Few political dramas arouse more passion than the Patient Protection and Affordable Care Act (ACA) of 2010, a.k.a. Obamacare, and the effort to repeal it. It is easy to get caught up in the political football game of winners and losers. It is also easy to get lost in the minutiae of congressional bills, and the convoluted strategies to overcome the 60 vote threshold normally required for ending debate on the passage of new laws.
Perhaps it might help for a moment to take a few steps back, and look at the big picture.
We should first separate health care itself from health insurance. An economist much smarter than I has described health insurance as a three-legged stool, and I will explain that metaphor later. But we first need to think about why the stool is required to bear so much weight.
Americans spend an annual average of more than $10,000 per person on health care, the most of any major country in the world. It isn’t even close: we spend two-thirds more per person than either Australia or the Netherlands, which are in second and third place. We spend twice as much as Canada, Germany, and France, and almost three times as much per person as Great Britain or Ireland.
Although we have a higher average income than most of these countries, that doesn’t explain how much we spend. The USA spends 17 percent of our GDP on health care, and no other major country comes close. Canada and the countries in the European Union spend around 10 percent, and others spend even less. And this gap is even more striking when you only consider private spending on health care, and exclude what is publicly subsidized by the government. Our private sector spends 9 percent, while in Britain and almost every other major developed economy, the private sector spends only 2-3 percent. We are alone out on our ledge.
The reasons behind the high cost of health care could fill an economics textbook. One issue is the lack of price transparency. In a normal market, buyers know what they will pay and have some idea of what they are buying. In a competitive market, the same good or service would have the same price no matter the buyer or seller. But when we go to the hospital, we have no idea what we will pay, and we are unlikely to see the bill until long after we were treated. Prices vary widely, and the price charged rarely matches what is actually paid. Those without insurance companies to bargain for them are sometimes charged outrageously high prices for even simple services.
We don’t always care about the price, since demand for life-saving treatment can be extremely inelastic. When suffering a heart attack, you want to go to the nearest and best hospital, and don’t even ask how much it will cost (at least not until later, when you get the bill and have another heart attack).
There are many other factors. Medical education is often very expensive, in terms of both tuition and time, and doctors need high incomes just to repay their student loans. Medical schools are also famous for limiting the supply of doctors. We rely heavily on pharmaceuticals, which are protected by patents and often very profitable. Costs are further driven up by the high cost of administration, particularly in managing many different types of insurance and complicated billing practices. The threat of medical malpractice lawsuits can lead to high insurance premiums and defensive medicine, where unnecessary tests are paid for by the patient but are really to protect the provider.
Americans are also expensive to care for. On average, we are much more likely to be sedentary and obese; we drive more and we walk less. Our diet tends towards large portions of mostly-processed foods with ingredients we can’t pronounce. We eat fewer fruits and vegetables, and much more sugar and salt. Our life expectancy is lower than in most other wealthy countries, and not only because we are much more likely to die violently.
So the American stool of health insurance has a lot more weight to bear.
Insurance markets work because most people want to avoid extreme risks, and are willing to pay a premium to avoid the worst outcomes. This adds an extra cost to paying for health care, but when the market works it is worth the reduction in risk. Most people pay in to the system, while a small number are net recipients. The insurance company can pay for fixing your car after an accident, as long as most people don’t have accidents most of the time.
However, if only the people whose homes are likely to burn down buy fire insurance, the market will collapse. If only the people who are likely to cause car accidents buy liability insurance, or if only the people who think they need a doctor buy health insurance, the market will collapse. The insurance company needs a large pool of customers to prevent this.
Insurance companies don’t want to sell insurance to people with higher risk. To prevent that from reducing their profit, insurance companies can charge people with higher risk a premium so high that they opt out, or to put so many conditions in the contract that the company doesn’t have to pay very much out even when the high-risk customer buys a policy.
As a result, a lot of people will go without insurance, either because they don’t choose to buy insurance or the insurance company doesn’t want to sell it to them. What then? The DMV can tell drivers that don’t buy liability insurance that they may not drive on public roads. Banks can tell homeowners who don’t buy fire insurance that they cannot have a mortgage. But what do you say to people who don’t buy health insurance?
When people without health insurance have accidents, or get sick, they can go to the emergency room, which is required to provide at least essential treatment. But there is no free lunch. Not only is the emergency room an expensive way to treat patients, but if the patient can’t pay it then those costs are spread to those who can pay, through even higher prices. With good health care, a little prevention can sometimes go a long way, and be a very good investment. A sicker population is also more likely to spread disease to others, is less productive in the workplace, and is more likely to rely on social services. If they don’t pay for their health care, we all have to bear the cost one way or the other.
If we want people to have health insurance, we need three legs for it to be stable. First, we must require the insurance companies to sell insurance to all, and this means real insurance, not a junk policy that looks like insurance but really covers nothing. Second, we need everybody to buy insurance, whether or not they think they need it now. Third, we need to make it possible for those who can’t afford it to participate in the market, either through price controls or subsidies. If we knock out any one of the legs, the stool begins to wobble.
Most of us get health insurance through our employers. The policy is offered to all employees, all employees are required to participate, and we are subsidized by our employer (with the generous help of our tax system). All three legs are present. Even if the employer subsidy is small, the fact that we draw a paycheck usually means we can afford it. And people with these jobs tend to be healthier on average than people without, so it costs less.
Older Americans account for about 15 percent of the population, and most are eligible for Medicare. This is a second stool in which the government acts as the insurance company. It is a larger share of total medical expenses, since the elderly account for a large share of medical costs, especially in the last year of life.
Medicaid is another government program that works with the states to provide health care to the poor, and many elderly also rely on this if they go into a nursing home or hospice. Some of us receive care from the government in other ways: active duty military personnel and their dependents receive free care directly from military doctors and hospitals, while veterans have access to VA hospitals and services.
Some of us don’t really need insurance. The top 0.1 percent can afford to pay for their medical care, no matter the disease, so they can self-insure and avoid the cost of the middleman. But some of us only think we don’t need insurance. Maybe we exercise and eat right, and we have no family history of illness. This works until it doesn’t, and lightning strikes, we learn we have cancer, or an accident happens. Then we want health insurance but nobody wants to sell us a policy. We go to the emergency room and hope the taxpayers or other patients will pay for our health care.
The Affordable Care Act
For all its faults – and any complicated legislation has faults – the ACA tried to provide a three-legged stool to those without access to employer or government insurance. It required insurance companies to sell real policies to everybody, without pre-existing conditions or similar clauses to avoid payouts, and it regulated how much the prices could vary. It required everybody to have insurance, though the penalty is not easy to enforce (especially when the administration doesn’t want to enforce it). And third, it provided subsidies to those with lower incomes.
A record 6.4 million people currently signed up for health insurance in 2017 through the federal exchanges, but this was still not as many as originally predicted. Not as many employers cut their insurance as predicted, which is a good thing, and the penalty for not having health insurance was low enough to make it worthwhile for another 6.5 million people to go without.
The stool was relatively basic, with a high deductible that meant most people would be paying in, not taking out. Even so, this new stool wasn’t for everybody. Some young adults were covered by an extension of their parents’ employer insurance, at least through age 26. Others with low incomes could be covered by an expansion of the Medicaid program, at least where the states agreed.
Most of the reduction in the number of uninsured came from this expansion of Medicaid. In 2012, before the expansion, 54 million Americans were enrolled. By 2016, this number increased by more than 14 million people in the 30 states which chose to participate, and the expansion included 3.3 million – mostly children – who were already eligible. Many of the newly enrolled appear to have gone without health care for some time, and the backlog of demand for services put strain on many providers.
But 20 states declined to expand Medicaid, leaving an estimated 7 million low-income Americans uncovered. Some joined the federal insurance exchanges, but most just went without a stool to sit on.
Since introduction of the exchanges, premiums have risen significantly in some, particularly in the states where Medicaid was not expanded or there is little competition. Insurance companies underestimated the backlog of untreated patients, and the pool of people paying into insurance is still sicker than it should be, as many in the healthier half of the potentially-insured population are still just paying the penalty and opting out.
Some have argued that the ACA made health care more expensive, and not just because people who had not been treated for years began to visit the doctor. However, this argument confuses health care with health insurance. Spending on health care was already rising fast, rising from 13 percent of GDP in 1995 to 17 percent in 2010, before the law was ever passed. However, this ratio has remained relatively steady since 2010 in spite of the fact that the post-WWII baby boom began to turn 65 in 2011. We are getting older, and our health costs should be expected to rise.
Many have argued that the ACA didn’t do enough to get costs down, and the argument has some merit, though the ACA at least made an effort. It is a huge problem.
Others have made the ideological argument about the proper role of government and the public-private split. Expanding access to Medicaid and subsidizing the purchase of private insurance is not cheap, and (unlike the 2003 expansion of Medicare Part D) the program was not unfunded. This meant new taxes, especially the 3.8 percent surtax on investment income. This tax took the Medicare payroll tax that we already pay on labor income and applied it to capital income. Not surprisingly, wealthy people were not happy about it.
But the Affordable Care Act was always a relatively conservative plan to help more Americans get health insurance. It worked with private insurance companies, private pharmaceutical companies, and private doctors and hospitals. We are the only major country to do it this way. Some countries provide health care directly, such as Great Britain’s National Health Service. Most developed economies – like Canada – have a public single-payer insurance system with private health care, sort of like Medicare and Medicaid for all. Some less-developed countries have no working system at all, and when their citizens get sick, they tend to die. The simple argument that the private sector is virtuous and the public sector is wasteful does not go very far in helping us find a solution.
What do we do now? Is the effort to repeal Obamacare dead, or will it be back in another form? Do we try to go back to the system we had before where more than 40 million Americans lacked health insurance, and where those without insurance tended to be less healthy and die younger, and two-thirds of bankruptcies were due to unpaid medical bills? Do we kick out one or more of the three legs of the insurance stool, and then stand there like Captain Renault in Casablanca, “shocked! shocked!” to find the system collapsing? Do we try to make it work, by firming up all three legs and doing a better job of getting costs down? Or do we push for even more, such as a single-payer option, or even a system in which private insurance companies have to get out of the business of essential health care services? Only time will tell.
Elliott Parker is Professor of Economics at the University of Nevada, Reno. His new book, Nevada’s Great Recession: Looking Back, Moving Forward, with Kate Marshall, is available from the University of Nevada Press.
Dean Heller is dead, one in a series:
If Nevada’s senior senator loses his elected title in 470 days, he has a future as a Cirque du Soleil performer on the Strip. As a political contortionist, he has no peer.
He was for repealing Obamacare with no replacement before he was undecided on repealing Obamacare with no replacement. He was for dumping the Medicaid expansion in the two years before he invoked the Medicaid expansion’s benefits to justify his opposition to a bill repealing Obamacare. He continues to remind his supporters that he fervently wants to dump the Affordable Care Act, just as he did five years ago, even as he remains, according to some, the man who has held up repeal.
It has gotten so bad for Heller that the worst moment of his week was not being publicly threatened by the president of the United States as he sat next to him, laughing nervously and yet uproariously. Instead, the nadir for Heller (so far) came during a brief interview with Axios’ Caitlin Owens that is one of the most painful pieces I have ever read, like watching a slow-motion defenestration, cringing all the way until the final impact.
Heller, as he cements a capital reputation for avoiding the media, probably should have run away from Owens. I still cannot figure out what he was trying to say in the piece headlined, “Dean Heller is keeping his options open on health care.” To wit:
----Asked where he stands, Heller said: "I don't have an answer to that question. I truly don't have an answer to that question, because things are changing so quickly ... And it's not because I'm undecided – all I'm trying to do is get all the information I possibly can before I make a decision." I’m not undecided; I just haven’t made a decision.
----Asked what he would say to a voter who inquired as to what he would support, Heller said: “It just depends on the individual. We'll sit down and talk about what their concerns are, what their problems, then we'll address those specifically." Only possible translation: I would tell the person whatever he or she wanted to hear.
----Asked if Sandoval’s opposition to a straight repeal would be a factor in his decision, Heller said: “Everything's a factor. Everything's a factor." I’m speechless on that one.
This is the word salad of a man suffering from Re-Election Fear Syndrome.
I understand the calculus here: Heller doesn’t want to say much because he – and most everyone else – has no idea what the Senate will vote on next week, if anything at all. Straight repeal? Repeal and replace we have already seen? A new repeal and replace?
And despite his inconsistency and maundering, Heller cannot vote for a measure that guts Medicaid or kicks millions off health care because of what he said at that news conference last month with Gov. Brian Sandoval: “I cannot support a piece of legislation that takes away insurance from tens of millions of Americans and hundreds of thousands of Nevadans.”
Maybe he simply doesn’t want to embarrass the president even though the president humiliated him or embarrass Senate GOP Leader Mitch McConnell even though McConnell served him up for Trump last week.
Maybe it is indeed a smart political strategy to pose as undecided so you are the deciding vote, no matter what Hugh Hewitt says. Maybe he gets what he wants ultimately, maybe Medicaid is preserved to his (or more importantly, Sandoval’s) liking (billions of dollars later) and maybe he looks as effective as, say, Harry Reid.
And maybe the Buffalo Bills will win the Super Bowl next year and I’ll win the main event at the World Series of Poker in 2018.
Heller’s problem is that even if it were brilliant to play this as he has, even if he is committed to voting no on almost any bill next week (I think he is), his record and words undermine all that he is doing now.
His late 2015 vote to repeal Obamacare, a risk-free move because it was sure to be vetoed, stands in stark contrast to what he (and others) are doing now. As Rich Lowry wrote in National Review: “The 2015 law was tougher on the expansion — it simply ended it after two years — and yet all of today’s hand-wringers voted for it.”
At the time, Heller bragged about the bill’s erasure of the so-called Cadillac Tax, but when he was asked about the Medicaid expansion that Sandoval was the first Republican governor to implement, he told the National Journal about the overall bill: “Well, it’s going to be vetoed.”
Even as recently as January, Heller voted for a measure designed to gut Obamacare and lay the groundwork for the vote slated to finally take place next week. He expressed no reservations at the time about Medicaid recipients.
By not explaining why he looks at all of this differently now, besides speaking Hellerese or admitting it’s all about re-election, Heller is vulnerable to charges of being an opportunistic flip-flopper, one that even a Cirque performer would find impressive in his audacity.
I’ve said it before, and it bears repeating: Even though his numbers are awful – reliable polling shows him losing some of the GOP base and hemorrhaging indies – Heller simply does not lose elections. And no one knows what the impact of this issue will be come the June primary or the November 2018 general.
It is hard to forget, though, that Heller really wanted to run for governor until Attorney General Adam Laxalt scared him out and has told people he does not like his DC job. Even if he is keeping his options open on health care, by the time filing opens in March, the only option Heller may have is not to run at all.
If there’s a common thread that runs through our criminal justice system, it’s drug addiction. Without it, my caseload as a prosecutor would probably be one-tenth of what it is now. That isn’t to say that 90 percent of my cases are drug possession – far from it. But when you see people breaking into houses, stabbing their roommates, stealing your identity, or robbing the local fruit smoothie joint at gunpoint, it’s a safe bet they aren’t living a clean and sober lifestyle.
Nonetheless, because the relationship between drug addiction and criminal activity is so obvious, the drugs themselves remain – and should remain – illegal. But are they criminalized correctly?
Last month, I wrote about Nevada’s new Sentencing Commission, a body tasked with reviewing and evaluating whether or not our punishments fit our crimes. Since then, I’ve kept a legal pad in my office at work, jotting down ideas for reform as I encounter various rough edges in our criminal statutes that ought to be sanded out. Reconsidering the penalties for personal drug possession is a great opportunity for the commission to break out some nice sandpaper.
Current law and the problem
NRS 453.336 makes it a Category E felony to unlawfully possess up to four grams of a Schedule I – IV controlled substance. Schedule I drugs include things like cocaine, methamphetamine, and heroin, of course, although the entire list is immense. Various prescription drugs, including opiates like codeine and hydrocodone, as well as common antidepressants, are lower down the scale but still carry the same punishment for unlawful possession.
(Marijuana is also a Schedule I controlled substance, but even before legalization the penalties for personal possession were far different, and didn’t even allow for jail time.)
Category E felonies require a judge to grant probation in most circumstances, and diversion opportunities through drug court and other specialty courts are common. But unsuccessful completion of these programs or a probation violation or two, and you’re still looking at a prison sentence of 1 to 4 years. For perspective, most forgery crimes also carry a potential penalty of 1-4.
In most cases, simple possession cases are pled down to misdemeanors. In my experience, this has become more and more common with the increased availability of misdemeanor specialty treatment court programs operated out of our justice and municipal courts. But sometimes someone wants his day in court, either because “those weren’t my pants!” (a far more common excuse than you would ever think possible if you’ve never been a public defender), or because they have a legitimate defense to their charge. What then?
Like any felony, they’re entitled to a jury trial. Even the simplest jury trial takes several days, and disrupts the lives of a hundred or so random citizens who must report for jury duty. Among those random citizens are an increasingly large number who simply refuse to convict on a drug charge, and all it takes is one juror voting to acquit to prevent a conviction and forcing the case to be dismissed or re-tried.
Jury trials can be a hell of a lot of fun (there’s a reason so many movies and TV shows feature them), but consume an enormous amount of time and resources that can’t be focused on more serious crimes. And even if that addict is convicted, he’s unlikely to spend any significant amount of time in prison – rather, he’s probably going to ordered to seek drug treatment, just as if he would have taken a misdemeanor deal.
In most jurisdictions I’ve seen, the vast majority of prosecutors would prefer to handle cases like this at a lower level, but that isn’t universally true. I once dealt with a particularly obnoxious DA who wanted a felony plea for 1.4 ounces of marijuana, and once heard a (now retired) rural district court judge describe mere drug possession as a crime of “moral turpitude.” Prosecutorial and judicial discretion are important components of a just system, but the difference between a routine misdemeanor plea deal and a felony conviction ought not depend so much on which prosecuting attorney just happens to get your case.
Update the law to match reality
For the sake of fairness and consistency, simple possession of controlled substances should be made misdemeanors, at least for the first several offenses. It’s already common practice, so why not make it official? And for repeat offenders, penalties could increase based on the number of prior convictions for similar offenses.
I don’t agree with the idea that we should simply decriminalize hard drugs. There’s no such thing as casual heroin or meth use, and often the threat of legal consequences is the only thing that will get someone to start seeking an escape from the monkeys on their back. And legalizing a product doesn’t necessarily eliminate black markets, make it more available (right, marijuana distributors?), or make meth affordable enough to make tweakers stop stealing to get it.
But dropping something from a felony to a misdemeanor isn’t “decriminalizing” anything. A misdemeanor still carries up to six months in jail, which is often the amount of time judges suspend over peoples' heads to ensure they follow through with their drug treatment programs. (If six months doesn’t seem like much, imagine spending even one month in a cell, away from your job, your house, your pets, your family…)
Felonies in drug cases should be reserved for dealers and traffickers, or for unusual circumstances such as bringing drugs into schools or jails.
Orrin, this doesn’t sound very conservative of you
First, how dare you! Second, my political philosophy is predicated on the idea that the raw power of government ought to be judiciously wielded, and that public resources ought to be marshaled in a way that maximizes the cost-benefit ratio to society. A belief that government’s mandate is to maximize individual liberty also requires that the interests of justice be served in matching sentences to conduct.
Treating low level drug possession cases as misdemeanors serves all of these purposes, and is a place where people of all philosophical stripes can find a great deal of common ground.
Orrin Johnson has been writing and commenting on Nevada and national politics since 2007. He started with an independent blog, First Principles, and was a regular columnist for the Reno Gazette-Journal from 2015-2016. By day, he is a deputy district attorney for Carson City. His opinions here are his own, and don’t necessarily reflect any official policies or views of the office for which he works. Follow him on Twitter @orrinjohnson, or contact him at firstname.lastname@example.org.
It wasn’t exactly like Clapton going acoustic, but Assistant U.S. Attorney Steven Myhre got the tune just right in his opening statement for the retrial of four men accused of playing gunmen for Bunkerville rancher Cliven Bundy.
Myhre’s spare, understated introduction of the government’s theory of the case to the jury Monday in U.S. District Judge Gloria Navarro’s courtroom was in substantial counterpoint to the first trial, which began with a dramatic narrative and multi-media event that attempted to illustrate the potential for tragedy during a tense court-ordered cattle roundup on April 12, 2014 in a wash located just off Interstate 15 about 90 miles northeast of Las Vegas.
This time was different. He mentioned the fear officers felt, but he focused in clear terms on the crimes the government contends the defendants committed. In a case positively piled high with video, body and vehicle camera footage, media recordings and citizen snapshots of the event in question, it served to remind jurors that basic and easily understood violations of law had been committed by grownups who ought to have known that waving their loaded weapons in the direction of law enforcement officers might have consequences.
In the first trial, however, only two of the six original defendants were convicted. Jurors declined to convict four others in part, I’ve come to believe, because the crush of media images presented as evidence at trial had the impact of cutting both ways for the triers of fact. Although much appeared incriminating, some also showed BLM officers appearing to overreact under pressure and abuse Bundy family members (some of whom recorded the incidents for publication on the Internet and social media.)
Myhre’s opening was a sure sign the government’s approach in the second trial would be different. Judge Navarro’s decision to narrow the evidence frustrated the defense, but also provided a reminder that criminal trials are about the charges in the indictment, not the political beliefs of the accused.
Judge Navarro made it clear the door was closed to a jury nullification defense -- a finding by a trial jury that contradicts the facts and the law sometimes because the law is considered ill-fitting or unjust. In other words, although by the end of this second trial jurors may question the competence of federal law enforcement, doubt the gravity of Bundy’s long battle with the BLM, or even think the land in question ought to be controlled Nevadans instead of the federal government, that doesn’t excuse them from trying the defendants on the charges.
On pro-Bundy websites, the judge is essentially accused of conspiring against the defendants with former U.S. Sen. Harry Reid, whose criticism of the rancher and efforts to create the Gold Butte National Monument outside Bunkerville have been roundly vilified by the right.
There’s a reason, of course. The legend of Cliven Bundy plays well with hard-core conservatives.
Having less than a mountain of evidence in play, while not as dramatic as some would like or as distracting as the defense would hope, will help jurors to focus on the crimes alleged. That, at least, on Monday appeared to be the prosecution’s emerging strategy.
The prosecution also emphasized the defendants’ affinity for the right-wing militia movement. Myhre informed jurors that the defendants responded to a call to arms from “Operation Mutual Aid” organizer Ryan Payne and members of the Bundy family to come to protect their lives and property. Right-wing media sites such as Alex Jones’ Infowars contributed to the sense of panic in the West. The Bundy family’s own social propaganda videos fueled interest. By their own admission, that led heavily armed militia-associated supporters to travel to the Bundy Ranch, where many wound up participating in the standoff, not with signs or banners, but with semi-automatic rifles. They stalked and pointed weapons at federal law enforcement officers as they attempted to stand their ground.
In interviews after April 12, the self-styled minutemen bragged that they were on the scene in Nevada to help protect Bundy family and the crowd. They failed to acknowledge that the presence of hundreds of unarmed protesters and approximately 40 riders on horseback provided them with cover that April day.
With less to work with, defense attorneys figure to have a much more difficult duty this time portraying their clients as outraged citizens exercising their Constitutional rights. While that fact may be true, it doesn’t excuse pointing loaded rifles at federal officers.
It became absolutely clear in the first trial that the biggest reason the court-ordered cattle impoundment was called off was the fact law enforcement learned that the Payne-Bundy call-to-arms was drawing dozens of armed men to the protest. The potential for violence was too great, and the poorly coordinated roundup was called off.
For those of you still befuddled by the hot air and prattling about the Constitution, remember first that Bundy’s refusal to pay his grazing fees dragged through the system for two decades. By the time of the showdown outside Bunkerville, the BLM was carrying out two court orders. Contrary to a lot of armchair constitutional scholars, its employees weren’t overstepping their ground; they were standing in the middle of their jurisdiction.
Add Bundy’s absurd demand that then-Clark County Sheriff Doug Gillespie order his Metro officers in one hour to disarm federal officers, stack their guns in a pile on the makeshift stage at “Camp Liberty,” and bulldoze the entrance booths to national parks and recreation areas in the region, and it puts the armed participation of the defendants in another light: a light of extremism. Dressing it in a hat and boots and waving a copy of the Constitution doesn’t change that.
After the standoff, supporters of the rancher hung a banner boasting, “The West Has Now Been Won.” But that wasn’t true, either.
Fanned largely by right-wing media and those who would ultimately benefit from the large-scale deregulation and privatization of public lands, a lot about Bundy and the standoff has morphed into legend.
Expect the retrial of his volunteer gunmen to provide a reality check.
John L. Smith is a longtime Las Vegas journalist and author. Contact him at email@example.com. On Twitter: @jlnevadasmith.
by Chris Schidle
Some people would have you believe that the fight over net neutrality is about over-regulation and stifling innovation. Unless you consider "more ads" an innovation, this couldn't be further from the truth.
Understanding the goals of ISPs
To understand this point, it helps to know some facts about America's big ISPs (Internet Service Providers):
- Last year Charter bought Time Warner Cable.
- Three companies (Comcast, Charter, and Cox) now control about 75% of high-speed internet connections in the U.S.
- These companies spend significant amounts on lobbying and try to hide it.
- ISP lobbyists praised FCC Chairman Ajit Pai when he was appointed to the position.
- Pai has already rolled back numerous consumer-friendly regulations affecting broadband services and customer privacy rights.
- These ISPs want to compete with Facebook and Google in the advertising space.
- Congress has already overturned privacy protections to allow them to do just that.
- The final step is reclassifying ISPs and overturning Title II's nondiscrimination protections, which the FCC will almost certainly do.
What is net neutrality again?
If you are still unsure about what net neutrality means, the Electronic Frontier Foundation provides an excellent and concise primer. To quote it:
Network neutrality—the idea that Internet service providers (ISPs) should treat all data that travels over their networks fairly, without improper discrimination in favor of particular apps, sites or services—is a principle that must be upheld to protect the future of our open Internet.
At the core of net neutrality are rules against blocking, throttling, and paid prioritization of online content or services. This means that News Corp. (which is one of the six big companies that control 90% of U.S. media) can't pay for a fast lane for Fox News while visitors to The Nevada Independent are stuck in the slow lane, staring at a loading screen.
Why classification matters
The debate over net neutrality revolves around whether ISPs should be classified as "telecommunications" or "information" services. The Electronic Frontier Foundation explains the difference:
Under the Telecommunications Act of 1996, a service can be either a “telecommunications service,” like telephone service, that lets the subscriber choose the content they receive and send without interference from the service provider, or it can be an “information service,” like cable television or the old Prodigy service, that curates and selects what content channels will be available to subscribers.
I don't know about you, but I sure as hell don't want my ISP curating any content for me. This definition of an "information service" conflicts entirely with the idea of having access to a free and open internet.
I would argue that the "telecommunications service" definition still holds up quite well today, despite being over 20 years old. You can think of it this way: ISPs provide the "pipes" for all of your internet data, and you pay to access them. That's it. They are forbidden from altering or "curating" the contents of the pipes (thanks to Title II protections). This is essentially what net neutrality guarantees.
But net neutrality can only be enforced if ISPs fall under the "telecommunications service" definition, because those services are governed by Title II of the Communications Act of 1934. Sure, this act was written a long time ago, but it holds up just fine as it simply states that ISPs can't discriminate via their charges, practices, or services.
All I expect from my ISP is to bring the internet—the full and open internet—into my home. I don't need curated content. I don't need my internet access filtered down, or chopped up into "light", "standard", and "premium" access. And I certainly don't need any more ads.
What you can do
The FCC is currently taking public comments on a draft proposal that it has the audacity to call "Restoring Internet Freedom". The public comment system has been plagued by attacks, controversy, and email address leaks. Still, this is the best way to make your voice heard. I recommend using the EFF's Dear FCC tool to simplify the process.
Chris Schidle is a freelance developer in Las Vegas building ethical software for the web. He occasionally writes on his blog.
“State of Emergency?! Because you ran out of WEED? Ha, ha!” So went the text from an old (non-Nevadan) buddy of mine earlier this week, after seeing our state become the butt of some less-than-flattering national news coverage.
Hey – remember when people said legalizing it would rid us of black markets? Ha, ha!
This shouldn’t be hard. There’s nothing new or novel about growing a crop, processing the harvest for market in some way, and making it available to consumers for sale. I mean, I know we don’t have that many farms in this desert state, but still. Agriculture is sort of human civilization’s thing, after all, at least originally.
The only difference between marijuana and any other crop is that it’s an intoxicant. OK, fair enough. We want some additional regulatory safeguards so kids aren’t buying it at the Mini-Mart along with gummi worms and MAD magazines. But we already do that (more or less) with booze, porn, cigarettes, guns, slot machines, and even spray paint. So that requirement shouldn’t be a show stopper, either.
Nonetheless, after gangbuster sales the first week, retailers were running out of product. Why? Because we decided to add all sorts of unnecessary regulatory layers to our marijuana production-distribution-sales loop.
I say “we” very deliberately, because this wasn’t some secret legislative back-room deal in Carson City. It was all of us, together. Well, those members of our citizenry who voted for Ballot Measure Question 2, most of whom never bothered reading the fine print.
(This reminds us of two things: One, that ballot initiatives are a foolish way to implement public policy, especially on complex regulatory issues, and two, that people super eager to get their hands on weed ought not be counted upon to pay attention to fine print.)
Not to worry, though. The answer to an excess of regulations is… emergency regulations!!!
The proposed regulation would create a structure for the taxation department to determine whether there are an insufficient number of liquor distributors to serve the market based on factors such as historical demand for marijuana and operational needs of dispensaries including 24-hour deliveries. That could pave the way for marijuana businesses to enter.
Vagueness in state regulations on how to make that determination of insufficiency was one of the flaws cited by the judge who ordered the injunction.
Do you know who is really good at determining how many businesses are necessary to meet consumer demand? Consumers and businesses.
Too few retailers/producers/distributors? Green-thumbed entrepreneurs are (or should be) free to profit from that demand. Too many sellers? The “excess” businesses will improve, find new markets, or fold – and no regulatory body has to lift a finger. A person who grows weed also wants to distribute and sell as much as she can? The government has no reason to care one way or the other, as long as the taxes flow into the state coffers.
And guess what? Due to the status quo, those taxes we didn’t have last month but are now utterly and irrevocably dependent upon are now no longer freely flowing. Another all-too predictable “success” for central economic planning by the government.
I’ve said it many times in this space, and I’ll say it again – the only purpose of this body of pot distribution law is to prop up a corrupt system wherein a tiny number of well-connected businesses who could never survive in a free market get statutory protection against legitimate and almost certainly superior competition. I mean, the first (and one of only two) liquor distributor who has gotten a license to date is called “Crooked Wines”.
Given the protectionist and fundamentally unfair nature of the entire “booze distributors get first crack at marijuana profits” thing, one could almost be forgiven for thinking that name has some hidden layers of meaning…
And then, of course, comes the news that Faraday Future won’t be building a factory in southern Nevada after all, after a special legislative session pledged millions of dollars to that company to get them here. Fortunately, according to state officials, the deal was structured such that we wouldn't technically lose any taxpayer money if this were to happen.
But when the state government looks like over-eager suckers lining up to fund the next Springfield Monorail (again – see Raiders Stadium), it makes us a target for other too-good-to-be-true “investment” schemes and erodes the confidence of other, more stable potential investors. And the too-common practice of crafting business-specific regulations, as we’ve done with Tesla and others, not only creates a confusing legal mess, but is fundamentally unfair to the Nevada businesses large and small who are already here.
It was a bad week for people who favor robust government control of Nevada’s economy, or the nascent industries so important to its growth.
Cars that haven’t been built yet, and a “new” vice – this week, the predictable government failures to take an active role in managing various consumer industries has been relatively harmless.
Not to worry, though. Seeing how the state struggles so much to provide consumers mere luxuries, thank goodness no one would ever think it was a good idea to give that same government a distribution monopoly on far more critical “goods” like education, publicly available transportation options, or health care services.
Orrin Johnson has been writing and commenting on Nevada and national politics since 2007. He started with an independent blog, First Principles, and was a regular columnist for the Reno Gazette-Journal from 2015-2016. By day, he is a deputy district attorney for Carson City. His opinions here are his own. Follow him on Twitter @orrinjohnson, or contact him at firstname.lastname@example.org.
Something is missing down at the Lloyd D. George United States Courthouse.
Before a visitor has even placed his wallet in the metal detector, a large portrait of the handsome building’s honorable namesake greets friend and foe alike from just inside the front door.
After you’ve passed the inspection by the courthouse security officers in their navy sport coats, the ground floor of the handsome dispensary of justice on Las Vegas Boulevard is decorated with an artistic display of vintage Vegas photographs in the lobby, an interactive directory, and information on the FBI’s Most Wanted List. Engraved in marble is a line from the late U.S. Supreme Court Justice William Rehnquist: “The cornerstone of the federal judicial system is the trial courts ... in which witnesses testify, juries deliberate, and justice is done.”
Those with nothing better to do than scour the building on a recent Friday, as I did, would have seen large portraits of a pair of veteran federal Judges Roger Hunt and Kent Dawson, greeting them as the stepped off the elevator on the sixth floor. A portrait of retired U.S. District Judge Philip Pro handled sentinel duty on the seventh floor, where the curious would also note group photographs of the judges in the Nevada circuit through the years.
But nowhere in the public space will a visitor to the federal courthouse find a photograph of President Donald Trump -- not even adjacent to the wanted posters -- and that has some employees complaining about a lack of fairness and balance. In their memories, the courthouse has always featured a presidential photograph. Several employees who spoke anonymously said a building manager said hanging the photograph would potentially cause controversy and upset people.
At this point, it’s probably a safe bet that Republicans and Sean Hannity already have surmised former U.S. Sen. Harry Reid is behind the slight. Reid is retired, but the dogged Democrat haunts their dreams, and they’re almost certain he’s responsible.
Not so fast.
Across the Boulevard at the Foley Federal Building, where locals grind their way through bankruptcy proceedings, you’ll experience ample security -- but no hanging likeness of the new president. Not a painting, not a photograph, not even a fake Time magazine cover.
A few questions of the blue coats on duty are met with eye rolls and a knowing silence. When asked, one points to honored wall space set aside for previous presidents. It is blank, and they have have been instructed to remain low key on the subject of the lack of photographs of the commander in chief inside the federal buildings.
Considering Trump’s many business bankruptcies over the years, you’d think the federal court of reorganization and liquidation would have a few snapshots of him on file. But I digress.
Those federal buildings are maintained by the U.S. General Services Administration (GSA). Surely its local officials would know about the missing presidential photograph. As it turns out, the GSA does hang the official presidential portrait in federal buildings under its control, but only after the approved glamor shots are received from the U.S. Government Publishing Office. But there doesn’t appear to be a government-wide regulation covering the issue.
A contact with the GPO resulted in a response from its chief public relations officer, Gary Somerset.
“The GPO is standing by to reproduce copies of the President and Vice President’s photos for official use in Federal facilities, and will do so as soon as the official photo files are provided to us,” Somerset said. “I do not have a timeline on when GPO will receive those files from The White House.”
I wanted to ask Somerset whether an official presidential TwitPic or social media selfie from @realdonaldtrump would suffice, but then thought better of it.
You can cancel the all-points bulletin and Amber Alert. The official photograph hasn’t been kidnapped. Nor is it a victim of vandals, or petty political intrigue.
Although the fretting GSA official is probably right, posting a Trump photo might not be a welcome sight for some visitors and employees, I did manage to find a picture of the president on display in the lobby of the federal building to the south of the courthouse. The U.S. Attorney’s office is quartered there these days. A security officer understood the question and the controversy, and he pointed to a small framed glossy in the distance. “We have one here,” he said, declining further comment.
It’s not official, perhaps, but at least it’s on the wall.
Back at the courthouse, there was a whirl of activity. Dozens of locals of many nationalities and ethnicities gathered on the first floor. Some were surrounded by family, others stood alone. Those present waited in a long line, but most did so with a smile.
They emerged from a large room with even broader smiles, for they had just finished declaring their loyalty to the United States and were then officially newly minted citizens.
Some waved little American flags. Dozens registered to vote and sought answers at a table set up by the Social Security Administration.
If you really want to know what makes America great again and again, take that picture and hang it on the wall.
John L. Smith is a longtime Las Vegas journalist and author. Contact him at email@example.com. On Twitter: @jlnevadasmith.
I read recently that our state economy is bigger than ever, our population keeps breaking records, and even average wages are the highest they have ever been. This is the way to travel, we think.
In a normal economy, statements like the above are a bit like incessantly reporting your car’s odometer reading. Unless you shift into reverse, like we did a decade ago, every day may bring a new record. But it doesn’t tell us much, and we might want to watch the speedometer instead.
How fast is our state economy growing? Are we behind the wheel of a Tesla Model S, or an old Ford pickup with bald tires?
Using data from the Bureau of Economic Analysis, we see that our economy grew at an average rate of 2.9 percent over the last two years, the 6th fastest speed of any state in the nation. This is measured by real Gross State Product, the output value of everything we produced divided by a deflator to adjust for price inflation.
This speed of 2.9 percent is considerably faster than the national average of 2.1 percent over the last two years. As Hunter S. Thompson once wrote, we're on our way to Las Vegas to find the American Dream. But the BEA also says that our state population has been growing at 1.9 percent, again the fastest rate in the nation. This is a bit like driving 90 mph with a tailwind of 60.
Real output growth per Nevada resident is 1.0 percent (the difference between 2.9 percent and 1.9 percent). The national average, however, has been 1.3 percent. We are now driving in the back of the pack, but at least we are no longer driving in reverse.
Part of the reason we are growing even at 1.0 percent is because people have been returning to work as we finally put the Great Recession behind us. Employment in Nevada is growing even faster than population, so our real output per employee has been growing at an average rate of only 0.7 percent per year.
As I explained in last month’s column, “The Simple Math of Economic Growth,” economic growth can be due to short-run factors, such as more part-time workers shifting to full-time work and underemployed workers who find jobs that better fit their skill set. In the long run, growth results from having more people working or more output per worker. More output per worker comes from investing in new capital plant and equipment (not just the replacement of old capital) as well as from improving multifactor productivity. Higher productivity results from better trained workers and better ways to make things.
When employment grows faster than population, this is a short-run factor. Can we count on this to continue much longer? Probably not. Nevada’s unemployment rate is currently 4.7 percent. If the rolls of the unemployed continue to fall at the current pace, we might expect to see 4.1 percent by December. It rarely gets much lower than that. We have been speeding up on the downhill side, but the road will soon flatten out.
Nationwide, new capital investment is currently contributing about 0.4 percent to the annual long-run growth rate, and multi-factor productivity has been increasing by about 0.8 percent per year on average. If Nevada was like the rest of the nation, our real output per employee would be growing at 1.2 percent per year, not 0.7 percent.
Why aren’t we becoming more productive? One explanation is that our share of skilled workers is not growing much. Education matters. While 85 percent of working-age Nevadans now have a high school diploma, less than a third of us have an associate’s degree or higher. We are still more like Mississippi than Utah.
Can we at least count on population to continue increasing at the same rate? Perhaps, but there are reasons to wonder. In the long-run, does Nevada have enough water for continued population growth? In the short-run, can we house all these new residents? Are we pricing ourselves out of the market?
Housing prices have been rising much faster than incomes, especially in Nevada, where prices have been rising each year by an average of 9 percent more than inflation. Back in 2012, when prices hit bottom, it was safe to say that housing was cheap in Nevada. By the end of 2014, inflation-adjusted housing prices had caught back up to where they were in the 1980s and 1990s. Now they are up 20 percent more, and don’t seem to be slowing.
While our inflation-adjusted housing prices are still 36 percent below the bubble’s peak of 2006, we should be getting a little uncomfortable about our homes once more becoming overpriced. If home prices continue to rise, along with apartment rents, can we continue to assume that people will keep moving here at the same rate? If they do, are they moving here to retire after selling a more-expensive home in California, or are they coming here to work? It seems the former group is growing faster than the latter. We are starting to build homes again, but home ownership in Nevada is at its lowest rate in almost three decades, so we have a lot of catching up to do to house those who have already moved here, never mind those still yet to come.
In deciding whether we are driving a high-performance automobile or an old beater, we should also consider what parts of our economy are growing the fastest.
We have seen the most output growth in construction, tourism, and health care sectors. These aren’t the transformative industries we might hope for. Meanwhile, the output from mines, where wages have traditionally been high, has plummeted. Most of the jobs added over the past two years have been in professional services, construction, food service, health care, and warehousing. Manufacturing jobs have increased more slowly than average for Nevada, and almost all of the increase has been in the Reno area.
In Reno, there is much talk about a Tesla effect. Housing price appreciation has been in top 1 percent of metropolitan areas nationwide, and manufacturing employment has been growing, along with professional services, though it is still less than 7 percent of employment. Reno’s unemployment rate is now down to 3.9 percent, though it is not seasonally adjusted and should be taken with a grain of salt. But Reno and its surrounding communities are home to only a sixth of Nevada’s population, much like one cylinder in a V-6 engine that is finally running a little smoother than the others.
What about those record wages? Well, it turns out that average hourly wages have begun to rise, but only at the rate of inflation over the last two years. Real wages are flat, and relative to housing costs they are dropping like a stone. If median family income is starting to finally rise, it is only because more people per family are working. Of course, this beats being in reverse.
What does this suggest for the future of Nevada’s economic growth? Well, it would take an excess of optimism to conclude we will soon be speeding up. We haven’t yet fixed the engine in this old thing, and once we are out of the hills and the winds die down, we will probably just be puttering along.
Elliott Parker is Professor of Economics at the University of Nevada, Reno. His new book, Nevada’s Great Recession: Looking Back, Moving Forward, with Kate Marshall, will be available later this month from the University of Nevada Press.
Children are the focus of most policymakers, most everywhere. In an age of heightened political polarization, the hope remains that differences can be set aside for the benefit of the next generation. At least, so the talking point goes.
So, if children are Nevada’s top priority, how is our focus paying off?
A week after the Legislature adjourned, the Annie E. Casey Foundation released its annual Kids Count Data Book, which provides a sobering progress report for Nevada. The Silver State is ranked 47th overall. But there IS some good news to be had – we’re improving in most metrics over time – but not enough to improve our comparative rankings.
Let’s start with education, where despite a concerted effort, Nevada remains ranked 49th overall (Note: data in this report is from 2015, and; therefore, does not reflect even initial impacts of legislation passed during that session.). We made tremendous progress on graduation rates – from 38 percent not graduating on time in 2010/11 to 29 percent four years later. However, the US average rate is more than 10 points lower at 16.8 percent, and while we’re within striking distance of neighbor Oregon, all our hard work has left us ahead of only DC and New Mexico, for a position of 49th of out 51.
Hopefully, the intensive focus on Read by Three is paying off, with a five-point drop from 2010 and 2015. However, at 71 percent not proficient, the state still has a long way to go – we need another six points to catch up with the 2015 national average.
The rest of the education stats are even more stark. Despite a one-point increase in proficiency, 74 percent of eighth graders – almost 3 of 4 – are behind in math. Perhaps even sadder is that the majority of students in every state except Massachusetts is behind, and Nevada’s rank here is actually one of its better ones – 42nd. And 66 percent of our young children are not in school, leaving Nevada 51st of 52. The US average is 53 percent; Mississippi is at 50 percent and the top four states are below 40 percent.
But, as we often forget, education is not everything in a child’s life. Nevada is ranked 45th in Health Care by Kids Count. And while substantially more children are insured, the state is seeing more low-birthweight babies and an increased child death rate. In the Family and Community category, Nevada also ranks 45th. Teen births are substantially lower in 2015 than they were in 2010, and more children are growing up in a household headed by a high school graduate. But a greater share of children are in single-parent families – almost 4 in 10 – and living in high-poverty areas.
This leads us to the final category: Economic Well-Being. The Silver State is surprisingly high here at 40th place, and saw improvements over the prior report in all four metrics. Still, one in five children live in poverty. One in three have parents whose employment is not secure, and live in a household where housing costs are a burden. And 10 percent of teens are not in school and not working – and it’s not immediately clear how much of our improvement comes from teens staying in school vs. getting jobs.
Taken together, this is concerning from a moral as well as economic standpoint, as our ability to attract and/or retain the best companies, entrepreneurs, and workforce depends on being able to provide a positive and healthy environment for the state’s children.
It seems the campaign season is already upon us. Maybe candidates should be pushed to provide not just a plan to continue climbing out of our K-12 hole, but also to reduce poverty, improve the quality of employment, dramatically increase participation in preschool, and improve health outcomes to match gains in coverage. If they don’t, regardless of their party or policy approach, then perhaps their commitment to Nevada’s kids, and even to economic development, is not as big of a priority as they make it out to be. It IS the moral and economic question of our time as Nevada residents, and as registered voters as well.
John Restrepo, the author of this op-ed, is an economist and Principal of RCG Economics. He is an expert in regional economics and forecasting in Nevada and the Mountain West.
Disclosure: John Restrepo co-publishes the Stat Pack, a client of the communications consulting firm owned by The Nevada Independent’s managing editor, Elizabeth Thompson.