As health care costs keep rising, a good part of that rise is due to insurance fraud.  According to the New York Times, 10 doctors, in 9 separate clinics, funneling money  through a total of 105 different corporations conspired to defraud private insurance programs for over $250 million.  And this plot is just the tip of the iceberg in a vast culture of fraud.

American Rattlesnake cares because most of these conspirators are immigrants from the ex-Soviet Union:

This one, like many others, was rooted in Brighton Beach, Brooklyn, the locus of the city’s Russian-speaking immigrant population, many of whom grew up under a Communist system that bred disdain for the rules and a willingness to cheat to get around them.

Brighton Beach has one of the highest rates of health care fraud in the nation, according to federal statistics. In fact, an analysis of data from the Centers for Medicare and Medicaid Services, the federal agency that regulates those two programs, shows that more health care providers in the Brighton Beach ZIP code are currently barred from the programs for malfeasance than in almost any other ZIP code in the United States. (The top spot is in southern Florida, with its high proportion of older residents.)

“This is the Russian mind-set, and this is why it’s endemic in the system,” said one law-enforcement official who has investigated organized-crime groups from the former Soviet Union. “If you’re not scamming the system, if you’re not scamming the government, you’re not doing what you’re supposed to be doing — you’re looked upon as a patsy.”

The photograph above is, of course, one of former Speaker of the House and current Republican presidential candidate Newt Gingrich. He was in town to sign his new book, A Nation Like No Other, along with his wife, who has a book of her own. But the most important part of his visit was a town hall forum held in the Hilton Garden Inn in Bloomfield, Staten Island, which was sponsored by the Staten Island Tea Party.  As a reminder, you can access my live tweet of the event by going to my Twitter profile page, Odd Lane.

There were a number of interesting aspects to this event, not the least of which was the decision to hold such an important campaign appearance in the backyard of former Staten Island borough president Guy Molinari, who’s not only an important Mitt Romney backer but also a personal foe of Gingrich dating back to their days as backbenchers in the House of Representatives. This goes to the heart of his presidential campaign, and perhaps points to the essential duality of Newt Gingrich as a political personality. While critics would view this gambit, like his Eli Manningesque certainty of being the eventual Republican presidential nominee, as an example of Newt’s insuperable arrogance, supporters would cite it as merely another illustration of their candidate’s confidence in the resonance of his ideas among the public. It’s that quality that impelled him to challenge President Obama to a series of seven Lincoln-Douglas style debates, should he be the Republican nominee. Without question, it’s something that the media and potential primary voters and caucus-goers will focus on as the Gingrich campaign progresses.

There’s no question that rhetorically Newt Gingrich cuts an impressive swath, and would be a formidable opponent in a theoretical race against the President. Yet, the discursive nature that was on full display yesterday is a double-edged sword. A perfect example was a period in his speech where he quickly transitioned, mid-stream, from a critique of this administration’s hostile actions towards Israel, to a somewhat glib suggestion that the job of tracking illegal aliens should be outsourced to private corporations like Fed-Ex, to a more thoughtful, holistic analysis of the fundamental distinction between the private and public sectors. Some of his observations are spot-on, for example, his point that Russian organized crime is indispensable to Medicaid and Medicare fraud in this country, particulary in the state of California but throughout the entire country. Whether he’ll be able to synthesize these conceptually intriguing themes into a systemic philosophy that will appeal to a majority of the electorate remains to be seen. Like the immigration question-which others have finally come to recognize as the defining issue of this Republican primary campaign-this is something that Newt Gingrich will have many opportunities to address if and when he becomes the de facto alternative to heretofore presumptive GOP nominee Mitt Romney.

Putting those caveats aside, here are some scenes I captured while I was attending yesterday’s town hall, including some interesting neoclassical and modernist sculpture.

I arrived at the Hilton a few hours before the town hall was slated to begin, but the event organizers were kind enough to let us inside of the banquet hall early.

There was lots of Gingrich campaign paraphernalia available to those who wanted it.

Including that ubiquitous election prop, the campaign button.

In addition to ones advocating the election of Newt Gingrich, there were also others espousing more generic conservative and libertarian  free market themes.  Including Bureaucrash buttons:

As well as a variation on the Gadsden Flag, which has become the Tea Party’s unofficial banner.

The rattlesnake made several appearances throughout the day, which this website can’t help but appreciate.

The Gipper was also given his due:

I was surprised by how quickly the hall filled up, although perhaps I shouldn’t be, considering the notoriety of the speaker invited.

I unexpectedly ran into several friends and compatriots there, including Long Island political activist Grace Colucci of the Independent Sentinel and Conservative Society for Action. A good friend of American Rattlesnake, Grace is also a Republican Party committeewoman in Suffolk County and an example of the necessity of participation to effect political change.

I was also able to meet Ilya Galak, the creator of Citizens USA, as well as a  leader of the recently created Jewish Tea Party.  Born in a country that was once part of the USSR, I’m sure he recognizes the sentiment expressed in the sticker below:

Also there was Andy Sullivan, of Blue Collar Corner, who has been active in what’s come to be known as the anti-Ground Zero mosque movement.

Of course, the memes derived from the Occupy Wall Street movement were inescapable, even in a tony hotel on the West Shore of Staten Island. While several OWS attendees attempted to disrupt Gingrich’s speech-all of them responded to in kind by Gingrich supporters-there were several people who used the opportunity to reframe the dialogue about class and politics that has been shaped by those with tendentious anti-capitalist viewpoints.

There were a bevy of well-connected politicos at the Hilton, including the current chairman of the Staten Island  Tea Party, Frank Santarpia, pictured below.

Newt himself was greeted by thunderous applause, as well as the wholly inexplicable Dog Pound “woof” normally associated with the former late night talk show host Arsenio Hall. Regardless of the peculiarity of the greeting, it can’t be denied that his supporters are enthusiastic about his candidacy, in decided contrast to those endorsing Mitt Romney.

Time will tell whether the throngs who eagerly awaited his signature yesterday will translate into primary victories a few months hence.

Such was the title of a debate held at the Asia Society, sponsored by Thomson Reuters, which I attended several weeks ago. Coming at a time of agonizing societal fissures arising from debates over austerity, stimulus, and the wisdom of government intervention into the economy, this event pitting the backers of a Hayekian view of economics against those who espoused a Keynesian model seemed incredibly timely. After explaining to the audience the general structure of the debate and how it would be judged-spectators were given gadgets similar to those distributed at IQ2 debates, which they were to use to vote for the side they agreed with at the beginning and conclusion of the debate-Harold Evans and Nicholas Wapshott, author of Keynes Hayek: The Clash That Defined Modern Economics, limned the underlying philosophical division that gave rise to this debate. 

As the introductory remarks made clear, the 80 year-old clash between Keynes and Hayek was “one of the most vituperative divisions in economics,” and the fact that this debate still carried resonance many years after the deaths of both men demonstrated the pertinacity of both schools, which reflected in some measure the confidence that both men had that their views reflected the definitive understanding of how economics works at an empirical level. Despite the deep esteem in which Hayek held the world-renowned English economist as a young man in post-war, inflation-wracked Austria-Keynes was celebrated throughout the territory  of vanquished Central Powers for his anti-Versailles manifesto, The Economic Consequences of the Peace-he would eventually become the chief intellectual antagonist of Keynes among neo-classical, liberal economists.

Although attempting to synopsize either man’s complex body of work into a few sentences is impossible, it’s generally understood that where the two men differed was in their philosophies about economic growth. Whereas Hayek was adamantly opposed to the easy money policy pursued by some central banks and felt that inflation was the primary scourge of humanity, Keynes believed that deflation and mass unemployment were more pressing concerns. He felt that there were moments in history where a misallocation between supply and demand because of microeconomic actions led to recession and unemployment. Therefore, the government needed to spur demand in certain sectors of the economy whose stagnancy could not be sufficiently addressed by the free market.

This point was emphasized by one of the Keynesians in particular, Steven Rattner, who most of you might remember as President Obama’s car czar. Others might remember him chiefly for the 10 million dollar settlement he was forced into by Andrew Cuomo after a lengthy SEC investigation involving his private equity firm, Quadrangle. Either way, he maintained that, despite his abiding faith in capitalism, there were moments in history when the government needed to rescue the free market from itself. His chief example of such a case was the large federal bailout of failing Detroit auto-makers Chrysler and General Motors, which he supervised. Rattner asserted that the domestic auto industry would have collapsed, had it not been for the direct intervention of Congress and the White House in 2008 and 2009. The capital markets were simply not willing to lend to GM or Chrysler, with the result being that both companies faced imminent bankruptcy-and their suppliers a similarly parlous fate-if the government did not step in to save both corporations with a desperately needed line of credit. In this case, one extended at the expense of American taxpayers.

It should be noted that the federal government’s response to what Rattner described as a “market failure,” but which his Hayekian opponents-during the question and answer period-labeled a “market verdict,” has come in for criticism from both the left and the right. This critique of the actions by Washington D.C., at least from a Hayekian perspective, is remarkably similar to the criticism leveled against the New Deal policies Keynes played a large role in shaping during the Roosevelt administration. Namely, that the government does not have enough knowledge, and certainly hasn’t the right tools, to redress structural, macroeconomic problems such as unemployment and deflation. Even if there is a place for government intervention-and James K. Galbraith, the lead debater for the Keynesians, was quick to specify all the areas in which Hayek believed the government should play some role-it must recognize the inherent danger of trying to manipulate economic outcomes.

The two most critical areas where that danger manifests itself are fiscal stimulus in the form of deficit spending, which inevitably leads to a greater debt to GDP ratio, and the inflation that results from monetary easing. These were also the two areas that came in for the most criticism from the Hayekian side. In particular, Manhattan Institute economist Diana Furchgott-Roth, who pointed out that our current debt to GDP ratio was higher than at any time in this nation’s history since the Second World War. She also took aim at a report co-authored by former Obama administration officials Christina Romer and Jared Bernstein, which attempted to predict future  unemployment rates both with and without the American Recovery and Reinvestment Act, otherwise known as the Stimulus Bill. Romer-then in charge of President Obama’s Council of Economic Advisors-famously predicted that without the stimulus plan the unemployment rate could rise as high as 8.8%. Of course, our currently unemployment rate, stimulus included, well exceeds that figure.

Sylvia Nasar, a business journalist who teaches business journalism at Columbia University, countered that monetary policy is more effective in dealing with problems like persistent unemployment, citing the work of Milton Friedman, probably the most emblematic monetarist of the latter half of the 20th Century. She also invoked the examples of pre-WWII Sweden and Japan, neither of which experienced the deep economic depressions of Western Europe and North America, yet both of which  ”ignored Hayek’s advice” with regard to monetary policy. Nasar insisted that there was a deep correlation between monetary stimulus and economic recovery, using the two examples above as evidence that determined policy had prevailed against “nature’s cure” in the realm of ideas. This raised yet another point of contention during the debate, which was the Keynesians’ accusation that their Hayekian opponents were complacent do-nothings who had no concrete plan to address pressing macroeconomic dilemmas such as unemployment.

Lawrence H. White, an economics professor at George Mason University, vigorously disputed this assertion, noting that Hayek advocated constancy in the money supply when advising central banks, and advocated the maintenance of nominal spending in order to avoid deflationary spirals. Even so, White reiterated the Hayekian critique of fiscal stimulus, reasserting a classical liberal maxim that we “don’t undertake public works whose costs exceed their benefits.” This jab was aimed at the public infrastructure investment envisioned by the Obama stimulus package, which Diana Furchtgott-Roth described as a thinly-veiled payoff to President Obama’s supporters among organized labor. In a swipe at an iconic passage from Keynes’s General Theory of Employment, Interest, and Money, White summed up his contempt for this sort of public investment for the sake of stimulating the economy by asserting that “we can’t restore prosperity by having the government build pyramids.” This, in turn, prompted a retort by one of the Keynesians that the construction of the Giza pyramids was an abundant source of jobs for Egyptian laborers. Hence, a boost for the economy of Egypt.

In addition to the standard Hayekian critique that this sort of fiscal stimulus debases the currency, and therefore impoverishes the standard of living, White also tackled what most feel is the proximate cause of the 2008 economic crisis. Namely, the burst of the housing bubble. He claimed that “we had permanently reduced our living standards by over-investing in real estate during the economic boom.” John Cassidy, a staff writer for The New Yorker and perhaps the most solidly anti-Hayek speaker on the Keynesian side, also identified the cause of America’s economic as being the collapse of the housing market, but assigned blame to the private sector. He dismissed the Austrian diagnosis of the causes of the collapse, asserting that the Community Reinvestment Act had little to with the skyrocketing foreclosure rate, and the culpability of GSEs like Fannie Mae and Freddie Mac was minimal when compared to the exposure of private sub-prime lenders who engaged in reckless lending and catastrophically bad or ill-timed investments. Cassidy went even further than most of his colleagues on the Keynesian side, asserting that “Hayekianism is not even a distinct policy doctrine,” and that Hayek himself “gave up the debate with Keynes about macroeconomics.” Cassidy wrapped up his remarks by quoting current chairman of the House Budget Committee Paul Ryan, who at a congressional hearing during the 2001 recession encouraged deeper tax cuts that would “juice the economy.” Cassidy, echoing the sentiment of other Keynesians, such as Ezra Klein, claimed that this statement demonstrated the resonance of stimulus spending, even among those who would reject the label of Keynesianism.

For his part, Stephen Moore agreed that tax cuts were an integral component of economic growth. However, he rejected the notion that Keynesianism was responsible for the economic growth the United States experienced during the 1980s. Using September 1983 as a benchmark, since it was the same point in the Reagan presidency as we are experiencing in the Obama presidency, he contrasted that month’s employment figures, which saw the creation of over 1.1 million jobs and a third quarter growth rate of 8.4%, with the anemic growth our economy is currently experiencing. Moore also pointed out that the Paul Volcker-led Federal Reserve had applied precisely the Hayekian remedies that the other side decried, yet his constriction of the money supply not only slayed the inflationary dragon but seemed to disprove the Keynesian assumption-voiced by Keynes followers like Sylvia Nasar-that monetary easing was inextricably linked with economic growth and robust employment. At the same time that Moore praised the policy prescriptions adopted by President Reagan, he faulted his inability to encumber spending by Congress. Of course, John Cassidy took a contrary view, asserting that David Stockmam’s failure to rein in discretionary spending as Chairman of the Office of Management and Budget was a boon to the U.S. economy. He also claimed that the tepidity of the current economic recovery should be attributed to the decline in spending at the state and local level, which is commensurate with the rise in spending at a federal level.

Perhaps the most intriguing statement made during the course of the hour and a half-long debate was the claim by James K. Galbraith that “the United States is not in a debt trap; debt levels, by historical standards, are not that large.” While this might seem like an implausible claim when viewed in the context of a national debt that eclipses 14 trillion dollars, and a government whose payment obligations range from 100 to 200 trillion dollars, it is not an entirely aberrant perspective. In fact, there is a rather popular book whose author attacks the very notion of retiring the national debt.

What was surprising about this debate was the willingness among some of the Hayekians to countenance government intervention into the economy, although perhaps it shouldn’t have been considering the political views of Hayek himself, who supported numerous interventionist policies during his lifetime. To the chagrin of my anarcho-capitalist friends in the audience, Edmund Phelps-a 2006 Nobel laureate in Economics-repeatedly emphasized areas in which he supported government intervention into the economy, at one point during his closing statement even rejecting the label of “Hayekian.” During his opening remarks, he made the point that the depressions experienced by Keynes were monetary in origin-signaled by rapid deflation-and that, as a response, monetary policy had to be altered. Since the economy in our current financial crisis initially faced what was essentially a liquidity problem, “the Keynesians were right to urge the Fed to increase demand for money.” Phelps contended, however, that since today what we are facing is a “structural slump” Keynes’s theory of employment was not applicable. In addition to supporting the first round of quantitative easing undertaken by the Federal Reserve, in his closing remarks Phelps seemed to imply that portions of the jobs’ plan put forth by President Obama were worthy of consideration.

I’m not sure if it was this nuance that led to the ultimate result, but at the conclusion of the debate a slim majority, 52% of the audience, professed themselves to be “pro-Keynes.” It should be noted, however, that this was only an increase of 5% from the outset of the evening’s debate, whereas the “pro-Hayek” side of the ledger gained the support of an additional 9% of the crowd, from a starting point of 33%. The Hayekian interpretation of this result is that the anti-Keynes forces were more persuasive in making their arguments, although strategic voting might have also played a role. In either case, I think the debate over whose ideas are more sound will persist for some time. Perhaps it will even be expanded to include an even more consistently anti-state Austrian viewpoint that will satisfy my disenchanted anarcho-capitalist friends.

Mises vs. Fisher anyone?

When the subject of illegal Palestinians living inside of Israel is broached, we more often than not view it through the prism of  terrorism directed against the Jewish state. Considering the collaboration between Israeli Arabs and Islamic terrorist organizations in the region, such as Hamas or Hezbollah, that’s not an altogether baseless concern.

We’ve also been told countless times of the alleged plight of Palestinians working inside of Israel illegally, often within the context of a broader condemnation of Israel’s construction of homes for citizens living on the West Bank.

What’s less frequently discussed are the problems posed by the large sub-population of Palestinian illegal aliens living within Israel on a daily basis. The gravity of this problem though was made apparent recently when an eleven year-old Israeli boy was habitually raped and tortured at the hands of four Palestinian men. As gruesome as this crime is, it reflects the enormous problems you invite into your country when you sanction the presence of hundreds of thousands-or in our country’s case, millions-of illegal aliens. Peruse New York tabloids from the past decade and you will find hundreds of criminal incidents that illegal aliens lie at the heart of, including one of the most notable cases, the brutal murder of acclaimed actress/director Adrienne Shelly by a nineteen year-old IA from Ecuador.

Nations can continue to ignore this problem-in order to reap the dubious benefits of access to a cheap supply of labor-or they can grapple with the enormous human cost of illegal immigration. As last week’s horrific revelations in Israel demonstrate, this is a problem that all Western nations must face, even if they are reluctant to do so.