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Survivor: Welcome Back to Redemption Island

Written by Daniel Anderson on . Posted in TV

It’s back — the granddaddy of all (network) reality television. And not a week too soon, either. Survivor returns (yes, along with the unfortunate Redemption Island wrinkle), with a brand new group of castaways. Brand new, that is, except for the two returning “heroes” Coach (the self-proclaimed Dragon Slayer) and Ozzy (he of the indomitable immunity challenge record), who are playing for their third time each.

And the show wastes no time pitting the two “heroes” (sorry, I can’t ever actually call them heroes without the quotes — it’s just too ridiculous) against each other in a reward challenge, which Ozzy predictably dominates. At this point, we’re thinking “Oh, poor Coach” since his whole tribe is giving off an undeniable “Ah crud, we’re stuck with Coach” vibe. To make matters worse, Savaii tribe thinks Ozzy is a complete rockstar, blowing off building a shelter in order to just swim and “kick it.” This in turn causes Dawn to flip out and break down emotionally, marking her as early elimination bait.

Roger Federer

Tennis’ Top Gun Moment

Written by Daniel Anderson on . Posted in Sports

There is this fantastic scene in Top Gun, just after the best fighter pilots in the country arrive in Miramar, where Chief Instructor Mike “Viper” Metcalf explains the objective of the Top Gun program. Essentially, with the advent of heat seeking missiles, fighter pilots lost touch with the nuance of flying jets. They let the technology do all the work and, as a result, U.S. fighter pilot records dipped sharply during the Vietnam War (or so says the film). Top Gun was created to train pilots in the art of dog fighting, shifting the emphasis back on individual performance. Success rates (again, according to the movie) radically improved.

Remarkably, men’s professional tennis has gone through a similar transformation. If you’ve never had the chance to YouTube tennis highlights from the early- and mid-1980s, I highly recommend you try it soon. It will startle you how different the game is. Points last two or three strokes — serve, return, volley off the side of the court. Rackets of this era are indistinguishable from badminton rackets, and provide almost no pace to groundstrokes. It’s all about technique — a chess game, or an episode of cat-and-mouse.


The Life and Influence of John Lennon

Written by Daniel Anderson on . Posted in Music

Last week marked 30 years since the passing of music icon John Lennon. At the risk of writing something like a themed paper (probably entitled “What John Lennon’s music means to me”), it would be a big oversight to let this anniversary pass by without some reflection.

I was probably in Fourth Grade the first time I came across some of my dad’s Beatles cassette tapes. It was my first experience with “grown up” music and, like some kid raised on bran flakes who tastes cocoa puffs for the first time, my world was transformed. I was infected with what was surely the best music ever made, and I began absorbing anything and everything I could learn about the band. Even from my modest research as a 10-year-old, Lennon’s unique identity stood apart from the other members of the group.

Paul was the talent, George was mysterious and Ringo was, well, the drummer. But John? John was, to a large extent, what was cool about the Beatles — and we often forget about the transcendent nature of his coolness. It was never very difficult for me to spot a kid with a “Let It Be” t-shirt walking around the halls of Keller High School in suburban north Texas. I expect the case was similar at any high school in the country. Remember, this is not the college scene we’re accustomed to today, where “ironically liking stuff” is hip. This was high school, where liking the right things was life or death. So what does it say about John Lennon when, forty years later, it is still cool to like his band?

Boise State

SPORTS: The Economic Case Against the Irrationality of College Football and the BCS

Written by Daniel Anderson on . Posted in Sports

You’ve taken part in this argument before. It’s everywhere. You can’t avoid it.

A decade ago, it was even somewhat enjoyable. We would analyze the stats like pundits, spout our opinions, and fantasize about the hypothetical. How would one of these non-BCS schools do against the big kids? Do non-BCS schools belong in the championship picture?

Since there exists no playoff in college football (although their basketball counterparts seem to pull it off just fine), fans of the game live and die by this kind of conjecture. This age of parity turns the heat up on these discussions to a full-blown boil. Competently run programs like Utah, TCU and Boise State (and until recently BYU) annually produce quality teams that stir the BCS pot. To complicate things further, the BCS has been around long enough to not only betray its own futility, but also render our arguments pointless.

To illustrate, let’s run through two generic conversations inspired by real life events. I’ve volunteered Jake Welch of PB&J Report fame to participate in these hypothetical conversations with me. Here we go.

Jake: “I think if TCU runs the table and finishes undefeated, they deserve to play for the national title.”

Me: “What about Boise State?”

Jake: “They’ve had a great couple of seasons, but they don’t play any quality opponents. Their schedule is so weak.”

Me: “They beat TCU last season.”

Jake: “True, but I think TCU was a little shell shocked by their first BCS bowl. It’s not like Boise State beat them by a lot, and I think TCU is a better team overall. They’ve beaten Oregon State more soundly than Boise State did this year, plus Boise State looked less than impressive in their last win against San Jose State.” (Side note, just to underscore the subjectivity of these types of arguments: Boise State beat San Jose State by 29 points. That’s more than four touchdowns.)

Me: “Ah. I see.”

Notice that Jake (representing all of us) uses the same logic of transitivity that has become the all-powerful measuring stick of college football rankings. In economics, we use the same logic to figure out which types of goods consumers will buy. Essentially, if a person prefers A over B and B over C, then that person must also prefer A over C. Notice further that Jake also takes into consideration margin of victory of common opponents and “style points” in order to determine which bundle/team was hypothetically preferred/better than the other.

While transitivity is a fine way to determine relatively stable consumer preferences, it turns out it is a really bad way to determine who would win a football game. (If you’re not buying this assertion, please refer the entire 2007-2008 college football season).

Next conversation:

Jake: “I think that if Alabama wins the rest of their games, they should go to the National Championship game over TCU or Boise State, even if either of those teams is undefeated.” 1

Me: “Why is that? Isn’t losing zero games better than losing one?”

Jake: “Well, Alabama plays a much tougher schedule. TCU or Boise State would get shredded in the SEC, or any other power conference.”

Me: “Yeah, but Utah beat Alabama in the Sugar Bowl two seasons ago. And Boise State beat Oklahoma in 2007.”

Jake: “True, but I just don’t think Alabama cared about that game very much, having just lost the SEC title game and their shot at the national championship. They weren’t motivated to play, and after Utah went up big on them, they scored 17 straight points. Obviously they were the better team. And Boise State got lucky that Oklahoma wasn’t ready for their trick plays.”

Me: “Ah. Right.”

Nauseous yet? Some interesting points about this second conversation: First, this is just a minimal example of the conjectural firestorm that went on after both of those BCS bowl victories by Utah and Boise State. It was out of control — small conference fans demanding that their teams get respect and automatic bids; large conference fans playing damage control and diminishing their losses by saying it was bad luck and that the teams they were facing were so pathetic they underestimated them and didn’t try hard.

Second, the logic is entirely wrong. And it’s our friends at the Bowl Championship Series that deserve the blame. Because their subjective ranking system means everything, we (and the computers) must try to figure out who has the best team(s). We have to do this because the match-up in the championship game depends on figuring it out. Hence, the speculation.

But there is a major problem with this. As much as we try, the sport of football is not set up to divine who is the better team based on one single game alone. The sample size is insufficient. We draw a conclusion that Boise State is just as good or better than Oklahoma because they beat them in one game. But in reality, the only conclusion we are allowed to draw from that magical Fiesta Bowl is that Boise State scored more points than Oklahoma did by the time the game ended.

This is like those loudmouths that, the second there is a big snowstorm in April or May, start sarcastically saying “Wow, I guess we’re really going through this whole ‘global warming’ thing after all.” They simply come across as uneducated. Arguing that climate trends can be proven or disproven based on the weather for one day — for even one week or one month or one year — is the acme of foolishness. (The same goes for arguing that a very warm day in December or January means global warming, in fact, exists.)

Yet this is what college football forces us to do week in and week out — and I can’t take it anymore.

Last season, TCU played as perfect a regular season as you could play against as strong a schedule as you could ask for, excepting the SEC schedule. And instead of getting a shot at the national title, they got shafted to play Boise State in the Fiesta Bowl. Then, when they lost, everyone used it as proof that climate change was bogus — that they weren’t a good team after all. Their entire season must have been a fluke since they lost a game.

Using one game to draw valuations and conclusions about teams as a whole is (and this is important) so unbelievably pointless. But we have to. It’s college football. There’s no playoff. It’s unavoidable.

But that’s not entirely true. There is one way to avoid it. Watch football on Sunday.

In the blessed world of professional football, there are no subjective rankings. There are no “style points” and margin of victory analysis. There are no conclusions drawn about one team beating another aside from the winning team simply scored more points than the losing team. Every team has a one-in-four chance of winning their division and making the playoffs — and some are even invited in as a wild card in case they don’t. When the defending champion Saints lost at home to lowly Cleveland two weeks ago, their season was not over. They are still in the race for their division and firmly in control of their own destiny. Compare that with the crushing effects of BYU’s loss to Florida State last year, just two weeks after beating Oklahoma.

In the refreshing land of the NFL, a win is what it was meant to be — a reflection of who was the better team on that day. Not a means of building up your resume in order to make the case that you’re hypothetically better than everyone else, so you can play in a championship game decided by a computer that takes into account whether you beat your opponent by enough points and with enough flash. Being hypothetically better means nothing in the NFL. Just ask the hypothetically better Indianapolis Colts after the clock read all zeroes at last years’ Super Bowl. No one was up in arms claiming the Colts were unmotivated but were still the better team in actuality. All of that conjecture would have been comically pointless.

Yet, in college football, that kind of postulating is what fills much of what we discuss on a daily and weekly basis. It will form the foundation of the discussion this season as we await the computer results regarding whether yet another undefeated team from a small conference deserves to play for the national championship over a one-loss BCS conference team. And no matter what happens, some people will be unhappy and unfulfilled.

For those of us seeking a bit of rationality in our football experience, the NFL provides the objective breath of fresh air.


1At the time of writing, Alabama was still a one-loss team. They have since lost to LSU, making this conversation a little outdated. But it is still an accurate representation of the logic involved in college football debates, so it stayed.

POLITICS: Obama's Not-So-Radical Agenda

Written by Daniel Anderson on . Posted in Politics

Obama's domestic agenda is more about common sense than Fox News would have you believe.

Obama's domestic agenda is more about common sense than Fox News would have you believe.

It seems fitting last year’s monumental presidential election gave way to such monumentally heated debates regarding the direction of our country. No president has inherited an economy in such disarray since Franklin Delano Roosevelt in 1932 and, while President Barack Obama won the election solidly, supposedly with a mandate for change from the American people, he now faces a partisan wall of substantial force keeping him from making good on the promises that got him to the White House. Washington has begun to increasingly resemble not so much government of the people, by the people, for the people as it does government of the monied interest groups, by the monied interest groups, and for the monied interest groups.

Meanwhile, the fledgling Republicans, being about as cooperative as a child forced to eat their vegetables, found new life as they opportunistically began the cries of “socialist,” “communist,” “terrorist,” “school child indoctrinator,” “foreign-born fraud,” etc. After all, this is politics. But what many conservatives (and especially the loud ones) fail to understand is that much of what the Obama administration seeks to do isn’t exactly radical. In fact, their agenda often follows proven historical patterns. Consider the top three domestic economic issues currently on the table:

Health care reform. As Republicans decry the administration’s attempts to reform our nation’s health insurance market, it is helpful to know this is a top policy priority for good reason. America’s health care system (which was created unintentionally as firms tried to sidestep wage restrictions in the 1930s) is unsustainable in every sense of the word. It consumes almost 20 percent of our Gross Domestic Product, with monthly premiums growing five times faster than wages.

Think of it on a micro scale – a husband and father who goes completely bankrupt paying for his chemotherapy treatments (even though he has insurance!) probably doesn’t have spare cash lying around to invest in the economy. Make no mistake: Without serious reform, health care is the next bubble to burst. Trying to fix the economy without handling health care is the definition of futility in action.

Unemployment. Yikes, yikes, and yikes. Unemployment continues to hover around 10 percent. This is beyond bad for the economy, leaving the output gap (how much the country should be producing versus how much it is actually producing) wider and wider by the month. And with the recent crisis finally stabilizing, the last thing businesses want to do is roll the dice by hiring more employees, which isn’t helping matters. A fresh injection of cash into the economy might be just the thing to help push them over the edge and create some new jobs.

Before you start gasping that more stimulus would ruin the country and increase debt, take a minute to think back to the Great Depression. Government fiscal policy did much to mitigate the effects of that crisis to some degree, but it wasn’t until America entered World War II that things turned around for good. Essentially, financing the war became an enormous government expenditure – or a colossal stimulus package. How big? Well, during the war the United States’ debt-to-GDP ratio reached a staggering 100 percent (right now it’s about sixty percent), and to my knowledge we were able to eventually balance the budget without any bouts of hyperinflation. So, when placed in that historical context, conservatives who argue that “the war got us out of the depression, not the government” might unwittingly be arguing for a second round of stimulus.

Financial Reform. After reckless speculating ruined America in the 1930s, the government regulated Wall Street to prevent future crises. Fifty years later, it became en vogue to deregulate the financial sector, and such policies continued through George W. Bush’s presidency. This was such a bad idea. Once the leash was off Wall Street, the reckless (and arguably immoral) behavior took over, leading to bubbles bursting all over the place, and culminating with the real estate bubble vaporizing the housing market and landing us where we are now.

Despite the current crisis before our eyes, conservatives continue to scream about the need for the government to keep their hands off Wall Street. Don’t believe that hype – the Obama administration’s quest to regulate big banks is not a step into socialism so much as it is a return to the way things were pre-1980. Ronald Reagan’s ideology that government is pure evil has had such marvelous staying power that we often forget the way things were before he took office. In the case of Wall Street, the trade off is clear: If we don’t want the government stilting up banks with bailout money, then we can’t let them get so large that their failure causes mass economic chaos reminiscent of the Great Depression – which is where we would have been without the Bush bailout and the Obama stimulus.

Despite these arguments, my guess is the name-calling and labeling will continue as Republicans seek to gain back the ground they lost in 2006 and 2008. However, evidence suggests the current administration is working to make sure there’s one label they can’t be identified with, the worst political and economic label imaginable – “the next Herbert Hoover,” the poster boy for foolishly waiting to see if the markets correct themselves. No matter what Fox News tells you, this isn’t about creeping socialism or some radical agenda; It’s about common sense.

Daniel Anderson is Rhombus’ resident armchair economist. He is not a radical socialist.

MUSIC: Review: John Mayer, "Battle Studies"

Written by Daniel Anderson on . Posted in Music

John Mayer is seriously studying his many battles.

John Mayer is seriously studying his numerous battles, including a particularly nasty one with his hairdo.

Poison gas clouds, a profusion of explosions, people getting assassinated — such is the imagery John Mayer invokes on his latest release, Battle Studies. What could cause these scenes of terror and confusion? The answer appears to be love.

At age 32, Mayer has apparently amassed enough experiences in courting women to corroborate Pat Benatar’s assertion that love is, indeed, a battlefield. And now he has graciously decided to pass the wealth of knowledge he’s gained from studying this battle on to us, his listeners. And so springs forth John Mayer’s first themed album — every track but one (a cover of Cream’s 1968 hit “Crossroads”) is exclusively a love song. Or more appropriately, each is a song about love.

I don’t pretend to be a professional music critic, but I am a colossal fan of John Mayer. This acquaintance with his music leads me to these observations of his latest work:

Battle Studies is not Continuum. Fresh off the John Mayer Trio blues binge, Continuum was principally a guitar rock album, with lyrical content providing the garnish. At first glance, Battle Studies appears to be just the opposite. What remains unclear is exactly which direction away from Continuum Mayer seems to be going musically. At times, Studies feels like the late ’80s, and at others it could easily be featured on Country Music Television. For now, he seems content to displace his label as guitar virtuoso, putting emphasis almost exclusively on lyrical content. Even on “Crossroads,” a blues classic, Mayer resists the urge to flex his guitar muscle, laying down an extremely tame solo partway through. (Instead, he opts to record the song through a bizarre effect pedal, making it sound like the title music to “Contra” for the NES).

Mayer appears to still be concerned with commercial success. Don’t let the extended title to “Half of My Heart” fool you — the song most definitely does not feature Taylor Swift. Unless singing four words over again for a total of ten seconds constitutes “featuring” an artist. What is more likely is that Mayer agreed to “collaborate” because Swift is surging in the music scene with a fan base that actually purchases music. Simply having Swift’s name on the track automatically means a greater volume of record sales. It may be just as well though, since the song sounds like the music video should be set in a high school hallway during class change.

Devoting an entire album to one subject is extremely limiting for Mayer. Especially when that one subject happens to be something he doesn’t have the ability to portray particularly well. His place in the tabloids the past couple years, moving from one superficial relationship to the next, serves to underscore my lack of confidence in his lyrical portrayal of such an “intense battle.” Throw in the fact that he refuses to upstage his lyrics with any sort of innovative guitar work, and the result is an album lacking real depth.

During its best songs, Battle Studies is listenable and above average; during its worst it is repetitive and extremely forgettable. “Waiting room music,” “light FM radio,” “the soundtrack to Disney’s Tarzan featuring Phil Collins,” and “songs that play while pictures of waterfalls shuffle on a computer screen saver” are all solid candidates to finish the phrase “this sounds like…” for much of Studies. Again, this could be deliberate on Mayer’s part to draw the listener into the message of each song. Unfortunately, it can also push people away.

The album finishes with the refreshing slow build of “Friends, Lovers, or Nothing,” which rounds out the small group of tracks that actually sound like John Mayer. The piano ballad serves as an ironic closer for Studies, stressing the impossibilities of being “in between.” The advice is just as applicable in music. With his new album, Mayer sends the message that he wants to be just as renowned for his lyrical ability as his musical ability, and takes a step away from the sure footing of his previous work to do so. But what Mayer wants to do, he doesn’t (at this point) appear to be capable of doing, leaving him short of his desired destination. And against his own advice, “in between” is exactly where Battle Studies has landed him.

Daniel Anderson is Rhombus’ resident armchair economist and an occasional music correspondent.

MUSIC: John Mayer's Gigantic Step Sideways (With a Shuffle Backward)

Written by Daniel Anderson on . Posted in Music

John Mayer

John Mayer

John Mayer’s soon-to-be-released album Battle Studies (out Tuesday) just moved to the top of my most anticipated list. But for not the right reasons. As Rhombus’ illustrious editor can attest, I don’t get into new music easily, so the idea that a new release just became “anticipated” says something significant. In this case, significantly worrying for John Mayer.

To understand my anxiety over Mayer’s new album, it might be helpful to quickly recap his music career as this writer (biasedly) sees it. (Full disclosure: this musical history is going to completely gloss over 2003’s Heavier Things, which, for anyone familiar with the album and especially the ridiculously self-indulgent cover, won’t be that big of a disappointment.)

John Mayer emerged from the Atlanta underground scene with 2001’s Room for Squares, a poppy, extremely breathy, acoustically driven album with hits you’re probably still trying to forget, like “Your Body is a Wonderland” and “City Love.” Despite the low points, the album’s highs showed signs of an artist with immense potential and hinted at the emergence of an entirely unique talent in mainstream music. Can you name another top 40 artist that tunes their low “E” to a “C” and slap-picks an impossibly complicated song like Neon? I couldn’t either.

What most of America didn’t know at this point was that John Mayer grew up idolizing Stevie Ray Vaughan and cut his chops mastering blues scales at the age of 15. My theory is that Mayer could see his dream of revitalizing blues-rock slipping beneath the tide of pre-teen girls screaming for “Your Body is a Wonderlandand felt he had to do something about it. So, in 2005, Mayer pulled what was arguably the music industry’s biggest “eff you” move of the decade — he dumped his band, ditched the sound that made him popular, and went on tour with his new blues-rock group, the John Mayer Trio. A stark contrast to his early work, the Trio played strictly gut-punching blues-rock, and the change came so suddenly that droves of high school girls bought tickets to his shows and left wondering if they had even seen the right band. Although not as commercially successful as his previous efforts, the Trio’s live album Try! rocked sufficiently hard to recast Mayer’s image and showcase him as one of the premier guitar talents today, mainstream or otherwise.

In 2007, Mayer finally married both ends of his musical spectrum with Continuum, which was artistically his best album by almost universal agreement. With a big emphasis on lyrics and songwriting, Continuum was nonetheless bluesy and powered-up in most respects — and even featured a cover of Jimi Hendrix’s “Bold as Love,” which Mayer nails. Crushes it, even. At last, John Mayer seemed to have found his place in the music world.

Now, for the anxiety. Recently I checked out “Who Says?,” the first single from Mayer’s aforementioned forthcoming album. My first impression was that, for an album that should be a big “next step” in Mayer’s musical evolution, this represented a gigantic step sideways with a shuffle backward.  If not for the chorus, this song might be a complete throwaway. Musically, it sounds like leftovers from “Stop This Train” and “Heart of Life.” Lyrically, it seems that Mayer has left his strong suit — straight-laced, self-contained observations — and overextended his philosophical capital. Who says you can’t get stoned, John? Well, nobody. You’re rich and can do whatever you want.

Here are three questions I’m asking myself in anticipation of John Mayer’s studies from this and (presumably) other harrowing battles with which he deals:

First, what message is John sending by releasing this track as his first single? I guess it’s a song about breaking away from the never-ending line of dudes and babes that just want to hang out with him all the time, and saying goodbye to all those long nights partying in cities across the country. Boy, what a battle. Is he saying he’s tired of a life of materialism and superficial relationships, or is it a ploy to gain even more popularity with the masses? You know, the old “act like I don’t care if you like me or not, in order to make you like me even more” thing.

Second, what will the rest of the tracks sound like musically and lyrically? Is the album more of this silly-as-he-tries-to-be-philosophical mush, or will the other songs revert back to electrified rock? After taking nearly a decade to find his groove, Mayer is at a crossroads. With his new album, he can further cement his image as a progressive rock virtuoso for the masses, or he can take himself way too seriously, try way too hard, and implode under his own desire to be culturally relevant. “Who Says?,” our best early indicator, points to the latter of these options, which kills a little part of my soul.

Finally, why is he wearing sunglasses at night in his new music video? If he’s just trying to avoid attention when he’s out on the town with his buddies, that’s one thing. If it happens that he thinks his shades cool enough to wear even when the sun’s not shining, then we know just how out of touch with reality he is — and Battle Studies might just be that wild of a ride. As a gigantic John Mayer fan, I’m choosing to stay on the cautiously optimistic side of the line, but bracing myself for the worst.

Daniel Anderson is an occasional contributor to Rhombus and one of the world’s five biggest John Mayer fans. (Note: these rankings are highly subjective.) Make sure to check back for his review of John Mayer’s Battle Studies in the coming week.

POLITICS: The Malt-O-Meal of Health Insurance

Written by Daniel Anderson on . Posted in Politics

The public option of breakfast cereals.

The "public option" of breakfast cereals.

The Great Health Care Debate has produced enough bantering material over the last few months that it seems pretty trite to write yet another piece on the subject. As health care reform rounds more corners in Congress, though, here is yet another opinion on the matter, specifically the hope that somehow, some way, the public option doesn’t get passed over in the discussion.

It seems as though, in both houses of Congress, leaders of health care reform talks are making the public option a top priority. Rhombus columnist Randal Serr recently wrote a piece about Arizona’s functional public insurance plan that stood, in my mind, as a fascinating precedent for this particular component of reform. Earlier this summer, as health care reform began to get serious attention (attention which, by the way, escalated into a literal blogosphere nightmare riddled with outrageous propaganda), I also wrote a column suggesting a public option might provide the functionality needed to save a severely dysfunctional and unsustainable health care market.

There are two general criticisms of the public option. The first is cost. Recent scores by the non-partisan Congressional Budget Office, however, have put the cost of the most expensive version of the public option in the neighborhood of $871 billion. Or in other words, close to the same amount as the Senate Finance Bill, which included no public option.  This $871 billion proposal is also well below the $900 billion price line set by President Obama in September. Not bad, I would say.

The other (and more legitimate) skepticism of a public option is the belief that the government could run everybody else in the insurance industry out of business by collecting tax revenues, which would allow them to keep their premiums below industry standard. What I’d like to suggest, though, is that facet of the public option is far from the destruction of privatized insurance — and may actually end up being great news for the rest of us. (You know, unless you’re the CEO of CIGNA or Blue Cross and Blue Shield).

While some may scream about the public option representing the government sneaking in through the back door of socialized medicine, it may seem surprising to realize that we actually have some evidence right before our eyes that a public option would not, in fact, lead to the destruction of the private health insurance market. That evidence, my friends, is Malt-O-Meal cereals. Seriously.

The two industries have more in common than you may realize. Consider the fact that, in both cases, the public option and off-brand cereals share some sort of competitive advantage that allows them to charge a lower price than their competitors. Government health care can collect tax revenues to cover cost, while generic cereals pay almost nothing in advertising. They don’t have to — Lucky, Cap’n Crunch and Toucan Sam do all the heavy lifting for them. Then when people saunter down the cereal aisle looking for a magically delicious bowl of Lucky Charms, they see a dog food-sized bag of the comparable Marshmallow Mateys for a fraction of the price. What would you choose? What do you choose? Me too.

But here’s the big secret: Despite this supposed undercut of the market, Post, Kellogg’s and General Mills are still in business. How do we explain this? Well, however we do, we can (with confidence) use the same logic and apply it to the health care industry, since now we see a public option working in Arizona as our functional example.

Essentially, this new competition of off-brand cereals results in three types of purchasing decisions with three distinct types of buyers:

  • First, those people that buy the generic stuff because it is all they can afford. My wife and I, impoverished newlyweds that we are, fall into this category.
  • Second, those who prefer the taste difference in the name-brand cereals and can afford to buy them, so they do (or maybe they feel buying Frosted Mini-Spooners as opposed to Frosted Mini-Wheats is below someone of their societal position — either way).
  • And third, people that could afford to buy name-brand cereals, but are more than satisfied with the generic copy, because they see it as practical to save money for a comparable product, and choose to do so.

What are the results in the cereal industry? The name-brands are forced to lower prices. They can’t quite ever get prices as low as the bagged stuff since they have a different cost structure, but they have to at least stay in the ballpark. Again, this is good for the consumers of name-brands, because they’re now available at a cheaper price. Are profits as large as they were before? Of course not — but in every economic transaction there are winners and losers. If you’re an executive at General Mills, you hate competition from Malt-O-Meal. If you’re one of the hundreds of millions that aren’t said executive (and assuming you eat breakfast cereal), you love Malt-O-Meal.

And this is the fundamental basis of the public option idea. Some will use it for health insurance, because it’s all they can afford. Others will instead be able to pay for the best medical treatment money can buy, and they will. And still others will find the public option’s health coverage perfectly adequate and opt for it, even if they might be able to afford better. Profits will go down and the health industry and pharmaceuticals will lose since they’ll have to lower prices to stay in the ballpark, but millions of Americans would win. As in Arizona, this would prove not to be the demise of insurance companies — they still exist in the state, even after 25 years of a competition from a public option.  Rather, it would become a benefit for citizens looking for solutions to the current, untenable system of privatized health care.

Daniel Anderson is Rhombus’ resident armchair economist. He needs to write more columns comparing public policies to breakfast foods.

POLITICS: The Only Option

Written by Daniel Anderson on . Posted in Politics

There is an argument you’ve probably heard over and over again if you’ve ever discussed politics in the state of Utah: “The government should not get involved with ________. Markets will naturally fix things better than the inefficient government will be able to.” Conservatives frequently employ the same argument as a major reason why the Feds should stay as far away from health care as possible. And they’re wrong. Economically speaking, the health care market is the victim of circumstances that prevent it from acting like other markets.

If you’ve ever seen the bill after a routine check-up, it won’t surprise you that Americans pay more for health care than any other nation on the planet, including a whopping 53% more per capita than Switzerland, the next closest country on the list. Costs are so high precisely because the aforementioned ideal, competition-friendly circumstances simply do not exist in the health care market. Let me explain: In a standard market for a regular good, price is kept in check by the idea that, if the price escalates too high, consumers will either stop buying the product or they will seek it from a different source. In the case of health care provided by private insurers, both key checks on price escalation are absent. Consider for a moment this exaggerated, but telling example:

Let’s pretend that you have health insurance, and you develop an ingrown toenail. As such, you head on over to the family doctor to take care of it. After the quick visit, you go to pay the bill and are taken aback when you see the balance: $4 million. Although startled by the price, you eventually settle down once you remember that your insurance is taking care of it. You pay the $25 co-pay and are on your way. Your insurance gets the bill, and they’re excited because they’re not really paying for it either. They’re a corporation and they cover the cost (and bring in profit) by ramping up your monthly premiums, as well as those of your fellow insurees. At this point, neither you nor your insurance company have directly borne the burden of the $4 million bill, and the hospital is raking in the dough.  In this type of situation, no consumer will stop purchasing insurance (especially with the high cost of medical care) and there’s nowhere else to turn besides insurance companies who are trying to make a buck (the bigger the bill, the bigger the premium, the greater the revenue). Is it any wonder that U.S. health care premiums have risen at five times the pace of wages in recent years?

Here’s the even bigger problem: Uninsured people develop ingrown toenails, too — except the results are much worse.  A recent Harvard study found that 62 percent of declared bankruptcies occurred as a result of unforeseen medical expenses. But don’t think purchasing private health insurance exempts you from such financial hardships: the same study also reported that “78 percent of bankruptcy filers burdened by health care expenses were insured.” (Emphasis added.)

This is really happening every day in our country: average Americans with average incomes become ill and are bled dry by the enormous costs of health care. Don’t these people deserve to receive care without ruining the livelihood of their entire family? Aren’t the health problems bad fortune enough?

The latest proposal from the White House seeks to balance these injustices, in the form of a public option — an affordable, government-run health insurance plan for those who want it. Economically, it provides the competition necessary to reign in the price of health care and is not being imposed on anyone. Those who enjoy the runaround and hassle of a private insurance company are more than free to keep paying overpriced premiums for insufficient coverage.  With a public option, those who cannot afford the “joys” of private insurance will at least have some means to get the treatment they need. Let us be clear: from the perspective of the American citizen who already struggles with outrageous premiums, outlandish insurance company shenanigans and insufficient coverage and care, this needs to happen — quickly.

In addition, and perhaps most importantly, whether you agree with the economic thought or not, a staggering 72 percent of the American public would favor the implementation of such a plan, according to a recent New York Times/CBS News poll. 72 percent. Hardly a slim majority. This makes the outrage currently bellowing from the right side of the aisle seem more than a little misguided. In my estimation, it would be a terrible shame to see our representatives, elected to serve the will and interest of their constituents, ultimately reject a policy that clearly holds the favor of the American people. If helping the millions of Americans constantly affected by the exorbitant costs of health insurance does not provide enough incentive for members of Congress to act quickly and boldly, hopefully the notion of upholding our most basic constitutional principles and ideals will.

Daniel Anderson currently serves as Rhombus’ resident armchair economist. We’re not quite sure what that means, but he seems to have a vague idea of what he’s talking about — and that’s good enough for us.