Mitt's Millions: Contributions?

In last night's Republican debate, Mitt Romney declined to say how much money he had contributed to his own campaign. This is certainly his privilege, and he can certainly claim that it is strategic information that would give an advantage to his opponents. He is required to reveal that number in the quaterly filings that are required of candidates, and I imagine he will do so at that time. However, I believe that I already know the exact amount of money, to the penny, that Romney has "contributed" to his own campaign. That number is precisely zero. Rather Romney has lent the money to his campaign, $17 million as of last quarters filings, and possibly as much as $40 million by the next filing. Who knows how much he will lend himself before this is all over.

Is there a difference between "contributing" money to your own campaign and lending it? Or at least, is there a difference that the public ought to care about? Well, yes, there is a big difference, one that will make a big difference in governing should Romney win. The difference is this: contributions are lost forever, whether the candidate wins or loses. But loans can be repaid by the campaign, and likely will be if the candidate wins. You see, there are a large number of people (let's call them "lobbyists") who like to bet on the race after the horses have crossed the finish line. What lending money to your campaign does is set up a legal conduit for "campaign contributions" to go directly to the candidate after the election.

Romney likes to boast that his self-financed campaign makes him independent of the lobbyists; in fact, the opposite is true. Further, it sets up a perverse incentive to overspend. If he spends $40 million and loses, he loses everything; but if he can improve his chances by lending himself $80 million, he can easily recover it. In other words, the bigger the loans, the better the chances, and the larger the conduit to "legal" personal contributions from lobbyists.

If Romney is serious about lowering the involvement of lobbyists, then he ought to convert the "loans" to contributions. This will announce to the world that he has no intention of collecting them from lobbyists after the election. If he refuses to do so, it will be as much as an admission that he intends to be repaid, and the lobbyists will have a field day, most likely at the expense of the public.

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Mitt Romney's Planet

Am I the only one who noticed this? I couldn't believe it when I heard it. I was sure I must have mis-understood what he was saying. And when I didn't see the spin doctors and the bloggers and pundits pick-up on the point, then I had to assume that I was wrong. Surely, a statement like the one I thought I heard would have produced headlines. So I must be wrong.

Hence, I waited for the transcripts to come out. And according to the transcripts, I did hear him right. I heard him right, but what I heard was so astonishingly wrong that I still am having difficulty understanding one, how anybody could say such a thing, and two, how he could get away with it without it causing a storm of protest. But here is the transcript from the New Hampshire Republican Debate of an exchange between Mitt Romney and John McCain on health care:

MCCAIN: Both the attorney general of South Carolina -- I don't know why I mention South Carolina...

GIBSON: Because there's a primary there.

... and the attorney general of Iowa -- and I don't -- well, anyway...

GIBSON: That's too late.

MCCAIN: ... have sued the pharmaceutical companies because of overcharging of millions of dollars of Medicaid costs to their patients. How could that happen? How could pharmaceutical companies be able to cover up the cost to the point where nobody knows? Why shouldn't we be able to reimport drugs from Canada?

It's because of the power of the pharmaceutical companies. We should have pharmaceutical companies competing to take care of our Medicare and Medicaid patients.

ROMNEY: OK, don't leave me. Don't send the pharmaceutical companies into the big bad guys.

MCCAIN: Well, they are.

ROMNEY: No, actually they're trying to create products to make us well and make us better, and they're doing the work of the free market.

And are there excesses? I'm sure there are, and we should go after excesses. But they're an important industry to this country.

But let me note something else, and that is the market will work. And the reason health care isn't working like a market right now is you have 47 million people that are saying, "I'm not going to play. I'm just going to get free care paid for by everybody else." That doesn't work.

Number two, the buyer doesn't have information about what the cost or quality is, or different choices they could have. If you take the government out of it to a much greater extent, you'd get it to work like a market and it will rein in cost.

Okay, here's what I find astounding, and I would like to know if anybody agrees with me. Apparently, Mitt Romney believes that 47 million Americans go uninsured because they are “freeloaders,” that they willfully game the system. The idea that health care (and consequently, health insurance) is priced out of the reach of far too many people has not occurred to the governor. Romney reveals himself to be so disconnected from the reality of most Americans lives, that you wonder where he has spent his adult life. Well, I know where he has spent most of his life; more of this in a moment. But first, his statement also reveals an incredible ignorance both about the “free market” and about the nature of insurance.

Concerning the “free market,” a market that depends on licenses and patents cannot be a free market. A patent allows one to charge monopoly prices, not free market prices. Now, Romney would be right in asserting that if we took the government out of it, there could be no patents, and hence no monopoly pricing, but that is not what he means. In fact, he means the opposite, namely that what few restrictions there are on the monopolists ought to be removed. In other words, he means exactly the opposite of a free market. Nor is this system necessary to fund research and development, which could be done at a far lower cost (see Sicko-phancy).

Further, Romney does not seem to understand insurance. Insurance can only be cost-averaging; some must pay too much so that others can pay too little. We take the risk that we are paying too much because we balance that against the risk of not being able to pay if we have a major loss. And since it is just cost-averaging, we seek the lowest risk-pool we can. If you are a bad driver with lots of tickets and accidents, you will be placed in a high-risk pool and your costs will be averaged with other high-risk drivers. If you are a safe driver with few accidents and no tickets, you will be placed in a lower risk-pool and will pay a lower average cost. When you go for health insurance, the same thing happens; if you have a bum ticker, you will get a bum price on the insurance, perhaps more than you can afford. Now, if we mandate insurance, we will force people to buy what they cannot afford. If we put everybody in the same risk-pool and mandate the insurance, it will be exactly like a tax. And if we mandate that people buy insurance, and put them in the same risk-pool, and subsidize those who can't afford it, what we will have is the most inefficient possible system of socialized medicine, one where care is delivered by government subsidy and tax (mandated insurance) but with the proviso that a tribute has to be paid to private insurance companies, for no particular reason. The insurance companies will have no incentive to manage costs, will be free of most marketing expenses, and no matter what the cost, they can rely on the government to make up the difference. Of all possible health care worlds, Romney has designed the worst, the most inefficient. He has combined the worst features of a predatory market and outright socialism. Quite a trick, when you think about it.

How could Mitt Romney, a very rich man, be so wrong about basic economics, the free market, and health care? Romney made his fortune as a hedge-fund manager, and his company Bain Capital, made its money by closing American factories and moving the jobs overseas. On Romney's planet, this is called “the free market.” Well, free for some, less free for others. On Romney's planet, freedom is maintained because the people thrown out of work could simply have moved to Bangladesh and taken the jobs he offered. But Romney's planet is not our planet, is not Mother Earth, our temporary home in this vale of tears, and now one should be allowed to make it more tear-full than it already is.

Mitt is free to live on any planet he likes, and he is certainly rich enough to buy his own planet. But he should not be allowed to buy his own country, particularly not my country.

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