on three more from Planet Money

June 30th, 2013

The crew at Planet Money can get so close sometimes, I feel like I could just tap them into a broader assessment of some of the issues raised by their stories, and a greater appreciation for the laissez faire perspective of classical liberalism.  Here are some taps that struck me on three episodes I listened to during yesterday's walk ...

Tires, Taxes and the Grizz (episode 467):  

This story recounts the tale of protectionist measures on behalf of an alliance of automobile tire factory workers and owners, who joined forces to compel every other American to pay higher prices for their products, by means of getting politicians to slap high tarriffs on tire imports from China.  The reporting describes how the known and quantifiable costs levied on Americans for this have been 20 times the benefits accrued to those workers and factory owners, on the order of billions of dollars that consumers have to pay for keeping their cars safe on the road. 

While those costs are generally dispersed, the story begins with a picture of how the costs can be concentrated on not very affluent people, people like the rest of us who face 40% higher tire prices but choose a "lease" arrangement because they can't scrape together enough at one time to pay the full price for tires for their vehicles.   I would like to see the Planet Money team collect up the aggregate of costs for all the tariffs that Americans are forced to pay out to accommodate the politically powerful interests who support such measures.  Identifying those beneficiaries and relating them to individuals who have concentrated costs would be a great theme for a series of podcasts.

Kid Rock versus the scalpers (episode 468):

Evidently, Kid Rock is reasonably famous in pop music circles, and he has some novel marketing ideas for the business of providing live musical entertainment to large numbers of people.  What I liked about this story is how it illustrates a case of the non-monetary motivations that enter in to our social behavior, even when there are also clear monetary components in those interactions.  Kid Rock has a reputation that he has (seemingly) sincerely cultured of being one of the masses, and his fans seem to like that part of his public persona. 

But he is also trying to make a living providing entertainment to those fans, and has started to think through the incentives that drive scalping of tickets for music and other entertainments.  Limited supply of performances by particularly well known and liked entertainers leads that demand to push up the prices for good seats, but unplanned consequences arise if Kid Rock and his fellow musicians and other famous entertainers don't price the original tickets at something close to the market clearing level.  In that situation there develops a secondary market that is serviced by people who are perjoratively referred to as scalpers.  But Kid Rock, and perhaps others, have been working out how to thread this needle, keeping the mass of ticket prices within relatively easy reach of large numbers of people, keeping reserved a premium set collection that can be serviced at the market clearing (higher) prices, and increasing the number of shows in high demand locations. 

All this to the effect of sustaining and maintaining Kid Rock's reputation of the masses, and a concrete example of how the monetary and non-monetary aspects of our lives intersect in untold numerous ways.  I call this a clear case of economics, and think the Planet Money team could point this out more clearly in the course of such stories.

Rhino horns and clean water (episode 469):

This episode contains two distinct stories, related by their setting in Africa, a continent beset with corruption and war, in no small measure aggravated by a century of colonial oppression from the 18th and into the 20th centuries.

Rhino horns are subject to a growing black market, driven in part by what seems to be a unscientific belief that the powdered form is a good hangover remedy, but caused by the fact that it is illegal to make a market in that commodity.  The predictable (but somehow always unforeseen) result has been the indiscriminate slaughter of rhinoceros across the African savannah, all to obtain that small horn that so characteristically projects from the head of those animals.  There may be hope in this situation, inasmuch as there are growing efforts in some African circles to abandon the ban and allow people to farm rhinoceros, thereby increasing the general supply, enabling a formal market, and eliminating the criminal element that dominates the current horn scene.  The Planet Money treatment of the wrap-up, however, left something to be desired, when it projects the possible consequences of this change in discrete either-or terms - either we will have rhinoceros farms or we will continue to have nature preserves where rhinos run wild.  I call this a false dichotomy because it ignores the fact that there is still demand on the part of tourists to see those huge animals running wild and drinking up the local watering hole; rhino farms and nature preserves can coexist and benefit from each other, at least insomuch as a larger rhino supply arising from farm operations will diminish the drive for poaching the parks.

Clean water is a crucial concerns for much of the third world, and it's lack is something for which the blame lays at the feet of policy makers and politicians worldwide (foreign aid being how we take money from poor people in rich countries and give it to rich people in poor countries).  But the main point is one of poverty, and when we compare the situation there to that which we enjoy in the States it is easy to see that the cause is for bad water in parts of Africa is not a technological one - the technology of water treatment and supply is well known and accessible worldwide.  The reason Americans enjoy plentiful supplies of water (to the point of wasting it) is that our culture has grown wealthy enough that we can devote the necessary material and other resources necessary to develop that infrastructure.  The water problem in Africa is symptomatic of poverty, and won't be truly solved until the broad standard of living across those populations has grown sufficiently to satisfy and grow beyond that required for their higher and more immediate needs of sustenance.

when would they tell us?

June 17th, 2013

I suppose one reason that Obama is now choosing to send arms to Syrian rebels is that it distracts attention from the domestic issue of widespread government spying on the citizenry

Former VP Dick Cheney is among the apologists for this policy, going so far as to say that such espionage on US citizens would have precluded the attacks of 11 September 2001.  What he and others are hoping to confuse is the difference between possibility and probability, and the costs along the way in time and materials spent on the databases, networks and software, and the uncountable costs to individual liberty and sovereignty given up in the name of making us feel a tiny bit safer.

Bruce Schneier gives an interesting interview on these subjects over at EconTalk, presciently discussing such threats to our privacy in a talk recorded just prior to this recent news broke.  While I side more with Roberts on the questions of relative weighting of the the danger of government and corporate entitities collecting personally identifiable information about us, I think Schneier is right on with his appraisal of the psychology of the majority of the population, wanting only to not feel afraid.  Schneier is also characteristically realistic in the blunt observation that life has risks, and there's no way to completely eliminate them, so we ought to be similarly realistic in what we do to evaluate and mitigate those risks.  The fact is that far more people die on the highways than are ever threatened by acts of terrorism in the United States, and yet every day we hop in our cars and risk other drivers on the highways.

Outrage is just part of my reaction to this story, although I confess the belief that much more and worse things are being done in the name of homeland security.  President Obama's remarks about this scandal are transcribed here; around the tenth paragraph he makes the following statement, referring to the public discussion now occurring on the question of security and privacy:

And I welcome this debate. And I think it’s healthy for our democracy. I think it’s a sign of maturity, because probably five years ago, six years ago, we might not have been having this debate. And I think it’s interesting that there are some folks on the left, but also some folks on the right who are now worried about it who weren’t very worried about it when it was a Republican president. I think that’s good that we’re having this discussion.

Unfortunately I don't think we can rely on the truth of this statement, for if he really wanted a debate on this topic then he would not have bought off on the secrecy of the whole program.  Secrecy that they were not planning to lift for 25 years - until 2038, which is shown in the court order to Verizon that demands they turn over customer records.

Finally, I bring to mind the content of the fourth amendment to the constitution of the united States:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

up with space tourism

May 30th, 2013

Self declared utopianist Brian Merchant has a few words about space tourism over at motherboard.vice.com.

Mr Merchant finds it "depressing" that "our most promising new spacecraft are privately built vessels that aim to ferry wealthy tourists".  I suppose his use of possesive "our" in that statement is in a similar context as we might claim a cultural ownership to the fruits of civilization, but it minimizes the challenges faced and overcome by Richard Branson and his team in developing a spacecraft that other people are willing to spend their own money in a thrill ride with noticeably less than 100% likelihood of surviving.  That achievement is not something that "we" can claim as a culture - it is something the rest of us can marvel at from the sidelines, but the responsibility lies with the individual people who are actually doing it, people who are brave enough to risk their money on the venture, and the scientists and engineers and managers and bookkeepers and marketing people and hundreds or thousands of others who are contributing to that hoped-for success.  It's not me doing that work, and it's probably not Mr. Merchant either.

Mr. Merchant seems to object to rich people spending their money on such thrill rides, or perhaps worse - that they are willing to pay even more for the privilege of taking that ride in the company of a famous actor such as Leonardo DiCaprio.  But I think he is missing the significance of a piece of information that he includes in his own story - that while the celebrity laden flight costs in excess of $1 million a seat, the ticket price sans DiCaprio is closer to $200k, and that is another marvel.  When NASA was the sole option for getting in to orbit, the cost was insurmountable - no one could afford it, and the only people who were allowed to take the trip were government employees; no doubt those people have been talented and brave and singularly notable for each of their own special reasons, but being among the selected few required a lifetime commitment for a scarce chance to fly.  And the costs for those trips have not been insignificant; $500 million per Shuttle mission would not be far out of line as an estimate, giving about $100 million per person per flight, so the Virgin Galactic operation has lower costs by a factor of 500.

I see this trend as extremely encouraging.

A further extract:

Yes, it's increasing looking like the only thing people are going to be doing in space this next decade is either patching up the aging ISS or clinking champagne glasses on a luxury rocket with the rich and famous. The destination may be new, but thematically, we're boldly going somewhere we've gone millions of times before.

Mr Merchant seems to desire a future that expands the development of space, but perhaps I am reading more of myself into what seems his underlying interest in more human activity in outer space.  For those of us interested in a destiny for humanity in the stars, we have to think about sustainability of such development, and that's only going to come in the context of a growing economy, an economy that allows wealthy people to spend their money on adventure, leading eventually to the same option becoming available to people who are only reasonably well off.  The trend for all such luxuries, when left in the hands of entrepreneurs to satisfy the consumer demand, is to progressively lower the cost of access, converting luxury into entertainments within reach of almost everyone.

Along the way I see a progression from sub-orbital experiences in the edge of space, to low earth orbit weekends in cramped quarters, to destination resorts aiming to cater to a growing population interested in an affordable once-in-a-lifetime vacation.

And it doesn't bother me that what drives this will be the profit motive.


PS.  I don't know whether or by how much Virgin Galactic has been subsidized by the state in one way or another.  I've not heard of them in any cases, egregious or even mundane (such as that for SpaceX contracting with NASA for cargo to the Space Station). 

McCain would sneak us into another war

May 27th, 2013


The headline and first paragraph of this CBS News story was enough to rouse my ire at the reckless way our political "leaders" threaten and use military powers to impose their will on peoples of the world. 

"McCain sneaks across Turkey-Syria border, meets with rebels" begins with these words: 

Sen. John McCain, R-Ariz., a proponent of U.S. military action in Syria - and a vocal opponent of President Obama's Syrian policy - sneaked across the Syrian border and met with rebels there, CBS News has learned.  The trip was in the works "for weeks, if not months," Mouaz Mustafa, the executive director of the Syrian Emergency Task Force who was with McCain all day, told CBS News' Clarissa Ward. "It's something the senator has wanted to do for quite some time because he's pro-active on the subject of the U.S. being more directly involved in Syria and helping to create the necessary changes on the ground to end the conflict."

It is striking how such hubris grows in the politically powerful, imagining that they can spend a few hours in a region that has suffered from conflict for decades, and come out with a clear notion on how and where and who to support in the civil conflict in Syria.  All the more amazing given how the conflict originates in no small part to the colonial partitioning of the Middle East by Britain after World War 1, fully endorsed in years since by the United States.

As for McCain, he is hardly the first to try such a stunt, but I have to imagine that the image of him "sneaking" through a war zone had some appeal to his political handlers, playing up his military credentials as Memorial Day is recognized in the United States.


a liar in the white house?

May 21st, 2013

The recent news has been all atwitter about how an IRS office in Cincinnati, Ohio has been found to have targeted certain organizations with special attention.  As far as I'm concerned, any attention by the IRS is unwanted, so I can certainly understand how such targeted groups may feel about such special treatment.

But that's not what this post is about.

The LA Times has this account of who knew what when:

White House aides had maintained for days that they knew nothing of the matter until the week of April 22, when the Treasury Department informed White House Counsel Kathy Ruemmler that a report was coming, and that they were not informed of what would be in the report.  Carney said last week that Ruemmler’s office was only told that the IG was finishing a review about matters involving the office in Cincinnati. “That’s all they were informed as a normal sort of heads-up,” he said.

Obama political advisor Dan Pfeiffer echoed the assertion during a CBS interview on Sunday, saying the White House was aware of the report but “not the details of what happened, not the results of the investigation, but that an independent investigation was about to conclude."

Following a report to the contrary in Monday editions of the Wall Street Journal, Carney acknowledged that Ruemmler knew on April 24 that findings probably included evidence that the IRS had targeted conservative groups.  Ruemmler then informed Chief of Staff Denis McDonough and other members of the senior staff, Carney said. He said there were subsequent communications between Ruemmler’s and McDonough’s offices with their counterparts at Treasury to talk about the timing of the release and potential findings of the report.

They claimed to have known "nothing of the matter", and we should just leave it at that they own up to the truth when they are called on it?  The NYT characterizes this difference as going "beyond", in the sense of adding detail

The details released by Mr. Carney on Monday went beyond a previous White House account, and may provide additional fodder for critics pressing to understand what and when the president and his team knew about the I.R.S. misconduct. During a series of television interviews on Sunday, Dan Pfeiffer, the president’s senior adviser, made no mention that Mr. McDonough or others had been notified and said that the White House had “no idea what the facts were” when Ms. Ruemmler was informed.

Was there no one in the press corp to ask a simple question, such as "why were you lying to us before now?" or "why should we believe any other statement you might make?"

my two cents on a couple from Planet Money

May 16th, 2013

[5/16/2013 - fixed the description of the cotton wars]

I have to give the gang at Planet Money the credit to be still at it after what is approaching five years of podcasts, and longer with the blog, even with a few changes along the way.  This note covers three recent episodes: The Lollipop War, the one that returns to their tee-shirt project, and the reprise of the cotton wars

The war over lollipops recounts part of a story that I have understood for years - that of the huge government subsidy to sugar farmers in the United States, sustained by price supports that approximately quadruple the cost of sugar here in the US as compared to what people pay for sugar in other countries around the world.  These subsidies have a few people and communities that are huge beneficiaries, typified by sugar beet farmers in Minnesota and elsewhere.  Not surprisingly, there are other communities and businesses that pay the price for those supports - exemplified in this story by candy makers in Ohio.  The PM team focuses on these interests as played out in the politics of price supports mandated by legislation and congress, but they miss a huge population who are also harmed by this interference in the market - the people here in the US who consume sugar in one form or another (i.e. everyone else).    Of course all of those people are only harmed a small amount individually, while the beet growers have a very concentrated motivation, so we should not be surprised by the outcome, which amounts to another case of "public choice".

The second story explains why it has taken the PM team so long to make their own t-shirt, which they admit the cause to be their complete naivete as to what it actually takes to make a t-shirt.  And this should not be a surprise - our modern world is marked by a huge and incomprehensible network of interactions and specialties that people engage in their day-to-day lives ,the result of which is the vast and varied production of so many kinds of goods and services that make our lives so comfortable, that allow many of us to specialize in purely artistic endeavors that we can enjoy for purely enjoyments sake.  And all that comes about without any overarching direction or control, and most people don't even realize what a wonderment is is to be able to choose between a variety of grocery stores, and select from a huge assortment of foods and sundries, suiting tastes and fashion and caprice and daring, as the mood may take us on a trip to the store.  Even the poorest among us have alternatives that were inconceivable to people only 50 years past, let alone in prior centuries, where even kings and pontiffs could not obtain what we find as so routine as to be mundane.  For a good explication of this, I recommend Leonard Reed's "I, Pencil".  Could it be more clear why it is that central planning is a disaster?

The third story connects the other two, because it finds a link in that chain of creating a t-shirt where government interference in the market manipulates the otherwise free exchange of cotton.  In this case, the market interference takes the form of subsidies provided to cotton growers in the United States, subsidies which derive from tax dollars extracted from the remainder of the US population.  I dare say that almost all of those people use cotton clothing or other cotton good every day of their lives, so why should they be penalized to increase the profits of cotton farmers in Texas and elsewhere?  This episode further explains how we are not just subsidizing US cotton farmers, but international ones as well, in a scheme that is very well described as byzantine.

As a final observation, I note that the "war" references in both stories about government interference in the market is an apt characterization.  War is destructive and pits mostly peaceful people against one another in the name of typically monied special interests, and is the ultimate outcome of the political process - trying to compel people to behave in ways they would not voluntarily choose to do. 

anti Seattle

May 4th, 2013

The early May news in Seattle should focus on the amazing clear skies and warm temperatures (and sundogs), but we also have numerous accounts of the "anarchists" wrecking havoc in an "anti-capitalist" observance of May Day.

"17 people arrested and eight police officers injured" reports the Mail Tribune today.  The Chicago Tribune picks up the story, describing "demonstrators hurling objects at officers who responded by firing flash-bang grenades and pepper spray".  The Seattle Post-Intelligencer provides more details, including the observation touched on elsewhere that the disturbance took place "after an orderly march by immigration reform advocates and others that was not marred by violence", with more background here

Photos that accompany that last story depict several scenes of "Black-clad protesters break windows on downtown businesses ...", and it is not like those people just happen to be wearing black, or that they each found something black in their wardrobe to wear that day.  The weird thing is they are wearing a black uniform - the same black cut and style for pants, black leather shoes, black socks, black hoodies, black bandannas hiding their faces, and black backpacks.  No doubt there are tactical reasons they would claim for such uniformity - I imagine it makes them more difficult to distinguish when the criminal charges are filed - but the facelessness reminds me much of the jack booted thuggery of communists and national socialists throughout history.  The police may represent oppressive authority, but at least you can identify their faces to allow charging them with brutality.

It reminds me of an encounter with a similar group several years ago in a peace march preceding the first Iraq war.  I happened to fall in along side of them and noted the similarity in attire.  Perhaps I sparked some introspection with the observation something like "how do you like wearing your anarchist uniform?"

And the targets "... including American Apparel and NikeTown"are certainly icons of capitalism, but far from the crony-capitalism that supports the bi-partisan war-mongering so popular with leading Republicans and Democrats.  If anarchism has anything going for it, a big benefit would be an end to the mass murder perpetrated by the state and foisted on the people in the name of national security or saving face or whatever other limp justification is applied for sending troops and bombs halfway around the world.  Purveyors of comfortable and fashionable clothes seem far removed from that.

I have read much political theory over the years, including a lot about the minimal state and anarchism, and these guys are not doing much to make a positive image.

olympic sized boondoggle

March 22nd, 2013

The news today has two reports in seattlepi.com on the subject of prospects for an olympic bid from Seattle for the 2024 Summer games: one overview and another with more background.  

A prior post may presage indication of my skepticism of spending from the public purse on sports entertainment.  Here are a few highlights from the recent story that further explain my position:

Evidently, Seattle Mayor Mike McGinn has bestowed responsibility for investigating this deal on the Seattle Sports Commission, a non-profit organization dedicated to promoting sports in the Seattle area and hardly a neutral party.

[SCC executive director Ralph] Morton said of Seattle’s involvement. “It will ultimately be looked at like a business decision — what is affordable and what is feasible. " 

While I have said a lot of good about business, I am not pro-business but pro-markets.  Markets mean people deciding for themselves about what they will support in their community.  The people who own businesses make their decisions on the basis of profit and loss; affordability and feasibility is based on whether they can produce something that people actually want enough to pay more than it costs to make the product or provide the service.  The city of Seattle has no way to measure those factors, and can only make such decisions on the basis of who squawks loudest in Council meetings.

In contrast, businesses that are able to accommodate consumer demands are successful, but just because it is a business does not mean it should be supported, and certainly not from the public purse.  Which brings me to the next point:

Hosting the Olympics is an extraordinarily expensive venture, often requiring billions in investment for infrastructure and sports venues. The 2010 Winter Games in Vancouver, B.C., cost an estimated $6 billion for transportation projects, venue construction, operations, promotion, security and other related expenses. The 2012 London Olympics reportedly cost as much as $15 billion. In the USOC’s letter in February, committee CEO Scott Blackmun said the operating costs alone for the 2024 Summer Games would likely end up being $3 billion, not including investment in venues or transportation.

And where is this money to come from?  Past experience indicates a combination of local, state, and federal taxes.  Given the multiple year disruption that such an event would impose on the community, for the benefit of two weeks competition, I think it is clear that not everyone in the community would think this is worth the expense when there are other ways we might spend our time and energy.  The argument to justify payment by people outside of the area, in the rest of Washington and the United State, is even more illusory, meaning that those billions coming from everyone in this country end up being spent for the benefit of a small number of people who might have the opportunity to capitalize on two weeks of huge crowds pouring into the region.

I don't expect this to be the last word on a Seattle Olympics bid.

getting better

March 19th, 2013

This episode of Science Friday features Harvard psychologist Steven Pinker promoting the hypothesis that we live in a historically unique period of peaceability.  It is not the first time I've been exposed to this sort of analysis, so I will venture a few observations ...

The world view we may absorb from the media is replete with violence, death and destruction.  Rare is the day that our CNN and FoxNews, New York Times and Chicago Tribune headline new and continuing tragedies.  But I am probably not unique to observe that the evening news and other media outlets give a highly filtered perspective on the state of world culture.  Violence and conflict is the coin of that realm, because it is just not interesting to see page after page or continuous hours of stories about people getting along with each other, solving problems, creating new and wonderful things, and engaging in all the other mundane and bizzare and joyous and boring things that make up the majority of life on this planet.  In short, the evening news is not the best source for understanding of humanity.

So, what is Pinker's thesis?  My interpretation of it is that the data he has studied is for deaths by violence, although it may also encompass the effects of disease.  Everything from the barroom brawl that turns tragically deadly, to the Black Death.  Perhaps the barroom brawls of the last decades and century didn't usually rise to the level of killing each other as so much happened in further centuries past?  Certainly one must seek out situations where highwaymen are a fixture threatening any form of travel; these days one must be sailing somewhere like the Gulf of Aden to find any pirates, and even that sort of high seas danger appears to be on the downside of history.  I would not be surprised that the rich countries have it better in that regard of lower per capita death by violence, but the positive trends are worldwide.

Also, the data is for per capita death by violence.  Certainly many people continue to die at the hands of dictators and in individual killings, but world population exceeds 7 billions, and that makes the average individual risk be quite low, even accounting for those horrendous exceptions.

For another optimistic prognosticator, see Matt Ridley and The Rational Optimist.  Ridley is interviewed here by Russ Roberts

Of course we have to get through the next couple years in the mean time, and on that time scale I am not optimistic.  But this may be the point of these authors - the immediacy of our days clouds our vision of years and decades.

benefits smorgasbord benefits

March 17th, 2013

There are only a couple more days projected in the current contract negotiation cycle, and the SPEEA tech vote is projected to pass the updated contract terms.  With that little bit of currency remaining, I wanted to capture some other thoughts on compensation practices.

I wrote previously about the response from SPEEA to my suggestion they negotiate for a benefits smorgasbord.   My purpose here is to elaborate on the smorgasbord suggestion and address some arguments I have encountered against it, and the more general suggestion of substituting cash for the non-wage health insurance benefits that are typical of employment contracts.

The main reason I like the smorgasbord option: it makes more alternatives available to match compensation to individual interests and circumstances.  While we share many broad goals and objectives, the choices we make from day to day demonstrate the even greater variety of purposes and interests - when we look at the details of those choices.  A large difference arises simply in the scope of desired insurance coverage between people who are single and those who are married with children; another relates to one's risk tolerance, or personal savings, which bears on the total coverage and deductible portions of an insurance contract.

I pointed out here the tax advantaged status of non-wage benefits.  However, if the non-wage benefits were not changed in magnitude, only in the ability of individual employees to direct where they are applied, then there is no such tax-differential effect.  A benefits smorgasbord could be like that, but there is not one fixed way that the benefits smorgasbord could be arranged; one approach is for a fixed value that can be allocated among the benefit elements.  If the benefit smorgasbord is managed by a third party like other insurance schemes, then there is no change to company administrative costs.   Even a smorgasbord scheme that does include company administration - e.g. to adjust the rate of vacation accrual that might be in exchange for lower dental benefits - are fully in scope of what the company currently manages.  To extend that example,the different rates of accrual we now have are based on years of service, but that does not preclude other conditions in the equation.

What about administration costs?  The company already considers the effects of benefits administration, but even a difference in such costs is not a deal breaker.  But if we grant that the company has some threshold of total outlays, then any options being considered would necessarily have the same NPV, or close enough to be in the noise of administrative costs.  These are the same sorts of comparisons that are done when deciding to offer the current set of alternatives.  Consider the company position to be wanting some total compensation C equaling straight wages W plus benefits B plus administration A,  so that C = W + B + A.  So long as C remains under some threshold they are satisfied.  The current approach with multiple benefit schemes has some administrative costs, while the new approach has some other administrative costs A' and corresponding benefits cost B'.  For fixed W, then A + B = A' + B'.  In the case where we get straight wages W, C = W and we save those administrative costs A.  The math isn't difficult, but opening people up to the alternative is more so.  

What about how people benefit from group rates in the current scheme?  There's nothing keeping people from grouping together in other forms (e.g. I regularly receive group insurance promotion offers through other organizations).  But there is also reason to think those groupings may not necessarily be more efficient economically.  The economic benefits of such grouping, taking advantage of large numbers of people to spread the risk, is exactly what insurance companies are doing when they sell you an individual policy.  For example, consider the home and auto insurance markets; the "grouping" that takes place in those markets is simply the result of insurers looking at the overall risk of their entire customer base and offering individual terms that reflect that risk.  One can always choose between Allstate and GEICO and State Farm and untold other insurance providers for your car, home, and health insurance needs.  If one doesn't suit, for cost or any other reason, you can go elsewhere; the companies know that very well, which drives them in a competitive environment to offer terms that are close to their actuarial costs.  Your ability to go elsewhere for that policy is what drives them to lower rates.  We don't have to rely on the union to provide such services.

What about the medical service providers?  Converting the payment scheme from group to individual does not by itself reduce the service demands.  However, once people start thinking about costs again they will start making health care decisions with that in mind.  That change will start to effect the bottom line and business will have to become more competitive.  They start to offer lower prices to the individuals, or they go out of business and someone else comes in who can provide the services people want at prices that represent value.  By comparison, we have markets in so many other goods and services that work perfectly well in terms of individual interactions, that all manage to let people balance the costs and benefits.

What about pre-existing conditions?  If your house was on fire, would you expect any home insurance company to sell you a fire protection policy?  If it was in a flood plain and the rivers were rising, would you expect to obtain flood insurance?  Of course these answers are no, aside from the government-subsidized flood insurance which is completely irrational.  This is the same logic that says buying health insurance for a pre-existing condition is non-sensical.   Many of the problems with coverage of pre-exisiting conditions stem from the lack of portability of our health insurance plans; since so many of us receive health insurance as part of our employment compensation, we are at the mercy of that employer to continue the coverage as our circumstances change.  If the general model were to be personal control of insurance decisions, then the policies we contract for would be independent of change in employment status.    Not including insurance policies in the union contract would not preclude buying insurance separately, which most of us would do to protect against catastrophic conditions.    However, I would probably not buy insurance for eyeglasses or teeth cleaning or orthodontia or ED or breast pumps, nor a host of other provisions that are either routine expenses or have no significance to me.