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Ron Paul says healthcare isn't a right. He's correct, technically - the US constitution guarantees no such right. However, unlike Dr Paul, I think healthcare should be a right - at least, some basic level of healthcare.

There are several reasons for this. One is a basic moral imperitive - enshrining such a right would save tens of thousands of lives each year.

Another is that healthcare doesn't work like other goods. I have a choice about whether to buy a new car or a new computer. If I am in need of life-saving healthcare - if my "choice" is to get the healthcare I need, or to die - that isn't really a choice at all. Faced with such a need, my only rational response would be to obtain the healthcare I needed by any means necessary, even if that means using all my savings and selling everything I own. No-one "shops around" for the cheapest cancer treatments - people go to the doctor, get fixed, and then worry about the cost afterwards. Until the bill comes, they probably have no idea how much it's going to cost.

Food and shelter are also essential goods, but they don't bankrupt people like medical bills do (at least in the US) because they are very predictable costs - one isn't going to suddenly find oneself faced with a food bill of hundreds of thousands of dollars due to circumstances beyond one's control. A "basic minimum for survival" level of food is also very cheap (we spend so much on food because we like it to be tasty and interesting as well as nutritious) but healthcare is very expensive because doctors are very highly trained professionals.

Yet another reason is that universal healthcare benefits everyone, even the healthy. Preventitive medicine and quick treatment of disease (as opposed to people avoiding going to the doctor because they can't afford it) means a healthier population overall, less disease, fewer sick days and greater productivity.

One other reason that doesn't seem to be mentioned anywhere is peace of mind. Unless you work for a very large corporation, health insurance isn't reliable. Even if you have insurance, you might still be bankrupted by deductibles, copays and coinsurance. If you have an individual insurance plan, your insurance company will look for any excuse to drop you as a customer if you develop a particularly expensive condition - woe betide you if you left an i undotted or a t uncrossed on your application form! If you work for a small company, the insurance company may pressure your employer to fire you (with threat of cripplingly higher rates) if you get too sick. All these add up to worries (and stress) that those who are guaranteed healthcare by their governments simply don't have.

I think social welfare is generally a positive thing for society - nobody should have to starve, become homeless or sacrifice their retirement savings due to circumstances beyond their control (such as losing their job). However, it is also important to not destroy the incentive to work - we should balance the aim of having everyone contribute usefully to society with the safety net. It seems the UK isn't doing a very good job with this at the moment as there are people on welfare who could work and would like to except that it would mean having less money for greater effort (a minimum wage job pays less than welfare, and if you have the job you stop getting the welfare). There are also many teenage girls who become pregnant just so that they will get a council house. [EDIT: This is an unsubstantiated and almost certainly false claim - I heard it on the Jeremy Vine show and failed to research it before repeating it here.]

If we were designing the system from scratch, one question might be to ask "what do we do with someone who is just Terminally Lazy (TL)?" I.e. what do we do with somebody who simply refuses to work or contribute to society at all? What sort of lifestyle should they have? For humanitarian reasons, I don't think we should let them freeze to death in the streets, so I think they should have some sort of Basic Minimum Standard Of Living (BMSOL). We would also like to avoid the possibility of them committing crimes simply so they get sent to prison and have a place to sleep (on the general principle that encouraging crimes is a bad idea). I also don't think we should treat TL-ness as a crime itself - if a TL person wakes up one day and decides to go and get a job and become a productive member of society, that should be encouraged - they should not lose the ability to do that.

I think that the concept of "prison" is the right idea here, though - apart from the "freedom to leave" thing, there is no reason to provide any better BMSOL to a TL person than to a convicted criminal. In both cases, we only provide that BMSOL for humanitarian reasons. Let anyone who wants to have a bed for the night in conditions that are roughly the same as those in prison: shelter, a bed, basic hygiene facilities, up to three square meals per day and a basic level of medical care. No sex, booze, drugs or TV.

Paying for the BMSOL for the TL whilst making the non-TL pay for those things isn't exactly fair, though, so let's have a guaranteed minimum income (equal to the cost of the BMSOL) for everyone, and give people the choice of receiving it in the form of cash or BMSOL (or some of each).

If you want more than the BMSOL you have to do some work. With the BMSOL system in place, the minimum wage could be scrapped which would mean there would be plenty of work to go around (the problem with unemployment isn't that there's a lack of stuff to do, it's that because of the minimum wage there's a lack of money to pay people to do it).

How to pay for all this? I tend to favour an income tax since it's cheaper to collect and more progressive than a sales tax. I think inheritance tax is one of the most fair taxes, as I've mentioned here before. Seignorage (if carefully controlled) is probably also a good idea. It would be nice if the government had a national surplus rather than a national debt, so that it could make some money from investments rather than having to pay interest. Sin taxes (on booze, tobacco, recreational drugs, pollution and gambling) should be levied exactly as much as necessary to undo the harm that they cause (so smokers should pay the costs of treatment of smoking related diseases, etc) - any less leads to the abstinent paying for the sins of the partakers, and any more could lead to encouragement of the sins.

Income tax should be calculated as a function yielding (the take home pay) from (the salary) such that:

• There is always an incentive to earn more (i.e. an increase in your salary always corresponds to an increase in your take-home pay) - .
• The tax is progressive (i.e. the more you earn the less of your salary you take home): .
• There's no tax on the first penny (i.e. at ).
• A minimum income is guaranteed (i.e. ) rather than a minimum wage ().

Because the minimum income is part of the income tax system, the tax bill is negative for people making less than a certain amount (not necessarily the same as the minimum income).

It would be interesting to write a program to simulate the economics of a society and see what effect various tax and welfare schemes have.

Edit 14th July 2013:

Here's a good article about basic income.

In the year 2000, John McCain was asked by a student, "Why is it that someone like my father who goes to school for 13 years gets penalized in a huge tax bracket because he's a doctor. Why is that - why does he have to pay higher taxes than everybody else? Just because he makes more money. How is that fair?". To his credit, McCain did actually defend the idea of progressive taxation (those who make more money should pay a higher percentage of their income as tax).

It seems to be a common misconception amongst conservatives that progressive taxation is "punishing hard work" (or perhaps it just makes a good soundbite). But I don't think that even the most diehard liberals want to punish anybody for working hard - what should be (and is) punished is good luck. Many extremely wealthy people haven't had to work particularly hard for their wealth - especially those who have inherited it, but also those who have had the good fortune to be selling the right product in the right place at the right time (for example Microsoft in its early days with MS-DOS).

Also, there are a great many people who work extremely hard, but don't make a lot of money (those who work two or three low-paying jobs).

Progressive taxation decreases the reward for being lucky and thereby increases the amount of that reward that is due to hard work. So a (well implemented) progressive taxation strategy actually encourages hard work rather than discouraging it.

Not all progressive taxes are well implemented, though. In the UK there is a VAT limit of (currently) £68,000 per year. If your business makes more than that you have to register for VAT and pay 15 percent on all your profits (not just the profits over some limit). This greatly discourages people who are making just under the limit from working any harder, because if they did they would actually make less money.

I think one of the fairest taxes is the inheritance tax. This is much maligned as the "death tax", a moniker which doesn't make much sense to me as it isn't the dead person that pays the tax, it's the beneficiary. It's a fair tax because there's no hard work involved in inheriting money, you just have to have the good fortune to be born to wealthy parents. The downside of the inheritance tax is it's effect on the "family business" - a child wouldn't necessarily be able to afford to take over a business from his or her parents if there are large inheritance taxes to be paid, and this may lead to the destruction of some otherwise profitable businesses. But why, as a society, should we give that child the gift of this business and not expect anything in return?

A business which would be affected by this must have a large intrinsic value to be subject to the inheritance tax, but also make a small enough profit that it would take an unreasonably long time for the beneficiary to pay it back. I think the answer to this conundrum is investors - the beneficiary ceases to be sole owner of the business but the business can continue to exist and benefit society. Inheritance taxes should be set up in such a way that this can work.

If I suddenly found myself with lots of money to spare, one thing I'd like to do is hire some talented programmers to work on whatever they wanted to work on. I suspect that there are lots of talented programmers out there who have ambitious projects they'd like to take on but which they just don't have time for because they have full time jobs. Most of those projects probably have no commercial application, but it's very difficult to tell in advance what is likely to make money and what isn't. If you get enough of these projects together, at least some of them are bound to make money.

Any profits made could be shared with the entire cooperative, or used to hire more programmers. Sort of like a business and employment cooperative except for programmers rather than entrepreneurs. Ideally once it got big enough it would become self-sustaining and then undergo exponential growth. Part of the nature of software is that it requires very little capital investment (really just the programmers' salary). Another part is that because it can be copied indefinitely and exhibit network effects, once a piece of software is written it can have great influence and importance. So a successful software project can make much more money than it costs, and one only needs a small percentage of projects to be financially successful in order to sustain the entire system.

I imagine that a very large number of programmers would like to join such a cooperative - what could be better than getting paid and not having anyone tell you what to work on? So one would need some method for choosing between a very large number of applications. Let's suppose for a moment we have some infallible way of weeding out people who, given the choice, would rather go skiing or watch TV all day than write computer programs of any sort. Suppose also we have a way of weeding out those programmers who are actually working on something for someone else and want to get paid for it twice.

One way to choose amongst the remainder would be for them each to submit a few ideas of some things they would like to work on, and how much they want to be paid. The cooperative would then pick those ideas that have the most "bang per buck" (i.e. are most interesting, not too expensive and have some chance of commercial success). The member might change their mind about what they work on, but the initial idea would give some idea about what sort of things they're interested in.

Every few months, each member would give a demo of what they've been working on to the rest of the company. Or, alternatively, make regular blog posts about their progress. This gives some cross-pollination of ideas, and may lead to collaborations within the cooperative. Such collaborations can be very flexible and informal, ending as soon as they stop being fun for any of the parties involved.

Suppose you are in charge of a large political campaign (like, say, the ones for Obama and McCain that are going on the moment here in the US). You have a certain amount of money to spend and want to spend that money in a way that will make as many people vote for your candidate as possible. As always with such things, there are bound to be more things that you can conceive of doing than there is available money, so you have to choose only the things that meet a certain "expected number of voters swung per dollar" threshold. I wonder what that threshold is? I.e. if you give $100 to a political campaign, how many extra votes does that buy?

This isn't the same as the total number of votes cast for a candidate divided by the total amount that campaign spent, because some of those voters would have voted for that candidate anyway without the campaign spending any money. I'm interested in the marginal cost of a vote.

I'm sure the figure varies from day to day (if the other candidate makes a big gaffe, you can probably exploit that to swing a lot of voters relatively cheaply) and from state to state (votes in swing states are more valuable than votes in safe states, so it's worth spending more to swing them). I expect it also varies depending on how much the other campaign spends (since it costs money to undo their work). I'm sure the political campaigns do calculations to figure this stuff out - it would be interesting to see their statistics.

I've been reading a lot about startups lately, specifically in the essays of Paul Graham. There is a part of me that regrets not having ever tried to start my own startup - unfortunately the bursting of the bubble and the intricacies of US immigration policy meant that there was never really a practical time. While being filty rich does have a certain appeal, the more compelling reason is the one at the end of this essay - getting the business of getting enough money for life over with as quickly as possible in order that I can work on whatever I want to. The summer/autumn before I started at Microsoft, when I had several months of mostly uninterrupted time to myself to work on whatever I wanted to was one of the most intellectually satisfying (not to mention relaxing) periods of my life.

I have always thought of myself as having progressive politics but this is the best argument I have seen yet against taxing the rich. I guess one possible counterargument is that maybe taking very big risks isn't really necessary to develop new technologies (nor necessarily particularly beneficial to society as a whole) - the only reason that this has been true in the past is that developers and funders of new technologies have very little information about whether these new technologies are likely to be successful or not. With better information, perhaps we will be able to pick the winners before a lot of money has been spent, meaning that the big risks will be unnecessary.

One other thought: as startups become cheaper than ever to create and run, perhaps we will see more of them following the model of craigslist - staying small (in the financial sense) and private and concentrating on what users want instead of aiming for explosive growth, trying to become as profitable as possible and then either go public or get aquired. While the latter is more lucrative, I suspect the former might be more intellectually and spiritually satisfying.

What do Bruce Schneier, Mark Chu-Carroll and Paul Graham have in common? They're all bloggers (though Graham prefers to describe himself as an essayist) who seem to have gradually transitioned towards writing about economics starting from their more specialized subjects (cryptography, mathematics and lisp respectively).

I guess this is because economics is a very powerful subject - if you want to change the world you have to make it worth peoples' while to do so, which means you have to set up the economic conditions for it to do so. Conversely, if you know (or think you know) how the world is likely to change in the next few years you can use economic principles to figure out what to place bets on (invest in).

I think that at some point in the future we will develop nano-replication technology (a la Star Trek: The Next Generation) and there will be perfect open-source recipes for these machines for everything from roast beef to nano-replication machines.

Shortly after that will come the complete collapse of society, because we won't need anyone else for our basic necessities any more. We will just replicate power generators (solar, wind or both depending on climate) and devices for collecting rainwater and making it drinkable. Our waste will be recycled into the raw materials the replicators need (as disgusting as that sounds, I'm sure we'll learn to deal with it) and our internet connections will be made out of wi-fi meshes and long-range point-to-point radio connections.

How can you have any sort of economy with such an absence of scarcity? Well, presumably there will still be some things that are scarce and desirable (like land in nice locations). And presumably there will still be people doing particularly creative things that improve peoples' lives (making movies or inventing new recipes) - we'd just need some way to connect the two.

I'm not advocating for intellectual property as such here (that makes the accounting far more complicated than it really needs to be and introduces artificial barriers to creativity) - instead I'm imagining something more like Nielsen ratings (but for everything) to determine who gets the scarce wealth.

I guess we'll probably always have some form of money, and I'm sure the arguments about how it is accounted for will be as heated as ever. How do you decide on the relative value of the recipe your dinner was made from verses the movie you watched?

A few times now I've heard the meme comparing carbon offset credits to Catholic indulgences - where one can "buy one's way out of punishment". I think this argument is completely bogus and that the similarities are superficial at best.

Carbon offsetting is an economic solution to an economic problem. Many people want to live a more green life but don't want to change their habits to do so - many of the things that they want to buy or do (like air travel) don't have (more expensive) carbon-neutral equivalents. Perhaps such equivalents are possible but the demand isn't sufficient yet for them to be practical. But just like the invention of money made trades possible that were impractical with the barter system, carbon credits make it possible for some people to be carbon neutral without everybody having to be so at once.

The key here is that the aim of the exercise is to reduce the total amount of carbon dioxide in the atmosphere. Doing something which adds CO₂ and something else which removes it is just as good as doing neither.

Sin, forgiveness and punishment don't work like that, though - doing one good deed doesn't (and shouldn't) make up for an unrelated sin of equivalent value, because (unlike CO₂) the total amount of sin isn't a meaningful concept - everyone just cares about the sins that are made against them in particular.

Also, Carbon credits can have a measurable effect whereas it's impossible to be sure just how long you're going to spend in purgatory. So fraud is more difficult (though still possible - we do need to have some way of ensuring that the money spent on Carbon credits is actually being spent on what it is being purported to instead of being squandered and that that activity is having the desired effect).

Imagine if one measured the amount of money one had as a fraction of the total amount of money in the world rather than in arbitrary units. That way, when inflation happens, the number representing the amount of money you have goes down rather than prices going up.

Obviously that would be rather difficult to do with old-fashioned coins and notes but it would be trivial for a Cryptonomicon-style completely electronic currency. We'd probably use units of trillionths or thereabouts (or maybe "year 2000 dollars") to avoid having to write too many zeroes (and avoid accidents miscounting them).

One advantage of such a way of measuring money would be that the effects of inflation would be rather more obvious to people (at least, those of us who keep a more careful eye on our bank accounts than we do on the consumer price indexes) and might therefore discourage inflation somewhat. It would feel more like a tax (which, of course, is what it really is when it comes down to it - a very fair tax, I think, since the people with large reserves of cash seem to be the people who can best afford to pay taxes).

Another advantage is that it becomes easier to compare prices over time (since you don't have to adjust for inflation). A third is that things that tend not to be index linked (but which really should be, like salaries) would be more likely to.

A side effect would be that the velocity of money would greatly increase - cash would be a hot potato.