverage of the Iowa caucuses has been pretty terrible. The conventional wisdom has been [re]emerging that Mitt Romney might just pull off a win in Iowa and then cruise to the nomination. This is because a) Newt appears to be in a free-fall and b) the racist and utterly insane Ron Paul newsletters seem to be undermining his support. Both of these things are probably true. But, trust me, Mitt Romney still won't win Iowa. Why? Because as every single article on the Iowa horserace fails to analyze, Iowa is a god damn caucus state. What does that mean? That means intensity of support is a HUGELY important variable. And Romney's support is not intense at all. The anti-Mormon, anti-Romney intensity is particularly acute when the caucus process is involved. Now, I personally despise the caucus process. It is intimidating, bullying, and anti-democratic. Even I won't stand up in front of a caucus delegation and make the case for my candidate and I have stood in front of 400 students talking about political science. Caucuses suck. But nevertheless, that is the process in Iowa. In a caucus, voter preference matters. And I guarantee you, the people in Iowa that don't like Mitt Romney, really don't like Mitt Romney. They will not rally to his cause once their preferred candidate is eliminated. Instead, they will gravitate to whichever "anti-Romney" candidate emerges within their particular caucus group. So while Romney might poll at 22% (or whatever it is now) in Iowa, it's a soft 22% and it probably won't translate in a strong showing in socially conservative Iowa. Now, this certainly doesn't mean Romney won't win the overall GOP nomination. I mean, McCain got slaughtered in Iowa and he rebounded. I just mean to say Romney will almost certainly lose Iowa and, call me crazy, but I still say Gingrich is the frontrunner there.