Christmas Links

This is crazy, check it out. A high rise fell over intact in Shanghai.

A really interesting blog post about the future of cell phones, cell companies, and Google.

Johnathon Chait says Republicans screwed up by trying to defeat health care reform instead of influence health care reform. I agree!

Matt Yglesias agrees with Chait and makes the obvious but interesting observation that by not participating in the reform process "they gave all their leverage away to Joe Lieberman and Ben Nelson, so we wound up with some weird freebies for Nebraska." This should have been obvious to any casual observer but somehow was still lost on Mitch McConnell.

Ezra Klein channels Tom Harkin who thinks the Nelson deal (getting full federal reimbursement for Medicaid expansion) might lead to full federalization of Medicaid.

Auction Broadcast Spectrum

Presently broadcast television is allocated a certain/significant amount of spectrum, spectrum that could be used for other applications such as broadband. What is galling about this arrangement is that the government is conferring a scarce and hence extremely valuable resource for free. Mark Cuban suggests reclaiming the spectrum and auctioning it off. I wholeheartedly agree. In general, outside of reserving spectrum for first responders and for national security reasons I don't understand why the default presumption isn't to auction spectrum.

update: Whoops! I was hasty. Cuban also makes a good counter argument, along the lines of national security/emergency response, for why you wouldn't want to sell off spectrum. Anyhow, it's in interesting post, read it (all the way through I should say).

Google Chrome Now Available for Macs

Beta version here. Jiggity.

Tyler Cowen has a good post on the problems with mandates, namely, mandate creep:

"Breaking a three-day stalemate, the Senate approved an amendment to its health care legislation that would require insurance companies to offer free mammograms and other preventive services to women.

The vote was 61 to 39, with three Republicans joining 56 Democrats and the two independents in favor."

Tyler leaves unexplored what this means for the proposed IMAC/IMAB (the medicare board that is supposed to propose cuts which congress can vote up or down). Ezra Klein and other progressive bloggers consistently tout the IMAC as a central mechanism for cost control. That said, congress voted to include this benefit just as study was released indicating that the US's mammogram protocol is probably too extensive, and thus too expensive for the benefit conferred. Or in other words, that it doesn't pass muster with respect to comparative effectiveness. This was a controversial finding, and I don't have the capacity to know whether it is dispositive. But, it does highlight a tradeoff, the type of tradeoff that the IMAC board will be proposing, ostensibly in order to "bend the curve". To me this says, unfortunately, that the IMAC proposal has little potential of "bending the curve" as Congress will always be loathe to cut benefits (especially seniors' benefits).

AARP and AMA Endorse Health Care Plan

What meaning can one discern from these endorsements? This certainly indicates a greater likelihood for passage of health care reform. However, it is also indicative of what two important groups (Seniors and Doctors) perceive of the likely success of cost controls.

AARP

AARP's endorsement indicates that it thinks one of two things will occur: (1) the proposed medicare savings (which represent the majority of the cost savings in the health care reform bill) will not affect seniors care; or, (2) the congress will never pursue the cost savings proposed (a la the annual kabuki with provider reimbursement rate cuts). This may be cynical, but I think AARP envisions the latter not the former transpiring.

AMA

Health Care reform would represent a boon to doctors in that it would expand the market for their services. There would be 21 million new, paying customers which would increase their overall volume and also the prices they can command. In theory, this would be mitigated to some degree by Medicare reimbursement cuts and reforms; but I suspect, the AMA also recognizes that these aspects of the health care reform are unlikely to materialize.

An Interesting if Incomplete Narrative on Income Inequality

From Arnold Kling:

"I think that perhaps the most important trend of the past thirty years is the increased importance of cognitive skills relative to physical labor. Obviously, this has been going on for more than just the past thirty years, but during the past thirty years we saw an acceleration. This has had a number of consequences:

1. It changed the role of women. Their comparative advantage went from housework to market work.

2. This in turn, as Wolfers and Stevenson have pointed out, changed the nature of marriage. Men and women look for complementarity in consumption rather than in production.

3. This in turn leads to more assortive mating, with achievement-oriented men looking for interesting mates rather than for good maids.

4. This in turn leads to greater inequality across households. It also fosters greater inequality among children. The children of two affluent parents are likely to have much better genetic and environmental endowments than the children of two (likely unmarried) low-income parents.

5. Inequality is exacerbated by globalization and technological change. If your comparative advantage is basic physical labor, you have to compete with machines as well is with workers from the Third World.

The net result is an economy that has improved considerably for people with high cognitive skills, but which has improved only somewhat for people with relatively low cognitive skills."

There is one thing that this narrative leaves out: the top 1%. It does seem that when you are looking at that top 1%, which has been pulling away from the rest of the population, I think you see two trends: 1) a greater return for entrepreneurs as a result of lower startup costs and easier access to capital (a positive development); 2) eroding social norms relating to CEO pay generally and the finance industry as a whole thus enabling CEO/finance to extract greater rents from shareholders.

UAW's Game Plan

Labor is its own worst enemy. The UAW membership are killing a plan that their leadership negotiated with Ford management that was more generous than they obtained from Chrysler and GM (courtesy of Uncle Sam and their respective perverted and politicized bankruptcies). While Ford seems to be turning around and has a decent cash cushion, it also has a pile of debt and a decreasing though still significant burn rate. This seems quite foolish on the UAW's part. If Ford continues to be at a labor induced competitive disadvantage (compared to non-UAW manufacturers and now Chrysler/GM which are partially owned by the UAW) chapter 11 is likely in its future. There is a greater likelihood by that time that some entity other than Uncle Sam will be able to provide Debtor-in-Possession financing in which case it is unlikely that the bankruptcy proceedings will be tilted to the UAW's benefit as much as they were for GM and Chrysler.

Cowen on Mandates

Tyler Cowen has an article on the problem with the individual mandate. I think his point is valid but without a mandate you have a significant free rider issue. I have been going back and forth on which is better: buying across state lines or setting up a national exchange. The principal concern I have with a national exchange is that it will increase the prospect of regulatory capture by the AMA. If it is the only means of purchasing health care there is a risk that doctors will lobby congress to mandate benefits ultimately causing an increase in premiums. That said, a national exchange is better equipped to deal adverse selection since you could conduct an ex post risk adjustment on all providers on the exchange to ensure that insurers do not select only good risks.

Zingales on Gramm-Leach-Biley

Here is an interesting observation from Zingales:

"The real effect of Gramm-Leach-Bliley was political, not directly economic. Under the old regime, commercial banks, investment banks, and insurance companies had different agendas, and so their lobbying efforts tended to offset one another. But after the restrictions were lifted, the interests of all the major players in the financial industry became aligned, giving the industry disproportionate power in shaping the political agenda."

hat tip: Arnold Kling

My Prediction on Health Care

I think the bill will ultimately die. I think once it gets to the floor the amendment process will yield more extensive coverage benefits, reduced medicare cuts, and weakened pay-fors causing the bill to collapse in on itself.

Watching the VA Gov Debate

McDonnell seems like a car salesman but I think he will win. Deeds stutters. This is a fundamentally trivial observation but given that the average voter is completely arbitrary I think it is something that will cut against deeds at the ballot box.

Obama on the Nobel Prize

While I think this whole deal is absurd, I am always impressed at how classy Obama is. Here is the transcript:

Good morning. Well, this is not how I expected to wake up this morning. After I received the news, Malia walked in and said, "Daddy, you won the Nobel Peace Prize, and it is Bo's birthday!" And then Sasha added, "Plus, we have a three-day weekend coming up." So it's good to have kids to keep things in perspective.

I am both surprised and deeply humbled by the decision of the Nobel Committee. Let me be clear: I do not view it as a recognition of my own accomplishments, but rather as an affirmation of American leadership on behalf of aspirations held by people in all nations.

To be honest, I do not feel that I deserve to be in the company of so many of the transformative figures who've been honored by this prize -- men and women who've inspired me and inspired the entire world through their courageous pursuit of peace.

But I also know that this prize reflects the kind of world that those men and women, and all Americans, want to build -- a world that gives life to the promise of our founding documents. And I know that throughout history, the Nobel Peace Prize has not just been used to honor specific achievement; it's also been used as a means to give momentum to a set of causes. And that is why I will accept this award as a call to action -- a call for all nations to confront the common challenges of the 21st century.

These challenges can't be met by any one leader or any one nation. And that's why my administration has worked to establish a new era of engagement in which all nations must take responsibility for the world we seek. We cannot tolerate a world in which nuclear weapons spread to more nations and in which the terror of a nuclear holocaust endangers more people. And that's why we've begun to take concrete steps to pursue a world without nuclear weapons, because all nations have the right to pursue peaceful nuclear power, but all nations have the responsibility to demonstrate their peaceful intentions.

We cannot accept the growing threat posed by climate change, which could forever damage the world that we pass on to our children -- sowing conflict and famine; destroying coastlines and emptying cities. And that's why all nations must now accept their share of responsibility for transforming the way that we use energy. We can't allow the differences between peoples to define the way that we see one another, and that's why we must pursue a new beginning among people of different faiths and races and religions; one based upon mutual interest and mutual respect.

And we must all do our part to resolve those conflicts that have caused so much pain and hardship over so many years, and that effort must include an unwavering commitment that finally realizes that the rights of all Israelis and Palestinians to live in peace and security in nations of their own.

We can't accept a world in which more people are denied opportunity and dignity that all people yearn for -- the ability to get an education and make a decent living; the security that you won't have to live in fear of disease or violence without hope for the future.

And even as we strive to seek a world in which conflicts are resolved peacefully and prosperity is widely shared, we have to confront the world as we know it today.

I am the commander-in-chief of a country that's responsible for ending a war and working in another theater to confront a ruthless adversary that directly threatens the American people and our allies. I'm also aware that we are dealing with the impact of a global economic crisis that has left millions of Americans looking for work. These are concerns that I confront every day on behalf of the American people.

Some of the work confronting us will not be completed during my presidency. Some, like the elimination of nuclear weapons, may not be completed in my lifetime. But I know these challenges can be met so long as it's recognized that they will not be met by one person or one nation alone. This award is not simply about the efforts of my administration -- it's about the courageous efforts of people around the world.

And that's why this award must be shared with everyone who strives for justice and dignity -- for the young woman who marches silently in the streets on behalf of her right to be heard even in the face of beatings and bullets; for the leader imprisoned in her own home because she refuses to abandon her commitment to democracy; for the soldier who sacrificed through tour after tour of duty on behalf of someone half a world away; and for all those men and women across the world who sacrifice their safety and their freedom and sometime their lives for the cause of peace.

That has always been the cause of America. That's why the world has always looked to America. And that's why I believe America will continue to lead. Thank you very much.

FHA Bailout

It looks like the FHA will require a bailout. Here is a chart detailing their delinquencies.

Nobel Peace Prize

Barack Obama won. I think he won because he is not George Bush. I suspect that the American voter was the original intended recipient until somebody in the Nobel Committee realized that George Bush was term limited.

Update: Maybe he is getting the Nobel for sending more troops to Afghanistan?

Update 2: Some will point out that when Obama was nominated that he had only been in office for 12 days. Well, maybe those were a very eventful 12 days?

Update 3: Mickey Kaus has a novel suggestion: decline it.

Other People's Money

The graph above is very telling. Over the last thirty years out of pocket spending has fallen precipitously. In this same period health care expenditures have risen tremendously. The reason I focus on out of pocket spending is that it's absence is illustrative of two major definciencies in the health care system:

1. Administrative Inefficiency (at an absurd level): Adding third and fourth parties to a transaction typically raises the cost of said transaction

2. Perverse Incentives: When you are spending other people's money you are more prone to waste. In the health care context this is the equivalent of ordering expensive tests with limited value, brand name drugs were generic drugs are adequate, etc.

Electric Utilities

Brad Plummer has a fascinating article on utilities.

Great Brooks Column

As they say, read the whole thing.

Solar Decathlon

If you live in the D.C. area you should go to the mall and check out the Solar Decathlon on the mall. Here is a blurb on the Solar Decathlon:

To compete, the teams must design and build energy-efficient homes that are powered exclusively by the sun. The houses are required to:

• Be attractive and easy to live in
• Maintain comfortable and healthy indoor environmental conditions
• Feature appealing and adequate lighting
• Supply energy to household appliances for cooking and cleaning
• Power home electronics
• Provide hot water
• Balance energy production and consumption.

Universities around the country, and a couple from Europe and Canada, participate. Houses are open to the public on Oct. 9-13 and Oct. 15-18. Go check it out.

Washington Post Discovers the Wheel

WaPo has an enlightening article on homebuyer's preference for good schools. Groundbreaking. How does such an article get greenlighted?

Samwick on Health Reform

Andrew Samwick has a great post on health care. He discusses an issue that is what I think is a central issue in our high cost of health care but is rarely explored: why does health care operate in a manner so distinct from other markets.

More ACORN Fallout

Now that ACORN has been revealed as an insidious organization (funny thing how offering to aid someone in trafficking 13 year olds for prostitution will tarnish your reputation) people are starting to look at ACORN's other activities. Kathy Kersten suggests voter registration should be an area of interest (in a rare fit of non-Michele Bachmenesque batshit insanity). It isn't such a massive stretch to think that some of these fraudulent voter registration drives might have yielded...voter fraud, which in the context of an election decided by 380 votes is troubling.

Palin's Memoir

I almost want to buy this just for spectacle aspect of it. I sincerely hope that it was not ghost written. It would be the first political tract with a heavy use of LOLcats.

Believing Your Own Spin, pt. 2

Ezra Klein again:

"Atlanta: If it's so easy to save $500-600 BILLION on medicare (doesn't Obama say: we can cut payments for medicare by that much?) - then why don't they just pass that bill?

Are they saying there is that much waste in the program? Why are they holding that money hostage? If it's the lowest hanging fruit (they say it is, it must be true) - just pass whatever needs to pass to save that money. Would anyone vote against that bill? Really?

Ezra Klein: Oh yeah. Saving that money isn't the hardest thing in the world, but nor is it the easiest. A lot of politicians are willing to do it if they also get health-care reform out of the deal. But they're not willing to do it if it's not part of a trade.

I've said this again and again, if the Republican Party included real deficit hawks, they could make an incredible bargain here. They could rip up the employer tax deduction and create a powerhouse MedPAC board and much, much more. The fact that they're just crossing their arms and shouting "no" suggests they're not particularly worried about spending, after all."

He is right that the Republicans have largely limited their participation in the reform effort to say no, however, the one substantive idea that Republicans have offered is to rip up the employer tax deduction or cap it. This was a center piece of the McCain health care plan, and consequently became the target of a very effective (and opportunistic and shameless) attack ad by the Obama campaign. Obama and the unions have taken the employer tax deduction off the table, not the Republicans. This is unfortunate because it manages to achieve two very important things at once: 1. raise revenue; 2. Control costs.

Believing Your Own Spin

Here is Ezra Klein, a blogger I regularly follow, like, and disagree with:

"Portland: So, have YOU ever actually had bulls testicles, a la Padma? If not, would you??

Second question - why this 2013 start date for reform? That's a llllong time from now.... And do you think if this passes and the Republicans regain control of Congress before 2013 they can just undo it before it even starts?

Ezra Klein: I have not, but certainly would try them.

As for 2013, there are two answers. One is that it can't be implemented till then for technical reasons. I think there's more to this than people are giving it credit for. The second is that it makes hc reform look cheaper in the 10-year window, which helps for budgeting."

Ezra gives 2 of 3 reasons why 2013 is when a lot of the health care bill is slated to ramp up:

1. Implementation is actually difficult.

2. Postponing implementation is a budget gimmick used to keep the cost artificially low (if you only show expenditures in five years out of a ten year budget window the program will appear cheaper than it really is).

And what Ezra omitted.

3. 2013 is after 2012, an election year. In the event that the reform is unpopular people will not be able to express the dissatisfaction for several more years.

That is sort of an obvious one. When you omit something like that you might as well be on payroll.

More on Health Care

Johnathon Rauch has a satirical piece probing the absurdity of health care. It's a good, if saddening, read. It is still bizarre to me that one of the major objectives of health care reform is to incentivize more people to pay a third party to pay for predictable expenses. Current proposals will simply exacerbate this perverse trend.

Why Community Rating is Bad

Community rating is where an insurer would be prohibited from charging policy holders different prices on the basis of risk. It is viewed as an essential part of health care reform by progressives and even some conservatives. The motivation behind community rating is sensible, some people have conditions which they have no control over and when insurers consider said condition the price of a policy is likely to be unaffordable. This is unfortunately what insurers do. Some view this as sinister but it too is sensible.

An event that is likely to occur is not an insurable event. If I wanted to build a house in area where hurricanes hit annually and houses were frequently destroyed the only way for an insurer to make a profit (or stay solvent) would be to set my premiums at the level of an expected future payout. Otherwise, given the predictability of a payout, a premium any cheaper would essentially constitute a direct transfer of wealth from the insurer to me. However, the information conveyed by the premium price is valuable. It tells the prospective homeowner that unless the homeowner is able to build a house that can withstand repeated hurricanes (or frequently rebuild a house that can't) that building the house is probably not advisable or affordable.

If you allowed insurers to price their premiums on risks where the policy holder has control over, such as their weight, activities such as smoking or excessive consumption of alcohol, or indicators such as high cholesterol or high blood sugar you would provide policy holders with stronger incentives for healthier lifestyles. This is not to say that all policyholders would adjust their behavior but at the margins some would. This would not obviate the need for other insurance reforms such as guaranteed issue and renewal, prohibition on excluding policy holders with pre-existing conditions, catastrophic re-insurance, and ex-post readjustment. But it would lead to a healthier population and lower health care costs over the long term.

Partying Like it's 1994

Here is an article discussing the Senate Finance bill proposed...in 1994. It's amazing how similar the current bill is to the bill discussed then. I half wonder if the Baucus bill was a copy and paste job.

Obama's Speech

I didn't listen to the whole thing. There were aspects of it that were good, some that were innocous, some obnoxious. I love that health care reform is being billed as a free lunch. I actually agree to some extent, there is waste, fraud, and abuse in medicare and there are substantial savings to be gained. I just don't think it will happen and even if they did the savings are likely to be substantially lower than predicted. Some of those savings, such as cutting Medicare Advantage, aren't really "waste, fraud, and abuse" but cutting seniors benefits. Which is fine with me, but it is a misleading argument. I think the president deserves some credit for putting the individual mandate in there. That is an important part of health care reform and it is an unpopular part. The pay fors are stupid. This tax on insurers is absolutely absurd. The tax will be passed on to the consumer, so you might as well place it on the consumer. What I am afraid of is that the since the tax is opaque that consumers, such as public sector unions, will still insist on cadillac coverage as they aren't exposed to the full cost of coverage (you don't see the employers contribution on your pay stub) and thus will not achieve much if any cost containment (while deriving little revenue). This is just a stupid idea.

Increasingly I don't think that universal health care reform will happen. That said it's interesting to think about what a smaller scale reform package would look like. You can't really do community rating without a mandate. You can't do a mandate without subsidies. One area where you probably could get wide agreement would be on the national exchange. This would benefit those who live in states where real insurance (catastrophic) has been regulated out of existence. This wouldn't increase coverage much but it would be a significant step in the right direction. I could also see a cap on the employer exclusion making its way back into the conversation. I think what you would see is that the cap would be fairly high but not obscenely high and the tax exemption would be extended to everyone. This would be far from optimal policy but it would be an improvement nonetheless. The other thing I suspect would be part of a scaled down bill would be some form of medicaid expansion (more limited) and maybe a very limited tax credit for folks up to 300% of the poverty line.

Things that would be left out from current bills are: mandates (employer/individual); insurance reform (maybe with the exception of recission; that is probably happening regardless); anything involving medicare; any substantial pay fors (income surtax, taxing benefits; the goofy insurer tax); malpractice reform.

ONE LAST NOTE: I hated when he said it costs three times as much to buy health care on the individual market than as when your employer provides it. One might pay three times as much as their employer is not providing an premium contributions, but the cost is the same. If I have a plan through my employer that is $100 a month and my employer pays 2/3rds of the premium, the cost of the premium is still $100 a month, I just happen to pay directly $33 out of wages and another $67 (potentially) out of foregone wages. If I pay for a policy on the individual market the cost could be the same- $100 a month- but I would paying the full cost from wages. The difference is not cost but rather whether the policy is being paid for in the form of after-tax wages in the individual market or pre-tax wages/employer contributions(foregone wages). What you could say is that it costs more in relation to the tax advantage. If my marginal tax rate is 25% and I buy a policy in the individual market with $100 I would need to make $133 in before tax wages to pay for the policy. If I get my insurance through my employer the policy is paid for in pre-tax wages so that is a a real bonus (thus I would only need to earn $100 to pay for the $100 policy).

Worst Sports Column EVER!

See this. This may actually be the worst column ever, not just the worst sports column. By way of background, the column is directed at Jaycee Lee Dugard who was abducted when she was 11 and just recently freed from the clutches of her kidnappers 18 years later. In the interim she has had two children, so it seems safe to say that she spent a good portion of those 18 years getting raped. Anyhow, the columnist, Mark Whicker (you can email him here to tell him what a dumbass he is-mwhicker@ocregister.com) wrote an entire column on sporting events that Jaycee missed while she was kidnapped. This in of itself, while stupid, doesn't necessarily sound venal, but if you read the opening of his column he makes light of the whole situation. I don't know how this made it to print.

(hat tip- Megan McArdle

My Idol

Here is a great article on D.C.s best: Marion Barry.

More Health Care Thoughts

Thought 1: I have probably said this previously but I think the biggest peril in health reform lies in the convergence of two areas- the minimum benefit and an individual mandate. If the minimum benefit is generous (i.e. covers all the first dollar stuff like physician visits and eyeglasses) than it will be fairly expensive. This will be problematic as even with subsidies (currently proposed for folks with an income up to 3X-4X the poverty level) a lot of the middle class that do not get their insurance from an employer will find themselves still unable to afford healthcare (maybe less so than before) and will now face the prospect of a penalty for not having complied with the mandate. Sounds fantastic.

Thought 2 (closely related to thought 1 for those keeping score): The emphasis on coverage thus far has been on the first dollar variety (e.g. low deductible, low copayment, low coinsurance). This emphasis is misplaced. Going to the doctor for your annual physical, semi-annual dental checkup, and some antibiotics are the typical interactions for most people with the medical system. This can be done and should be done out of pocket. These are predictable events not suited for insurance and add to the overall cost growth of health insurance in creating administrative waste. What is important though is that you are covered when something unfortunate does happen, such as getting hit by a bus, a sudden stroke, etc. This is what insurance is typically for, low frequency events with high payouts. It is this type of event, a catastrophic event that causes medical bankruptcies for the uninsured. It would thus seem logical that a mandate would involve such a plan-catastrophic coverage-as opposed to something that makes sure you can get a pair of designer glasses and prescription sun glasses without having to reach into your wallet.

Thoughts 3&4 (interrelated thoughts: Out of Pocket Spending and Administrative Waste)- Everyone decries out of pocket spending as if there is something tragic and immoral about having to reach into you pocket and plump down a sweaty wad of cash for medical care. In a sense this is logical, at least in the employer provided and medicare context. Most people are insulated from the full cost of their healthcare. Your contribution of your premium comes out of your paycheck, which you probably don't think about if you are like me and only really pay attention to the actual amount that gets direct deposited into your account. Your employer pays anywhere between 50% and 100% of your premium which you never see (note: this portion, or a portion thereof, really are foregone wages). So all of sudden you have a big medical expense, a couple hundred for a specialist visit outside of your insurer's provider network, which you have to pay out of pocket and you scream bloody murder. But you shouldn't and here's why: a direct payment is a lot more efficient. The public discussion of administrative efficiency focuses exclusively on how adept your insurer is at denying your valid claim or medicare is at rubber stamping your fraudulent claim. Certainly this is a significant portion of the health care industry's administrative overhead but it also neglects a significant portion. Think of the process of going for your annual physical. You call your doctor set up the appointment and go. You pay a $25 co-pay, give the clerk your insurance information and leave. What happens subsequent to your visit is absurd. Your doctor then sends a bill to your insurer. Your insurer (if they are all like mine) then sends you a letter each week for the next month telling you that you owe the provider and every letter the amount changes (it usually goes down). I suspect during this period that the doctor's staff is trying to get full reimbursement from the insurer and probably resubmits the bill to they get full reimbursement or that the staff just keeps haranguing the insurer. Then at some point once the doctor has failed to get reimbursement from the insurer they send you a bill indicating the amount you owe them. I suspect that your doctor doesn't play too direct a role in this but his staff does which he has to oversee (this sucks because the more time he spends managing the less time he can spend giving care which is how he is going to make bank). And have you ever noticed that seemingly there is at least a 1-1 match between doctors and administrative staff. I can't imagine what my iPod would cost if the typical purchase was conducted through a 3rd party payment. It would probably cost me a grand for a damn refurbished iPod shuffle. If you cut out all of this nonsense, i.e., by just paying up front, couldn't the doctor/practice have a much smaller staff and then pass those savings on to you? I bet you the net result would be a total payment in the neighborhood of a copay- maybe $50? Honestly, when you are at the doctor's office, they spend maybe 3 consecutive minutes with you, maybe 5 total. How long does it take to diagnose if someone has strep or chlamydia, not long. Let's be conservative, you get 5 people per hour (that's 12 minutes per person=quality time) at $50 bucks a pop, that's good money. That's a half million before taxes.

Anyhow, those are my thoughts. I find them persuasive, which is good, otherwise no one would.

P.S. Thought 5 (post conclusion thought)- There is a big status quo bias in favor of the present system because, well, it's the status quo. But also, as previously mentioned, what most people really obtain is not so much insurance (characterized by infrequent events and high payouts) but rather a product called insurance that really functions as insulation or consumption smoothing (characterized by frequent events and low pay outs). Imagine for a moment that instead of having your employer pay a portion of your premium they gave you that money in wages and you had to go buy your own health insurance. I think a lot of people would get plans that were less generous and choose to spend the money on more important things like crack and iPods. If this were the norm (minus the crack and iPods bit, ok, just minus the iPods) the notion of paying out of pocket wouldn't be so jarring. My wonderful co-worker, who will given the pseudo-nym Jane Median Voter, would not brag to me that her plan covers prescription sun glasses but would instead be bragging about all the extra smack she could buy because her wages were higher and her premiums were lower, which, pace the Rand study would have no impact on health outcomes. That sounds like a much better world indeed.

P.P.S. Thought 6 (preventative care, what about preventative behavior)- I am fat, probably technically obese, but you wouldn't know it because I carry my weight very well. I am an extreme outlier in being a lardass but simultaneously passing for studly. This is what happens when you have broad shoulders, they are very deceiving to the eye. Back to my point, it's absurd that I should pay the same premium as someone that is in good shape. Now, I do to some degree buy the argument, however self-serving, that there is no real difference between an active fatty like me and someone that is thin. But what if you are obese, or smoke, or mainline heroine, or have really high chlorestorol, some combination of the above or or other unmentioned behavioral characteristics, shouldn't you pay extra? Car insurers don't have good risks subsidize bad risks, why is that the norm in health care? My wife gets speeding tickets like their going out of style. Actually she mostly gets out of them because she is a girl (an attractive girl, this a crucial distinction unfortunately, it's a cruel world). But even a speeding ticket or a little fender bender where you are at fault will cause your premiums to go up. And this is all logical, if you drive like a moron there is a greater chance you'll get into an accident which implies a greater chance that your insurer will have to pay out a large sum of money because you drove like a moron one too many times. This was the underlying incentive structure (reward healthy behavior, penalize bad behavior through premium adjustment) that Safeway adopted that President Obama commended (which by the way would not be allowed under community rating which both the house, the HELP committee, and the President have all proposed).

Kennedy and Colson

Hanna Rosin has a blog post bemoaning references to Mary Jo Kopechne and Kennedy because Kennedy suffered some consequences and did good deeds later which distinguishes him from many others. She compares him to former Nixon aide Chuck Colson who founded Prison Fellowship. The big difference is that Chuck Colson didn't have the Kennedy name to trade on and actually did have to go to prison. Kennedy didn't really suffer any consequences. She argues that he partially repented by not running for president but this is incorrect; he did in fact run for president in 1980, running against Carter for the democratic nomination and losing. I have heard others suggest the fact that he wasn't ever president was consequence enough, implicit therein that the presidency was his birthright as a Kennedy. Kennedy certainly deserves to be remembered for his accomplishments, which were considerable, but also his flaws which in the case of Mary Jo Kopechne, were tragic.

An Ugly, No Good, Very Bad Chart

If you look at the image to the left you can see that the finances for social security have gone to crap as a result of the recession. In the current year it appears that social security will break even, i.e. there will be enough money coming in to pay out benefits, but not a penny more. Further, it looks like the point at which Social Security will take in less money than it pays out will move forward from late next decade to the middle of the decade (or about 6 years out). Given that the trust fund does not have actual assets or fungible debt it will be interesting to see how the politics of Social Security evolve. For one, I expect a lot of people to stop talking about how the trust fund will maintain Social Security's solvency till 2042.

Delectable Edwards Trash

There may be a sex tape.

Great Health Care Article

This is one of the better ones I have read recently. The author does a great job of cataloguing some of the absurdities of the health care industry. His prescriptions are quite radical and I can never imagine them being passed which is unfortunate. It is deeply unsettling to me that the basis of reform is essentially not to disrupt the current system but rather to build on it. If everyone is in agreement that a policy sucks why should the emphasis of reform be to further establish said system. The alternative that has been discussed, and has been the source of much left wing frustration, has been the public option or in extremis a medicare for all approach. But yet again, this too is merely an expansion of the status quo. Medicare is a huge and unsustainable portion of the health care industry, why does it constitute an adequate model for reform? At what point in the health care debate do we move from heated discussions of the virtues of Policy A (Employer Based Insurance)and Policy B (Public Option/Medicare for all)--which both suck and where the sole distinction is whether your overinsurance is provided by tax dollars or foregone wages--and move to a discussion of Policy C (something that doesn't suck)?

More Health Care

Apparently the Senate Finance Committee big proposed revenue source is a 35% levy on insurance companies premiums for plans above $21k. This is daft on so many levels. One, this utterly ignores tax incidence. As Diane Lim Rogers notes, you can't tax things, you can only tax people. Conceivably insurers will stop selling "cadillac" plans but more likely insurance companies will simply pass on the cost of taxes on to the consumer. Outside of providing a paltry revenue source this doesn't do much.

The problem with this proposal is not that individuals will ultimately be taxed but rather in its opacity it is unlikely to get people to make more cost concious decisions vis-a-vis their health insurance. If you were to eliminate the employer exclusion or cap it then at least a portion of the employer contribution would be taxed as income. One, the employee would have visibility as to the amount they are foregoing in wages as a result of health care. Two, the employee would then have an incentive to obtain less generous coverage. Going back to the Rand Study we know that increased cost sharing has a neglible impact on health outcomes while drastically reducing health expenditures. The important exceptions to this finding were those who were lower income and had chronic diseases such as hypertension. These finding should be the basis for health care reform. But instead there is an obsession with first dollar coverage and a public plan whose purpose is ill defined.

The Best Health Care Post Ever

Check out Chris Hayes blog post "Your Questions About Health Care Reform Answered". This is my favorite part:

"3) I heard the proposals currently under consideration provide seniors with option of free counseling sessions under Medicare, where they can discuss a living will and end-of-life care.

That's a huge misconception. The bills require all senior citizens (who are non union members) be euthanized on their 70th birthday. Under section 278(c)ii all last rites will be performed by Jeremiah Wright using a Q'uran."

Murdoch Saves Newspapers?

Murdoch is planning on charging for all the web based content of his newspapers. The real issue is whether other newspapers will follow suit. If they restrict their content as opposed to giving it away for free then ostensibly their advertising would be worth something again.

More Health Care

Political Calculations has a handy dandy chart adjusting OECD life expectancies for non-medical fatalities (automobile accidents, homicides) and interestingly the U.S. jumps from 14th place to 1st place in terms of life expectancy at birth. I imagine the margin would increase if the data were further adjusted to normalize the data for premature births (in europe premies that die within a certain time period are counted as stillbirths and aren't figured in the life expectancy statistics). This doesn't mean that the US healthcare system isn't craptastic. However, it does seem to indicate that public health measures, transportation policy, and crime prevention will ultimately have a much greater impact on life expectancy than health care.

Legalized Pot

A perfect storm is brewing. California is in dire straits fiscally and is on the precipice of default. Pot would raise major revenues, and if California legalizes pot the rest of the country will eventually.

More Stupid Administrative Efficiency Arguments

"The administrative costs of the main Social Security program are 0.6 percent of expenditures. The disability insurance program clocks in a bit higher: 2.3 percent. It's all pretty lean."

I am not a senior and thus my only exposure to social security is the FICA tax pulled from my paycheck. But typically you hear that the Social Security Administration does a good job at what they do, cutting checks to people. However, in obliquely making this point Mr. Klein unwittingly points to a flaw in the measurement of administrative efficiency. The Social Security Administration cuts checks for both Social Security (Old Age Insurance) and Disability Insurance. Thus they have the same fixed costs. Then what accounts for the difference in the administrative efficiency? There are more people claiming social security than disability insurance. It's quite simple. Imagine that the typical cost of writing checks to a claimant works out to an annualized expense of $500 per claimant. The $500 is your administrative cost. Now you divide the administrative costs by the benefit check cut. The marginal cost of adding a zero to the that benefit check is essentially zero. So if the benefit were $1 million annually the percentage dedicated towards administrative costs would be 0.0005%. If the annual benefit were $1,000 the administrative costs constitute 5%. Efficiency in this manner is effectively being equated to the generosity of the benefits disbursed. This is measurement error.

The Health Care Bill

The health care bill that the House has put forward is a disappointment. In the immediate future it will expand coverage but will do nothing to contain costs. The employer based system is kept intact and to some degree reinforced (by maintaining the employer tax exclusion and not allowing those with employer sponsored health care to purchase a different plan through a national exchange). The one aspect that I find promising is that the MedPac appears to be getting beefed up. But the health care bill is built on the status quo as opposed to an attempt to move towards a more rational and efficient system.

More Government Motors Brilliance

Lawmakers are now trying to reinstate dealers that were closed as part of the Chrysler and GM bankruptcy proceedings.

Wal Mart Health Care

It would be interesting if Wal Mart were to extend health care to all of its employees. It could basically drop a minute clinic in the store alongside the pharmacy and basically function as a self contained HMO.

Employer Mandate=Assanine

Johnathon Cohn breathlessly reports that Wal Mart has broken with its business brethren by endorsing the inclusion of an Employer Mandate. I understand why Cohn finds this to be good news, it portends easier passage of Health Care reform. I, however, think an Employer Mandate is idiotic. It just further cements the status quo. We need to move away from an employer based system. The downfalls associated with an employer based health care system are many but here goes a list:

1. Reduces labor market flexibility by inducing job lock and creating greater impediments to starting a business

2. Assuming the tax exclusion remains in place, which is sort of the whole point if you were to have an employer mandate, the employer mandate is regressive as the tax exclusion primarily benefits higher income folks.

3. Making the same assumption as in point two, the tax exclusion incentivizes medical expenditures without regard to outcome thus exacerbating medical cost growth...

4. Which will cause stagnant wages or declining for the majority of workers as we saw in this last decade.

5. Employer incentives aren't very well aligned with those of the employee, this is devastating with regards to the management of chronic diseases.

Hooray for Employer Based Health Care!

That Wal Mart has endorsed the employer mandate is a bit surprising but not shocking. Google "bootleggers and baptists" to see why their endorsement shouldn't be so shocking.

I have found the whole health care debate to be underwhelming. There has been much handwringing about the inclusion of a public plan and potential cost savings to be reaped from said public plan's purported administrative cost savings (one time savings at that). So much of the debate has really centered around how to expand on the status quo instead of transitioning to a sustainable system.

Hear Rick Kogan, the voice of Chicago

• Rick Kogan reads the closing lines of Nelson Algren's book 'America Eats'
• Rick Kogan narrates Chicago's hilarious Schadenfreud episodes 59 and 60
• Rick Kogan on Chicago Public Radio's Eight Forty Eight, "1955 Chicago" (Feb. 2, 2005)
• Rick Kogan interviews Danny Goldring on WGN Radio
• Rick Kogan interviewed on Outside the Loop Radio, episodes 3 & 4
• Rick Kogan interviewed by Steve Cochrane about broadcaster Paul Harvey
• Rick Kogan interviewed by Studs Terkel, parts 1 & 2

The Climate Bill Sucks

The Climate bill is a massive corporate give-away. This is corporate welfare in an unprecedented scope. This is why carbon taxes are superior and should have been the vehicle for climate change legislation from the outset.

The End of an Era

I said it before, and it bears saying again: Michael Jackson was the King of Pop. His passing marks the end of an era, but his music will persist in the lives of the living.

Wackjob

So I was looking on drudge and I saw a curious headline: Congresswoman Refuses To Complete 2010 Census.... Immediately I thought there could only be two people in congress that crazy and stupid to do something like this: Michelle Bachman and Maxine Waters. Then I saw another headline immediately below it: Fears ACORN collecting data.... Then I knew it must be Michelle Bachman. And sure enough, I was right. What a wackjob. She is a joke.

The Day the TV Died

For me that day is today. I will admit that I'm one of those millions not fully prepared for the switch to digital television. I have a digital-to-analog converter box, but it doesn't work with my antenna.

Now that my TV has died, I no longer have a refuge from reality. It's just me face-to-face with reality. Which isn't a new experience, as I didn't have a television for about the first six months after my move to Chicago.

I'd like to think that this is a moment when more people will wonder what it would be like not simply to live without TV, but to live in a society without television. To quote Don DeLillo from White Noise, "Television is the death throes of human consciousness."

Sotamayor

Many of the right have made fools of themselves trying to diminish the accomplisments of Judge, soon to be Justice, Sotamayor.  Folks like Fred Barnes, William Bennett, Michael Goldfarb, and countless others have alleged that here success is entirely contingent on preferential treatment.  However, her resume renders this line of attack absurd on its face.  She graduated head of her class in Princeton, was law review at Yale Law School and has served on both circuit and appellate courts. This is the normal trajectory for a Supreme Court justice, namely, an abnormal or exceptional career, the mark of the elite.  It has long been the claim of those of us on the right that a judge should be voted up or down on their qualifications.  Provided there is no ethical snafu or apparent cronyism (a la Harriet Miers), Sotomayor is evidently qualified and should be confirmed by wide margins.  

Watching Life from the Periphery: Russell Brand's Booky Wook

Lately I've been quite fascinated with British comedian Russell Brand. I first became aware of him from an appearance on a late-night show, and since then he's been on my radar screen. I recently saw his performance in Forgetting Sarah Marshall and just finished reading his Booky Wook, a "memoir of sex, drugs, and stand-up."

He's not a very cuddly or tender man. His memoir is mostly a story about his nearly career-destroying descent into heroine and sex addiction, followed by his successful rehabilitation as a stand-up comedian and actor. Along the way he wises up to his detachment from his own life and the "amoral dream of commodified sex." Though he doesn't talk much about death, Brand is clearly driven by the sense of the fleeting and fragile span of life that we're given on earth, and yearns to connect with others who feel the same. More than once he recollects with happiness those rare moments when he found "one of those rare women who recognized that life is finite and saw orgasms as a wonderful distraction."

In his life, aside from his insatiable fancy "to have sex with adult human females," one thing remains the same: his relentless ambition to become famous. From the start he knew that comedy would be his ticket - his "cursed talent." It was the only way he could relate to others and cope with his sense of always being an outsider, watching life from the periphery, and only really living it on the stage. It also makes him tolerable and charming.

I like him because he has a poet's appreciation and ear for language—"you are in for a giddy, wild ride through language," he says of his book—combined with a preference for the grandiloquent and even grotesque phrase or gesture or act over the customary, conventional, and cliched. Like all comedians who get their material by watching life from the periphery, Brand also makes some prescient observations about humans. Like their tendency to change their mind about what they want to do that evening: "People do this a lot. They don't seem to realize that the future is just like now, but in a little while, so they say they're going to do things in anticipation of some kind of seismic shift in their worldview that never actually materializes. But everything's not going to be made of leather, the world won't stink of sherbet. Tomorrow is not some mythical kingdom where you'll grow butterfly wings and be able to talk to the animals—you'll basically feel pretty much the same way you do at the moment."

As a connoisseur of sex, he knows what's sexy: "She was sexy, in a lap-dancer sort of way, which many might think, incidentally, is the best way to be sexy; other ways include: sexy like a teacher, sexy like a police-woman, a mate's sister, a biblical character, Cher, Eva Braun, a Brontë sister, a babysitter, Madonna, or The Madonna."

Brand is a cocky, confident, cheeky man. I can't wait for his next book(y wook).

Cap and Trade= Carbon Tax + Corporate Welfare part 1 million and five

I have previously stated my preference for a carbon tax over a cap and trade regimen. What I see as the weakness of a Cap and Trade program proponents see as its strength: its opaque nature. It is true that a cap and trade, were the emissions permits to be auctioned off, would simulate a carbon tax. All well and good. But the reason most cap and trade advocates prefer a cap and trade is not because it simulates a carbon tax, but that it does so and reformers can avoid saying the word tax. But as its opacity is a double edged sword, it is also much more susceptible to rent seeking as is evidenced in the form of the proposed Waxmen-Markey bill whereby 85% of the emissions permits would be allocated as opposed to auctioned off. I can imagine how rigorous the allocation methodology will be: 1. Do you pollute extensively? Check; 2. Are you headquartered in or provide service extensively in a key congressional district? Check; 3. Have you donated to my (insert namer or party) campaign? Check; 4. Here is a free emissions permit which you can now use to defray the costs of your pollution by either keeping or selling at a premium to a less politically connected power company.

Some Wit from Russell Brand

"Life is not a theme park and if it is the theme is death."
—Russell Brand, My Booky Wook, p. 150.

The Jay Leno Show

It's not a talk show, it's a vehicle for advertisers: "Mr. Farella said he also liked NBC’s promise that Mr. Leno’s show would be 'advertiser-friendly,' offering sponsors opportunities like commercials delivered by Mr. Leno and the inclusion of brands in skits."

Chrysler

Chrysler will be a millstone around the Obama administration's neck.  It doesn't appear to do all that much about the cost structure of Chrysler, it will make any company that has a sizable union presence a credit risk in the eyes of investors, and there is a pretty good chance that Chrysler will fail again, just as it has twice already in the last two decades (I am considering the Mercedes merger/acquisition as a bailout).  Pairing Chrysler with Fiat will give Chrysler access to small cars and nominally a luxury marque in the form of Alfa Romeo.  However, both Fiat and Alfa Romeo, are renowned for reliability issues.  Just as Chrysler is.  I do think the Fiat 500 might be a real hit but outside of that Chrysler doesn't get much.  

The principle purpose behind this reorganization seems to be to preserve UAW pensions and health benefits.  But I think this will be viewed as a pyrrhic victory for the UAW and the union movement writ large.  I don't think the UAW is out of the woods yet.  What if Chrysler continues to make crappy cars that people don't want to buy?  I don't see how a tie-up with Fiat changes that trajectory.  If so, four or five years, I doubt Obama will be able to pull off the same hijinx and will probably just have to let them enter into a normal bankruptcy process which could very well result in liquidation whereby those UAW pensions are dropped onto the Pension Benefit Guaranty Corporation.  This is what should have happpened this time around.  There is in fact some value to be found in each individual brand (especially Dodge and Jeep).  It's not as if Chrysler were to go into liquidation that every job would be lost and those brands would be gone forever.  Nissan was just recently looking at having Dodge manufacture trucks for them to be rebadged.  If Chrysler went into liquidation wouldn't Hyundai, Nissan or potentially a Chinese manufacturer be interested in buying one of those brands, whether to supplement their offering in the case of a Hyundai or to get a foothold in the American market in the case of a Chinese manufacturer.

But I think the broader fallout for the Obama administration will not just be the needless waste of taxpayer money but will be the affect this has on unions.  The UAW has largely been identified as the culprit of Chrysler and GM, however, a lot of the blame has been misplaced.  While the UAW did cause a cost structure that made for some unsuitable compromises (such as the precluding the manufacture of a competitive small car) management deserves the bulk of the blame.   The cars that GM and Chrysler have made of the years have been crap.  Some of this is the result of cost cutting but it has also been to a large degree a function of design, concept and quality.  Most of those three things are ultimately the responsibility of management and Chrysler and GM management have failed on all three accounts.  However, by stiffing the senior creditors to reward the UAW with GM and Chrysler equity stakes and the preservation of their benefits, this would seem to create a substantial risk in the eyes of investors where it concerns union companies.  Why would you want to lend to a company with a union when there is a decent chance if things go south that the government will subvert your claims to those of their preferred special interest: the unions.  Now not only will a union company' exhibit a cost structure disadvantage but also a disadvantage from the perspective of borrowing costs.  

The Bidens and Ponzi Schemes

One of my favorite finance bloggers is John Hempton, an Australian.  He has been machine gun posting about a firm Paradigm Global, which happens to be owned/run by Joe Biden's brother and son.  He makes a fairly compelling case that the Biden's brother and son are at least entangled in a ponzi scheme, and possibly running one.

Anyway, here are his posts on Paradigm Global:

http://brontecapital.blogspot.com/2009/04/just-how-sloppy-is-paradigm-global.html

http://brontecapital.blogspot.com/2009/04/statement-by-paradigm-and-some.html

http://brontecapital.blogspot.com/2009/04/economics-of-paradigm-global-alleged.html

http://brontecapital.blogspot.com/2009/04/another-post-i-did-not-make.html

http://brontecapital.blogspot.com/2009/04/first-post-i-did-not-make-on-ponta.html

http://brontecapital.blogspot.com/2009/04/fraudulent-hedge-fund-associated-with.html

The difference between a Pandemic and an Epidemic

I don't have the source for this; probably something I wrote down from the NYT or NYRB:

Pandemic, an adjective from the Greek pandemos, "of all the people," becomes a noun to mean "the outbreak of a disease spreading over a large geographic area," now construed as "worldwide." Epidemic, disease visited on a large segment of a population, is now considered regional rather than global.

On Miss California/Perez Hilton

You've all seen the video of Miss California at the Miss America competition expressing her belief that marriage should be between "a man and a woman," much to the visible chagrin of the gay judge, Perez Hilton. Many people have written in defense of Miss California, saying that she should not be "persecuted" for her views about gay marriage, views which many people in California and elsewhere also share. Fair enough. However, it seems that most people who are ready to offer their comments on the exchange between Miss California and Perez Hilton haven't paid attention to the question she was actually asked and to the answer she actually gave. Here is my transcript of the exchange:

Perez Hilton: Vermont recently became the fourth state to legalize same-sex marriage [crowd cheers]. Do you think every state should follow suit? Why or why not?

Miss California: Why I think it’s great that Americans are able to choose one or the other. Um, we live in a land that you can choose -- same-sex marriage or opposite marriage. And, you know what, in my country, in my family, I think that - I believe that - a marriage should be between a man and a woman. No offense to anybody out there [crowd cheers]. But that’s how I was raised and that’s how I think it should be between a man and a woman. Thank you.

First of all, and not to put too fine a point on it, Miss California was not asked whether she supports gay marriage or not. She was asked whether other states should legalize same-sex marriage. There are many ways she could have answered that question without making her own views public. She didn't want to offend anybody, and she could have done so, if she said, for example, that that question is a political question and should be left to each state to decide. Period.

Second, her answer suggests that she has no strong view about the issue. First she says that it is a "great" thing that gays can marry each other in America. Then she offers her now famous opinion that she believes that marriage should be between a man and a woman. Those two statements aren't necessarily contradictory. She may not support same-sex marriage, but she doesn't wish to condemn Vermont and the other three states for legalizing it either. In any case, she seemed to fail to fully register the fact that she was being asked a political question and that she should have responded accordingly. She only realized this after she had put forth her opinion, but by then it was too late. Many people "out there" were already offended and that offense wasn't remedied by the words "no offense to anybody." Her answer would have been better received if she didn't refer to her audience as people "out there" and to the source of her beliefs as "my country...my family."

A little bit of sympathy for persons like Perez (who was after all a judge in the competition) would have gone a long way. And that's why she lost.

Dear Gov. Perry:

I recently heard that you were contemplating Texas' ability to secede.  The right to secede has a storied history in the United States.  You may have heard of a thing called the Civil War, well as a fellow Southerner (though I am only one by technicality, hailing from Northern Virginia), it may have been called "the War between the States" or "the War of Northern Aggression".  Anyhow, this question was put into practice during the Civil War, that question being whether states could freely secede, and President Lincoln provided an answer: no.  Ironically, there is another gangly and inexperienced fellow from Illinois in the Oval Office just as there was then.  My suspicion is that his answer would also be no.

Tea Parties

I didn't realize teabagging was so popular.

The Political Facts of Torture in America

In the latest issue of the New York Review of Books, Mark Danner observers the politically convenient fact that most Americans are willing to "countenance" the use of torture against America's enemies. The pertinent passages from "The Red Cross Torture Report: What It Means" are as follows:

It is because of the claim that torture protected the US that the many Americans who still nod their heads when they hear Dick Cheney's claims about the necessity for "tough, mean, dirty, nasty" tactics in the war on terror respond to its revelation not by instantly condemning it but instead by asking further questions. For example: Was it necessary? And: Did it work? To these questions the last president and vice-president, who "kept the country safe" for "seven-plus years," respond "yes," and "yes." And though as time passes the numbers of those insisting on asking those questions, and willing to accept those answers, no doubt falls, it remains significant, and would likely grow substantially after another successful attack.

...

It is a regrettable but undeniable fact that torture's illegality, or the political harm it may do to the country's reputation, is not sufficient to discourage the willingness of many Americans to countenance it. However one might prefer that this be an argument about legality or morality, it is also an argument about national security and, in the end, about politics. However much one agrees with President Obama that Cheney's "notion" that "somehow...we can't reconcile our core values, our Constitution, our belief that we don't torture, with our national security interests," the fact is that many people continue to believe the contrary, and this group includes the former president and vice-president of the United States and many senior officials who served them.

The Bush Administration knew then what is still quite true today: for many Americans, America is regarded as a privileged torturer.

Building Anew

There's a lot of truth to Ilya's post but I have to quibble with it.  It is clear that over the last decade there was significant overbuilding in housing, excessive capacity in auto manufacturing, etc. Ironically, it is now that I appreciate Galbraith's old bit about the private sector being rich and the public sector poor.  Much of our resources over the last decade or so have been misallocated due to poor tax incentives, easy credit, regulatory arbitrage, and rampant stupidity on the part of the entire finance industry.  Our schools do a piss poor job of educating the next generation, our health care system is incredibly expensive yet an ungodly amount of people are uninsured, come summer parts of the country will experience rolling blackouts (not to mention the fact that the grid could come down entirely as it did a couple of years ago), and people lose more and more of their time wasted commuting (and thus their standard of living decreasing as both their disposable income and time diminish).  We need more mass transit, a smarter grid, cleaner energy generation, etc.  That requires building and should have been built a long time ago.  Instead we built McMansions in the exurbs financed by easy credit extended on the basis of foolish models and fraud.

Why Not Hatchbacks

In Europe hatchbacks are prevalent whereas in the U.S. they are more of a niche item.  Americans opt for sedans and car manufacturers are reluctant to bring hatchbacks over here.  I don't understand this.  A hatchback is a sedan that just has a little more cargo room (significantly more really) and is easier to load.  They're quite utilitarian and perform every bit as well as their sedan platform mates on the road.  I find them more attractive personally but I am apparently in a very small minority.  I wonder how much of the American buying public's aversion to hatchbacks is rooted in a hatchback's likeness to a station wagon (considered a baby mover and a dowdy one at that- yet again, I like station wagons).  Or, maybe Americans do secretly love hatchbacks and car manufacturers marketing departments are filled with dolts.  I hope it's the latter.

We Do Not Need to "Rebuild" Our Economy

I find Obama's vows to "rebuild" our economy misguided. Our problem is not one of building or rebuilding anything. If anything, there has been way too much building. "During a decade of easy credit and loose spending," begins this NYT article on empty restaurants, "American businesses built too many cars, houses, stores and factories. It turns out the country built too many restaurants, too." People need income, and thus jobs, not more building(s).

Bethesda

According to Forbes Bethesda is one of the most livable cities in America.  I couldn't agree more except for two facts: 1. Bethesda sucks; 2. Bethesda is in Montgomery County which sucks.  Other than that it rules.  Any sane person, which by definition excludes any resident of Montgomery County, knows that the commonwealth is vastly superior.

Here's my brief against Montgomery County:

1. The roads are awful

2. The drivers are the worst in the country

3. Taxes are significantly higher than neighboring jurisdicitons such as Arlington, yet the level of service is lower.

4. Car insurance is goddawful expensive in Montgomery County (my car insurance was $2k annually while it was $800 annually at its highest in Virginia)

5. The housing stock is poor, and the lots on which the houses reside are stingy.

But I come from Northern Virginia and there is simply something that is hard to explain but we from Northern Virginia find Montgomery County unappealing and the feeling is reciprocated.  Bethesda is actually a pretty nice place.  It's very expensive but it does have close proximity to a lot of cultural amenities, it has convenient access to mass transit, it is right on the border of the city and has some wonderful dining options.  It feels sterile to me but sterile is better in my view than some crime-ridden shithole.

Was the Recession Caused by an Oil Shock?

That's James Hamilton's contrarian thesis.  He thinks the economy would be showing slow GDP growth presently if it weren't for the oil shock last year.  I am not sure I buy it but still worth reading.

Pepsi Natural

April Fools! Just kidding. This product has been available for some time, but I saw it for the first time in my local grocery store last week. Seeing the word "Pepsi "followed by "natural" left me a bit puzzled. Of course, by "natural" they mean that it is composed of "all natural ingredients" as opposed to traditional Pepsi, which is composed of artificial ingredients such as fructose corn syrup, sugar, artificial colourings, phosphoric acid, caffeine, citric acid, and so on. But isn't this a distinction without a difference? Natural Pepsi is just as much a part of a large industrial process of production as traditional Pepsi. And if natural Pepsi is natural, does that make regular Pepsi unnatural? Natural Pepsi is not a new product, it is merely a new ingredient in an old, unhealthy, artificial product. It's amazing how a company can add one ingredient - sugar - and market the product as new and natural.

Clover

Yesterday I visited the Intelligentsia coffee shop on Broadway (in Chicago) to get a taste of coffee made from a Clover machine. A few months ago that outlet got rid of its conventional drip machine and in its place installed 3 Clover machines. Which means that each cup of coffee--your cup of coffee--is made soon after you order it, and the whole process takes less than a minute. The Clover machine is slick and quick. It's like a high-tech French press. Unlike French press coffee, however, the coffee that the Clover makes is much smoother. I paid $2.60 for a 12oz cup. You pay for what you get, and it's worth it, especially compared to the price of 12oz of coffee at Starbucks. It is really a shame that the Clover machine (from what I understand) is now owned by Starbucks and they seem reluctant to use it in their own stores and to see it used by anybody else.

Pie-Eyed Pickle of the Week: Dennis Rodman

Dennis Rodman had a reputation--at least among those who didn't know him personally or care to be apprised of his criminal record--that was secured by his glorious days on the basketball court. But after his run on Celebrity Apprentice, the whole world now knows that he is an obnoxious, lecherous, aimless drunk. Dennis, for the sake of your own reputation, you should have stayed out of the public eye and in those Canadian strip clubs.

Payroll Tax Holiday

Rick Hertzberg pimps the idea of a payroll tax holiday as a stimulus option and then also advocates abolishing the payroll tax altogether.  Abolishing the payroll tax would be a step in the right direction policy wise.  It is a regressive tax and it is a tax on labor thereby reducing the returns to work.  That said, the payroll tax currently comprises about 1/3 of all federal revenues.  Even if you implemented some taxes such as a carbon tax and a securities transaction tax, you would only be a 1/3 if the way towards offsetting payroll tax revenues.  If you were to completely offset the payroll tax you would have to implement a VAT or consumption tax of some form in addition to a carbon tax/securities transaction tax.  Such a shift would probably have negligible distributional effects but it would be a lot more efficient.

Retention Bonuses

There is much furor over the AIG retention bonuses, and there will probably be more about Fannie and Freddie's, but I don't get why there is the need for them.   The financial industry has contracted severely, and will likely continue to contract.  Where are these folks, the "stars" of AIG and Frannie purportedly going. Are JPMorgan and Goldman Sachs hot after talent with a subject matter expertise in blowing up the world's economy?  It all just seems so odd to me.

AIG Bailout Recipients by Country

hat tip: ezra klein

Do Americans Secretly Harbor Big Government Desires?

That's the question Walter Shapiro attempts to answer and he answers in the affirmative.  I agree with this assertion and disagree simultaneously.  Most Americans support any number of "big government" interventions or programs with one very important caveat, it doesn't affect them by either depriving them of choices or their money in the form of increased taxation.  Reconciling these competing stances is what politicians are tasked to do and they typically don't succeed, in large part because it is impossible.  The biggest byproduct of this cognitive dissonance is our completely screwed up tax code which is everybody's preferred vehicle for enacting this or that social program which is ostensibly for lower income folks but the value of any "social program" related deduction correlates with one's tax rate.

Kristol's Replacement

Bill Kristol, embarassment of the NY Times, will be replaced by Ross Douthat of the Atlantic Monthly.  Douthat is infinitely better.