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In his classic book Taking the Risk Out of Democracy, Alex Carey argued that corporate propaganda shapes public political opinion on two different levels: grassroots propaganda aimed at the masses, and “treetops” propaganda aimed at elites and intellectuals. In contrast to grassroots propaganda like, for example, the recent Chamber of Commerce national advocacy campaign,1 “’Treetops’ propaganda is not directed at the person on the street,” Carey wrote. “It is directed at influencing a select group of influential people: policymakers in parliament and the civil service, newspaper editors and reporters, economics commentators on TV and radio.” In the words of one former director of a British neoliberal think tank, it helps to use “intellectual artillery to soften up the enemy’s entrenched strong points,” so that eventually the “ground troops can advance.”2
The purpose of this post is to refute three falsehoods perpetuated by two neoliberal think tanks, the Heritage Foundation and the American Enterprise Institute, in their steady campaign of “treetops” propaganda. These falsehoods have in my experience either been a source of confusion for progressives or have been cited by moneyed organizations like insurance companies to help discredit policies that might threaten their profits. A longer version of this post is available on ZBlogs.
The American Enterprise Institute (AEI) was founded in 1938, partly by executives from corporations such as Eli Lilly, General Mills, Bristol-Myers, Chemical Bank, and Chrysler who were disgruntled with the effects that the New Deal was having on society. Its board is today made up almost entirely of executives from major corporations, and it’s staffed mainly by intellectuals and former government officials. Growing rapidly between 1970 and 1980, when its revenue expanded from less than $1 million with a staff of ten to about $8 million with a staff of 125, it played an important role in ushering in the current era of Reaganist, supply side, neoliberal economics.3 It is currently ranked sixth on a list of America’s most influential think tanks, the second highest of “partisan” think tanks, just behind the Heritage Foundation.4
The Heritage Foundation was founded in 1973 with help from beer magnate John Coors. It was instrumental in creating the Contract with America that helped Republicans win a 1994 majority in Congress. In partnership with the Wall Street Journal, it publishes the annual Index of Economic Freedom. The Index notes that this year, “Regrettably, populist attacks on the free market, fueled by the economic slowdown and the political temptation of quick interventionist remedies, have gained momentum.” It is currently ranked fifth on a list of America’s most influential think tanks, the highest ranked of those that are considered “partisan.”5,6
Falsehood #1. The US does not spend an excessive proportion of its GDP per capita on health care.7
This statement is so clearly untrue that it doesn’t seem to be quoted much even by other right wing sources, but it’s still important because it demonstrates a total lack of intellectual integrity by the AEI authors who made the claim.
To understand how they rationalize this, let’s start with another analysis of US health spending by Princeton economist Uwe Reinhardt published on the New York Times Economix blog.8 Here’s the graph from that website.
Reinhardt explains:
You’ll notice that there is enormous variation in health spending per capita in different countries within the O.E.C.D. But the graph also indicates that there exists a very strong relationship between the G.D.P. per capita of these countries (roughly a measure of ability to pay) and per-capita health spending. The dark line in the graph is a so-called regression equation (whose precise mathematical form is shown in the upper left corner).
That line tells us something important about the relationship between a country’s wealth and its health care spending.
An additional insight from the graph, however, is that even after adjustment for differences in G.D.P. per capita, the United States in 2006 spent $1,895 more on health care than would have been predicted after such an adjustment. If G.D.P. per capita were the only factor driving the difference between United States health spending and that of other nations, the United States would be expected to have spent an average of only $4,819 per capita on health care rather than the $6,714 it actually spent.
Now let’s compare the American Enterprise Institute source. After listing a similar graph to Reinhardt’s, they then explain that it is irrelevant because the U.S. “residual” is sensitive to “model specification.” In other words, you can just do this:
But as other bloggers have noted,9 they give no justification for why you would do that. They do state the US is an extreme value, because it’s richer than almost all other countries, but that difference pales in comparison between differences between many of the other countries in the model (in other words, the US isn’t an “outlier” in a technical statistical sense). And as Reinhardt states, the intuitive, straight line model is a very good fit:
Just knowing the G.D.P. per capita of nations helps us explain about 86 percent of the variation in how much different countries pay for health care for the average person.
One of the principles learned in any basic class on regression is that if you can get away with a straight line model, that’s the way to go: “simplest is best.” AEI’s claim is pure ideology.
In an effort to promote Z Magazine, ZNet, and ZBlogs, I have made a longer version of this post (and falsehoods 2 and 3) available exclusively on ZBlogs. Z Magazine is currently in dire financial straits and desperately needs support. It had to reduce the size of the October issue due to lack of funds and reportedly may fold up as soon as January 2010 if donors don’t help. Given its extremely valuable perspective and twenty year history, this would be a tragedy. Also, for those bloggers of explicitly leftist persuasions, ZBlogs is one of a very few blogs that is too—so you may want to consider becoming a Sustainer and posting there.
5 Comments
Great post, and definitely crucial. It’s still important to push back on these types of folks. They’re the foundation of a powerful wing of the Republican party.
Bill Kristol “kill” health care reform
Spread this one far and wide
http://news.firedoglake.com/2009/10/17/obama-attacks-insurance-industry-in-latest-youtube-message/#respond
“not the time to pat ourselves on our backs, not the time to be complacent”
You can spend $200,000.00 for a $30,000.00 car, and it doesn’t make it a better car.
It’s not what you spend on something it’s what you get for it.
Did you hear about the guy that His healthcare to stay alive costs a million dollars a year. There is nothing they can do to a human body that should cost a million dollars. Someone is getting very well off, on His need to stay alive. I’m sure it’s all compassion for Him.
Thanks for this useful post. I recognize the dodgy curved regression graph, which has been floating around some blogs, an Angry Bear poster put it up awhile ago. The logic of the curved regression line is that there is a magic point, just coincidentally above the second highest per capita income country, where per capita costs start to rise rapidly, and just coincidentally, expected per capita health care spending for any high income country would just match that of the US, if the other country had a similar per capita income.
Just to amplify three issues. One, the curved regression line is a bad fit compared to the linear regression line. The distance between each individual country’s acutal income and healthcare spending and the regresion line should be random, and there should be no pattern to it across countries. This is roughly true of the linear regression line, but not of the curved regression line, as can easily be seen. The curve line systematically overestimates, then underestimates, then overestimates the healthcare costs of countries in the sample. I can state categorically, that the curved regression would not pass muster in a student project in an intermediate statistics class. And I do not remember having a student with sufficiently poor judgment to try to get away with such an obviously bad analysis.
Second, the graph with the curved regression line uses a data sample that stops in the early 2000s. If you use later data, up to 2006 or 2007, the linear regression line still works, but the curved one does not, or at least requires more fiddling to get the desired conclusion. The reason is because a few other countries’ per capita incomes have caught up to the those of the US since the early 2000s. That makes finding a magic point where costs would rise for all countries to the US level, but also matches the historical data much more difficult. If you looked at data across countries and for different time periods simultaneously (panel data estimation), the curved regression is almost impossible to justify.
Third, the curved regression line is sensitive to the choice of measures used for per capita health spending and income. The linear regression line is much less sensitive.
In encourage people to check out the remaining 2 myths on the Z-net blog. (though I think I did write something that disposed of myth number two on the Seminal Reader Wire awhile back).