When Senator Lieberman objected to a Medicare expansion as part of the Senate health care bill, the left went bonkers, accusing him of, among other things, being a tool of the Connecticut health insurance companies and being out to get attention for himself. My local Reform rabbi was denouncing the senator on Facebook ("I wish he would get defeated. That an observant Jew opposes a public option is beyond my comprehension in its total lack of compassion for the poor. What a shanda."), with other Facebook commenters discussing whether and how physically to attack the senator ("Is it illegal to threaten to harm a United States Senator? I don't care. MOIDERIZE HIM!!! DROP A PIANO ON HIM!!! A FLOWERPOT!!! A 16 TON WEIGHT!! ANYTHING!!!"). The Hartford Courant ran a cartoon depicting Mr. Lieberman as having shot Santa Claus. Now the prestigious Mayo Clinic -- hailed by President Obama and New Yorker writer/Harvard Medical School surgeon Atul Gawande as a model of high quality, low-cost care -- has taken essentially the same position: "Senate leadership made a wise decision to drop plans to expand Medicare eligibility. We also applaud the Senate for not pursuing a Medicare‐like, price controlled public option. As we've said, we must build health care reform upon what's working… not on a failing Medicare system." Somehow I doubt that the Mayo Clinic will get the same vituperative reaction that Senator Lieberman did, which suggests to me that the reaction to Mr. Lieberman was more about Mr. Lieberman and his critics and less about the substance of health care policy.

Derek Scott, who served as Prime Minister Blair's economics adviser, has an article in the Financial Times that says, "Today, if rates of return are to rise, it requires not necessarily capitalism 'red in tooth and claw' but certainly more capitalism rather than less. The problem is that in most countries policies are moving in the opposite direction: more regulation (it's called 'better' but it means 'more') and, from some quarters, a desire to replace Anglo-Saxon capitalism with European corporatism."

President Obama tells the Washington Post, "the most important thing we did this year was to ensure that the financial system did not collapse." And here we had thought it was "the mild-mannered man who runs the Federal Reserve" who was responsible for that. Seriously, you have to think carefully about the assumptions underlying the president's statement, because they are pretty remarkable. First is the idea that the "financial system" is or was so fragile and in such bad shape that it was vulnerable to "collapse," an assumption that is open to question. Even if it's true, it doesn't exactly inspire confidence for the president to go around saying it. Second, and closely related, is the idea that if Mr. Obama hadn't done what he did, the financial system would have collapsed. That is an assertion that is impossible to prove, because of what Lawrence Summers correctly calls "the difficulty of constructing a counterfactual and knowing what would have happened without intervention." Finally is the notion that it is within Mr. Obama's power to prevent a collapse of the financial system. It's not a power of the executive branch that is enumerated in Article II of the Constitution, but it is nevertheless a theme that Mr. Obama has picked up from President Bush's treasury secretary, Henry Paulson, whose book, to be published February 1, is subtitled "Inside the Race to Stop the Collapse of the Global Financial System." Mr. Obama held over Bush-era economic officials such as "the mild-mannered man who runs the Federal Reserve" and Timothy Geithner, so it's not totally surprising to see him buy into this story line. But the notion that it is politicians and central bankers who are all that stands between ordinary Americans and a cataclysmic collapse of the global financial system elevates the politicians and central bankers at the expense of entrepreneurs or actual bankers, businessmen, or investors. It also tends to absolve these same central bankers and politicians from responsibility for creating the crisis in the first place. And it creates a pretty low hurdle for declaring success. So what if the unemployment rate is 10% and the federal deficit is somewhere around "$1.6 trillion, or 11.2 percent of GDP, the highest level since World War II." We should all be relieved -- grateful to the president, even, in this view -- that at least we don't have a collapse of the global financial system on our hands.

With Nebraska getting special federal treatment under the Senate health care bill, now Governor Schwarzenegger wants "roughly $8 billion in new aid" for California from Washington -- and not all for health care either. The Los Angeles Times has a report; link via Hotair. There's no discussion of where Washington is supposed to find this $8 billion, though somehow it's hard to imagine it'll be done without raising taxes on Californians.

Having apparently lost the political battle over a health care overhaul, Senators DeMint and Ensign, encouraged by the Heritage Foundation, are preparing to argue that it is unconstitutional in the hope that activist judges (I'm the one calling them activist judges, not DeMint, Ensign, or Heritage) on the Supreme Court will strike it down. When the left tried to do this in the case of restrictions on abortion it was a sign of weakness; it's a sign of similar weakness on the right now. Here is the Heritage post from this morning:

"As of July 25, 73,799 taxpayers had incorrectly claimed $504 million in credits in the program for first-time home buyers," the federal inspector general for tax administration found. The New York Times has a report. The program was so successful it has been extended. As Holman Jenkins writes today, "Fewer banks would have inflicted such damage on themselves if not for the government's role, eight ways from Sunday, in encouraging Americans to incur housing debt, with direct subsidies, tax incentives and the use of Fannie and Freddie to channel China's surpluses into a U.S. housing boom."

For a company on the cutting edge of modern technology, Google sure plays close attention to history. Here is the company's senior vice president, product management, Jonathan Rosenberg, writing about "The Meaning of Open": "When railroad tracks were first being laid across the U.S. in the early 19th century, there were seven different standards for track width. The network didn't flourish and expand west until the different railway companies agreed upon a standard width of 4' 8.5". (In this case the standards war was an actual war: Southern railroads were forced to convert over 11,000 miles of track to the new standard after the Confederacy lost to the Union in the Civil War.)" More: "when traders in the Mediterranean region circa 3000 BC invented seals (called bullae) to ensure that their shipments reached their destinations tamper-free, they transformed commerce from local to long distance." As a historian, it's interesting to me that those thinking hardest about the future, whether it is the future of capitalism or the future of technology, keep an eye on the past.

A friend from overseas writes: Can you suggest a single, simple book explaining why capitalism is better than socialism? Ideas, anyone?

The online discussion I was having last week with After the Fall author Nicole Gelinas of the Manhattan Institute about financial regulation turned out to be so lively that it spilled over into this week. I think it's over now, but if you missed any of it, it is worth catching up on.

Alvin Rabushka's suggestion that the proposal to tax banker bonuses be met with a proposal to tax professors was noted here earlier. Now a letter-writer to the Financial Times notes that the rationale for the bonus tax is to prevent profiting from the state's patronage or rewarding failure, and suggests that the same principle be translated into a special tax on the royalties (or advances) on the books written by politicians or governmet officials. Henry Paulson's book comes out February 1, so the tax-writers better move fast.

President Clinton's secretary of labor, Robert Reich, criticizes the health care overhaul bill from the left, but really, from the point of view of ordinary American taxpayers: "What no one wants to admit is that Congress never actually implements promised Medicare savings. When crunch time comes, it caves in to the AMA and the AARP. In a few years time, when boomers swell the ranks of seniors, and the political power of the AMA and AARP together rival that of Wall Street, the cave-ins will be boggling." More: "Because Big Insurance, Big Pharma, and the AMA will come out way ahead, the legislation will cost taxpayers and premium-payers far more than it would otherwise. Cost controls are inadequate; in fact, they barely exist. If Wall Street's top brass are 'fat cats,' as the President described them last weekend, the top brass of Big Insurance, Big Pharma, and the AMA are even fatter. While they don't earn as much, they're squeezing the public for even more." While Mr. Reich seems not to share my concerns that government-imposed cost controls on drug companies and doctors will discourage innovation and hurt quality, he's onto something with his complaint with his sense that the interest groups are "squeezing the public."

From Poverty to Prosperity, the book by Arnold Kling and Nick Schulz reviewed here back on December 7, is the topic of David Brooks's column in today's New York Times. Mr. Brooks faults economists for having worldviews that are "excessively individualistic." This is kind of like those excessive profits that the White House wants to prevent the health insurance companies from reaping. I think New York Times columnists have worldviews that are excessively communitarian and insufficiently individualistic. But at a certain level, without an explanation of why Mr. Brooks finds the individualism of the economists to be "excessive," you are left with personal preferences or dispositions rather than reasoned arguments. Mr. Brooks finds the economists excessively "rationalistic," too. One is left wondering about the difference between being "reasonable" and being "rationalistic."

The New York Times, which fronts a report on a college president in New Jersey who gets paid more than $1 million a year, has a sidebar on "Other College Heads Who've Been Accused of Lavish Spending" that somehow manages to omit the case of Vanderbilt chancellor Gordon Gee. The Wall Street Journal reported, "Vanderbilt paid more than $6 million, never approved by the full board, to renovate and enlarge Braeburn, the Greek-revival university-owned mansion where Mr. Gee and his wife, Constance, live. The university pays for the Gees' frequent parties and personal chef there. The annual tab exceeds $700,000."

While President Obama and congressional Democrats are getting ready to raise taxes here in America, London-based Bloomberg columnist Matthew Lynn notices that Germany is readying a $12.2 billion tax cut and predicts that as 2010 progresses, "the rest of Europe will catch up." The rest of the press's reaction to the German tax cuts is almost comically negative, with the state-owned Deutsche Welle noting that "69 percent of Germans disapprove of tax breaks" and the New York Times running an article headlined, "German Experts Criticize Country Over Tax Cuts." As James Taranto is fond of saying, What would we do without experts?

The Wall Street Journal has a column predicting that 2010 will be "the year of the regulator" and flagging three key issues in the upcoming fight over an overhaul of financial regulations. One battleground, the Journal writes, is "a somewhat obscure provision that would allow the government to give a 10% to 20% haircut to debts owed to a bank's secured creditors in the event of a federal takeover." This battleground is not obscure to readers of FutureOfCapitalism.com; we've been writing about it since back in October and have nicknamed it the Bair-Miller-Moore Haircut. Another issue of contention, the Journal reports, is whether a fund to resolve or bail out failing banks should be funded before or after a bailout. "It also has become a disputed topic between the FDIC's Sheila Bair, who says it gives the government much-lacking flexibility, and Treasury Secretary Timothy Geithner, who says the fund could create 'moral hazard' in the future," the Journal reports. This dispute, too, was reported here on FutureOfCapitalism.com back in October, in a post headlined "Bair Versus Geithner."