Atlas Shrugged: The Mocking

Tuesday, October 18, 2011

The Free Market

A Galtian CEO of a private hospital, Cleveland Clinic, decided to cut costs by giving his employees monetary incentives to become more healthy. Ordinarily Megan McArdle would be first in line to support the rights of a CEO to make more money without interference, but this time there's a slight hitch to her libertarian giddy-up.

Perhaps unsurprisingly, I'm pretty skeptical. Let's start by asking what the selection bias was. Cleveland fired two high-profile doctors who wouldn't quit smoking. One imagines that employees who do not want their employer nannying them about their gym time and alcohol consumption probably decline to work at the Clinic.

Since the point was to get rid of expensive employees, it's strange that McArdle would bring up selection bias as a negative, since it is very much a positive in this situation. Argument fail.

Selection bias will produce good results for the selecting organization, but you cannot replicate its results on a nationwide scale; fat, smoky people have to work somewhere (or go on welfare). If this became common, you'd see legislative pushback in the form of discrimination lawsuits and legislation. I'm betting there are more obese workers/voters than there are people who hit the gym five days a week.

Why should Cleveland Clinic care if others can't copy their methods due to a shortage of doctors? Not that McArdle has proven a shortage would happen. Let's look at some--now what do they call them again? Oh, yeah, facts.

In the past month Drs Derek Smith and Peter Leggat published a comprehensive international review of tobacco smoking in the medical profession from 1974-2004. The study showed that in countries like the United States, UK, Canada, Australia and New Zealand, smoking rates have dropped dramatically among doctors, from 15-20% in the 1970’s to around 5% at the end of the 20th century. However, such low smoking rates are not uniform among doctors across the world.

So it seems that it might be quite easy to find doctors who don't smoke. Since the hospital's employees are losing weight and becoming more healthy, it doesn't seem that exercise is a deal breaker either. The doctors who refuse to quit smoking or eating excessively can just go to work for themselves or another company. In a free market economy there are always jobs available, ensuring that any corporation that makes up onerous rules will be punished when people refuse to work for them.

There's also the question of lifetime cost profile. Cleveland mostly isn't covering people in that expensive last year of life; that honor tends to go to Medicare and Medicaid. Cleveland saves money if its workers have fewer smoking-related problems, but if that keeps them alive long enough to get Alzheimer's, their lifetime health cost may go up.

Again, irrelevant. The hospital is concerned about its health care costs and bottom line, not the government's.

Now, you can certainly argue that it's still a net gain--people live longer, healthier lives. And I agree that longer and healthier lives are a worthy goal. But from a cost perspective, I suspect that there's less to the Cleveland model than meets the eye.
The journalist did not bring up one fact and used two irrelevant arguments to bolster her claim, and her gut feeling is not an adequate replacement for facts and reason. It certainly is easy to be the business editor for The Atlantic.

The only question is why McArdle would take up arms against one of the holy CEOs. Perhaps she is worried that The Atlantic will copy the Clevland Clinic and force her to quit smoking, drink less and exercise more. If it does, McArdle can just teach it a good free market lesson by quitting and getting another one of those plentiful journalist jobs that pays six figures a year.


Ken Houghton said...

In fairness, McMegan is not obvious out of shape. (What her BMI may be, I do not know or speculate.)

If we applied her Alzheimer's argument to all, of course, we would conclude that medical research is a bad idea (could lead to higher EOL costs as, e.g., asthmatics survive longer). All of the progress of the second half of the 20th century--reducing death by lung (pneumonia, TB) and heart (stroke, attack) diseases--has just led to higher EOL costs of people who Should Be Dead Already!

(Same problem as seat beats--the guy who should have died in his first car crash instead lives to have a second or even third or so.)

Strangely, the IBs have given such perquisites as part of their (often self-funded) health care plans. I don't remember her ever suggesting that GS should stop such behavior. (You must have been on vacation that week.)

Anonymous said...

So Logan's run is a Good Scenario for Megan? (Sorry can't help but bring up old scifi - where these ideas are first encountered/examined)

Isn't she over 30? Does she not understand the consequences?

Run Megan, Run!

Downpuppy said...

One problem may be the Cleveland Clinic is non-profit.

Another is that she doesn't seem to understand that the doctors were canned for repeatedly smoking on hospital grounds.

Plus, Smoking in the Boys Room is her favoritest song.

Mr.Wonderful said...

Selection bias will produce good results for the selecting organization, but you cannot replicate its results on a nationwide scale; fat, smoky people have to work somewhere (or go on welfare).

It's touching, how MM declines to suppose that fat, smoky people might decide to become thinner and less smoky when faced with market conditions punishing their fatness and smokiness. But that's our Megan: a libertarian softie who, in the end, doesn't give a fig for the market, and just wants people to be happy.

fish said...

In fairness, McMegan is not obvious out of shape.

Easier to do when you are smoking...

atat said...

She must be reacting to this as a smoker.

Anonymous said...

Ken Houghton:

We do know her BMI means she is overweight. She has discussed it endlessly and because she is tall, she is considered overweight.

Likewise, we know she smokes despite claiming to have quit.

ifthethunderdontgetya™³²®© said...

Run Megan, Run!


Anonymous said...

she has to smoke. mistress ayn declared it a moral obligation.

Substance McGravitas said...

Maybe she's just so goddamned dumb that she thinks the free market makes people more free no matter what.

You have to admit the possibility.

Larkspur said...

Ugh. I read the comments section over there. When it comes to "no-fault" afflictions like diabetes or MS, they suggest that people purchase supplemental policies before they get those diseases, and that parents should purchase such riders before they have kids. Genetic testing was also suggested as an aid to helping prospective parents make their insurance choices. The discussion then moved along without reflecting on whether in their new world, abortion would still be legal, or if there should be some kind of penalty for people who procreate while actuarily at risk (like there's diabetes in the family, or mom is older and thus statistically more apt to have a Downs baby).

In unrelated matters, I had jury duty today and had to fill out a long questionnaire for what could be a nine-month-long murder trial with multiple defendants. Seriously, who can do a nine month trial who isn't retired (with no grandbaby duty) or wealthy (without having to earn the money by working)? And yet somebody got killed and some other people are on trial for it, and you have to have jurors. Meanwhile, I won't know until December whether I have to either serve or flee the jurisdiction.

Well, I guess one anti-stress remedy would be for me to never look at McMegan's comments section again.

Emily said...

Larkspur: I served on a jury for a trial that lasted about four months. We were about half retired and half working for big companies or govt agencies that paid us our full salary during the trial. We jurors all got to be pretty good pals and as far as I could see, nobody was wealthy.

I realize that jury duty for a trial this long is a big sacrifice for lots of people, but for me, it was one of the most interesting things I ever did.

Lurking Canadian said...

I am baffled by the notion of Megan taking the position that the boss doesn't have the right to fire anybody, at any time, for any reason. Isn't that the libertarian ideal if the flexible labour force, guaranteed to lead to piles of gold in the land of the unicorns?

I think the only way to read this is as pure Randianism. Doctors are Galtian supermen and the untermenschen just don't have any right to tell them what to do. Otherwise, I just can't see Megan writing it.

fish said...

I think it goes back to one of Susan's themes about McMegan. Principles are all well and good, right up until they become a personal inconvenience. Then right out the window. If she is still smoking, then the idea that there is an instance where free market might make her life less convenient, then maybe the market shouldn't be quite so free in that particular case.

Susan of Texas said...

That might be the only way to make sense of McMegan. She is not at all rigid in her ideology; her philosophy is a bit of this, a bit of that, with no internal consistency. She makes decisions based on what she thinks the elite response would be; that's how she ends up saying she's pro-choice without believing in a woman's right to choose. Or say she's libertarian while believing the government should do whatever benefits her personally. Or see the world as a struggle of the elite versus the masses dragging them down, but still take non-Randian perks such as mortgage deductions. She'll even throw her husband under the bus if it makes life easier for her.

McArdle is not amoral and is not utterly without empathy but she is unable to do anything but protect her own self-interest. She must always look out for number 1, which implies that she feels she must protect herself at all costs because nobody else will. That implies that she was thrown into a frightening situation without emotional support in childhood.

Lurking Canadian said...

Well, sure. That's because of her academically intimidating household, or whatever.

Larkspur said...

Note to Emily: Yes, you are right. I didn't stop to consider larger companies or government entities, both of which might tend to have enough personnel to cover the absent person's workload, and in the case of government entities, would be more inclined to treat jury service with respect.

I should have thought of that. It's just that most of my working life has been spent in smaller companies or law firms, and none of them would have considered retaining an employee throughout a 9 month trial. Even if they were willing to hold the job open, they would not be in a position to pay my wages, especially if they needed to hire someone else.

And in my most recent employment, the firms had already cut staff down to the bone, with those of us remaining being worked to exhaustion, or at least distraction. If they thought for a seconds that they could do without me for 9 months, they'd have laid me the hell off before now.

I'm concerned because I know how important this is. I was a juror for a three day trial some years ago, and I had a similar experience to yours. We have to have jurors and alternates from the community. I'm just not going to be able to do this one, and it upsets me and makes me feel ashamed.

The end. Sorry to hijack your comments, Susan!

Anonymous said...

Susan, I respectfully disagree on how to make sense of Megan.
describes her way of life.