Friday, October 30, 2009
Thursday, October 29, 2009
Wednesday, October 28, 2009
Tuesday, October 27, 2009
With productivity growth up an average of 2% annually in the past 30 years, but real (inflation-adjusted) median household income up only 0.3%, many say that the middle-class has been ripped off. But Gordon says that correcting a few basic statistical problems eliminates almost the entire gap between these figures.
First, in the past generation, the number of people per household has declined, as has the number of hours per worker. In other words, median household income has not kept pace with actual increases in hourly income on an individual basis.
Second, the 2% growth rate of productivity only refers to the private sector. With 17% of the workforce in the government, where productivity growth is zero, economy-wide productivity (private plus public sector) has lagged behind.
Third, Gordon shows that the inflation measure the government uses to adjust incomes (the Consumer Price Index) is typically higher than the inflation measure used to adjust output for productivity calculations (the GDP deflator).
Correcting for these factors eliminates 90% of the gap between productivity and middle-class household incomes.
Gordon then goes on to show that, with one important exception, any skewing in the income distribution stopped in the early 1990s, maybe even earlier. The reason other analysts have missed this is that they assume inflation is the same for every income group. But inflation for people with lower incomes has been lower than inflation for everyone else.
Call it the Wal-Mart ( WMT - news - people ) Effect. There are certain kinds of items that make up a much larger share of the budget for the poor than for the middle class and upscale--clothing, for example. And prices for these items have not increased as much as overall inflation. There are also geographic differences. Inflation has been higher where incomes are higher--that is, on the East and West coasts vs. the Heartland. That said, we would not be surprised if the higher inflation we anticipate in the next few years--an inflation that may raise commodity prices relative to service prices--will send this process into reverse.
The exception about inequality, Gordon says, is that even though 99% of earners have stayed in the same economic position relative to each other, the top 1% of earners have increased their incomes relative to the other 99%.
But this is largely the result of more widespread use of performance-based pay systems in Corporate America. In 1993, the Clinton administration limited the deductibility of regular paychecks for highly paid workers. As a result, stock options became more ubiquitous and total pay rose with the market value of companies. In other words, government prodding may have led to the situation, not the free market.
Obviously, in a democracy, inequality matters. When people feel left behind, populism expands and freedom comes under attack. In that sense, Gordon's recent paper is important. Political demagoguery about inequality just had a huge hurdle put in front of it by an academic economist that cannot be argued with on politics alone.
Brian S. Wesbury is chief economist and Robert Stein senior economist at First Trust Advisors in Wheaton, Ill. They write a weekly column for Forbes. "
Monday, October 26, 2009
Friday, October 23, 2009
Tuesday, October 20, 2009
Monday, October 19, 2009
From Tyler Cowen (www.marginalrevolution.com):
"Chinese workers save a lot, maybe forty to fifty percent of their incomes. There are some demographic reasons for that but it also suggests fear and foreboding. They wonder if the Chinese economic miracle can continue. There aren't full contingent claims markets in China but this quantity (of savings) is reflecting an implicit price for transferring wealth into possible bad world-states. That implicit price suggests a fair amount of worry.
In the U.S. T-Bill market, in contrast, there is relative optimism and froth. Lots of securities can be sold at rates close to zero. That explicit price suggests not so much worry about the creditworthiness of the U.S. government and not so much worry about China.
The two prices contradict each other and they continue to do so because explicit arbitrage is not possible. (Ideally, at least in neoclassical fantasy land, the U.S. government should be borrowing money from the Chinese and selling them back insurance at a higher price.)
From this portrait you can see why it is so hard to unwind the imbalances. (Many expositions of imbalances focus on quantities and thus may obscure this point somewhat.) If the Chinese workers are dealing with the correct price (implicit price), that means the worries are real and rates in the T-Bill market have to spike. Ouch. If the auction market for T-Bills is showing the correct price, that means the worries are false and at some point Chinese workers won't save nearly so much. Again, rates in the T-Bill market have to spike. Ouch.
Either way it ends in ouch. There's a reason why, rhetoric aside, no one wants to end these imbalances.
So who has the right price? The Chinese workers or the T-Bill bidders? As usual, the truth probably lies somewhere in between."
Sunday, October 18, 2009
Based on research by Michael Kremer (almost took a class with him - went to 3 lectures and took a different one, but not cuzve Kremer, who was awesome), if sexual conservatives (in Britain, people with under 2.25 partners per year) had more sex (up to 2.25 partners per year), the spread of AIDS would slow dramatically.
The argument is illustrated by landsburg (an economist) in the following manner:
If Judith is going to have sex with Michael, you'd prefer that Michael be sexually conservative.
Split it into two cases - Judith does not have HIV and Judith does have HIV.
If Judith has HIV, you'd rather she risk transmitting it to someone who doesn't have sex with many people. (This neglects all notion of justice and desert based on behavior - the only normative thing you care about is to retard the spread of HIV). This way, the virus won't spread much more quickly as a result of this encounter.
If Judith doesn't have HIV, you'd rather she be "protected" from promiscuous men - in a sense, you shield her from HIV by keeping her with a non-promiscuous partner.
This is a vast oversimplification, of course - nobody has the guarantee of going home with somebody, so rejection by a sexually conservative person doesn't imply the other party is going home with someone else. But it's an interesting thought puzzle, if nothing else.
Another way of thinking about it (also just as a thought piece) is if most women prefer monogamy, but most men prefer 2 partners, there will be a small number of women having a LOT of sex (as prostitutes or simply very, very promiscuous women) with men, because there aren't enough women to satisfy sexual demand by women. These women are highly likely to get communicable diseases and pass them on to a lot of people. If everyone preferred 2 partners, instead, the transmission would still happen, but it wouldn't happen as quickly - more people would be more links in the chain away from an HIV positive person.
Do I have any intention of listening to Kremer? Absolutely not. But it's kinda cool nonetheless.
Friday, October 16, 2009
Republicans should take a cue from British conservatives
Thursday, October 15, 2009
Three ideas I've had for improving the function of the government.
I've mentioned twice before my idea that Presidents and Congresspeople
should be forced to put up a percentage of their net worth at the
beginning of their candidacy, and tie it to goals they have and make
them publicly available. For example, say the requirement were 20%,
Barack Obama could choose to tie 7% to getting us out of Iraq within 3
years, 5% to a vote on healthcare reform including a public option, 5%
to a vote on climate change that increases funding to solar and wind
research by 50% and 3% to a vote and passage of financial regulation.
Whatever he achieves, he gets the money back, and whatever he doesn't,
he doesn't. He'd announce these percentages during the primary with
Hillary so people can actually look at priorities instead of charisma.
The percentage would have to be different for the house, senate and
presidency, certainly, but the concept is the same.
This system would make it very easy to determine a candidate's
priorities and how seriously they're willing to engage with them.
You'd get more altruistic people running.
Another idea would be to ban reelection in the house of
representatives. The senate can be the "experienced" branch, but the
house can be a branch where populism, special interests, and public
preening for reelection are eliminated by not allowing reelection. The
short term ensures that no congressperson can just take over and be
unaccountable to anyone. Combining the X% of net worth idea above also
ensures they do what they said they will.
Finally, why not mandate campaign finance contributions be sealed and
anonymous? Lobbyists become far less powerful when they can't credibly
show they donated. If contributions are limited, and the candidate is
not aware of who donated to him or her and sees donations only in
aggregate, it would reduce the power of lobbyists
not economically related, but incredible...
Hidden landmine costs riddle the healthcare bill:
"When it was a vibrant garden of ideas, Europe gave the world more
good things than one can count. Then it discovered the pleasures of
the welfare state.
Old Europe now lives in a world of unpayable public pension
obligations, weak job creation for its youngest workers,
below-replacement birth rates, fat agricultural subsidies for farms
dating to the Middle Ages, high taxes to pay for the public high-life,
and history's most crucial proof of decay—the inability to finance
one's armies. Only five of the 28 nations in NATO (the U.K., France,
Turkey, Greece and Spain) achieve the minimum defense-spending
benchmark of 2% of GDP. "
Fixing natural gas pipeline leaks would be the equivalent of taking
half of America's coal fleet out of production... in an economic
Unions blocking important education reform
It's difficult to improve failing schools when you can't create
alternatives such as charter schools and can't remove inept or abusive
teachers. In New York City, for example, unions ordinarily prevent
teachers from being dismissed for incompetence — so the schools must
pay failed teachers their full salaries to sit year after year doing
nothing in centers called "rubber rooms."...
There are no silver bullets, but researchers are gaining a better
sense of what works in education for disadvantaged children: intensive
preschool, charter schools with long hours, fewer certification
requirements that limit entry to the teaching profession, higher
compensation to attract and retain good teachers, objective
measurement to see who is effective, more flexibility in removing
those who are ineffective.
Wednesday, October 14, 2009
NFL healthcare reform
The Saudis are demanding that any movement away from fossil fuels be
accompanied by payments to Saudi Arabia to compensate them for loss of
Shackling female prisoners while they give birth is cruel and unusual
Groups receiving federal money should not be allowed to discriminate
based on religion
"By the end of 2019, according to the administration's budget numbers,
our federal debt will reach $23.3 trillion—as compared to $11.9
trillion today. To put it in perspective: U.S. federal debt was equal
to 61.4% of GDP in 1999; it grew to 70.2% of GDP in 2008 (under the
Bush administration); it will climb to an estimated 90.4% this year
and touch the 100% mark in 2011, after which the projected federal
debt will continue to equal or exceed our nation's entire annual
economic output through 2019."
The importance of contracts in the government's dealings with senior
and junior mortgage-holders
Why Wall Street collapsed. Kind of an interesting theory... no idea if
I buy it, but an interesting theory.
Why the new healthcare plan is a tax
Learning from New Jersey: "In the early 1990s, New Jersey also passed
legislation requiring insurers to accept all applicants, regardless of
their health status (guaranteed issue) and charge them all the same
price (community rating). President Barack Obama wants to do the same
There were repeated warnings that such legislation would drive up
health insurance premiums. But New Jersey legislators ignored those
warnings. Today, New Jersey residents have relatively few health
insurance options, and coverage is significantly more expensive than
in most other states. Just across the state line in Pennsylvania, for
instance, a family can buy a comparable insurance policy for a quarter
to half the price."
[Whether it is worth it to have guaranteed issue and community rating
is one thing - it very well may be. Claiming it will lower healthcare
premiums, however, is disingenuous.]
Tuesday, October 13, 2009
Felony Frank's assaulted by neighborhood over its name.
"Meanwhile, Switzerland is locked in a yearlong standoff with Libya
over the fate of two Swiss businessmen held hostage in the North
African country after Geneva police arrested Moammar Gadhafi's son
Hannibal for allegedly beating two servants.
Switzerland's allies have been conspicuously silent about the
incident. In August, Swiss President Hans-Rudolf Merz traveled to
Tripoli to apologize personally for the arrest, but failed to secure
the release of the two men."
As a reminder of what we're dealing with:
Britain's path in 1946 is not that dissimilar to where we stand today.
Sniping at climate change etc was a little unnecessary, but his point
Something very different. I have no idea if I agree or disagree,
whether it makes me angry cuz've its callousness or relieved cuz
someone else thinks so... really, no idea. but it's interesting, at
British hospitals use donor lungs from smokers? Are they THAT short of them?
While capping pain and suffering awards has problems (see prior
posting, thanks to Mike), capping punitive damages would be nice...
SUPER cool and strange article on the Large Hadron Collider
Disney wants to make its stores entertainment centers
Small silver linings to huge black clouds: motorcycle usage increases
organ donation! (Because so many people die...)
Monday, October 12, 2009
This site is unbelievable. You could apply supply/demand (I believe a
greater percentage of black women are single than any other
race-gender group, and they get the worst response rate)... but that
would imply more substitutability than I'd like to think exists. The
alternate explanation? Racial preference in dating... (some would call
This analysis is also cool. Workers are paid more by the government at
low wage jobs, but less by the government at high wage jobs... one
possibility is that the higher wages at low wage jobs represent
compensation for never being able to earn a high wage. Another
possibility, not mentioned, is that the government is inefficient in
two ways - it doesn't bargain appropriately on wages for low wage
employees (they're using other peoples' money), but they also can't
look like they're paying a high wage to anyone because it would be
embarassing and threatening.
Thoughts on a two-state solution's treatment of Israelis
Insightful thoughts on the national debt
Innovation is helping us win the war on breast cancer. (Cough cough,
Friday, October 9, 2009
some crimes work better than others...one thing everyone in the gun
control debate forgets, on both sides, is that gun control has no
statistical effect on gun crimes either way. Restricting access to
guns doesn't reduce gun crimes, giving victims guns doesn't deter gun
crimes, but laws giving harsher punishments for crimes involving a gun
do mean less gun crimes... substitution to other weapons inevitably
For a lot of crimes, both blue collar and white collar, that strategy
could work well
Decent case that GDP gains from the stimulus severely overestimate the
actual gains. This also excludes the deadweight loss from increasing
government spending that much.
Smuggling tunnels as investments for Gazans... and what happens to
Hamas' support when they're bombed. This would support the continued
bombing of Gazan tunnels by Israeli planes.
One of the funniest, kind of most brilliant sites I've seen in a while.
(all originally found on marginalrevolution)
Real people who deserve our support:
Mankiw's succinct take:
Their argument: because more women have been dismissed from the Air Force under Don't Ask, Don't Tell than men, and there are many more men in the Air Force, it means the Air Force discriminates against women. The Army is bad, as well, with 36% of dismissals being women compared to 14% of the Army being women.
Firstly, this does not condone Don't Ask, Don't Tell. It's a horrible policy that should be repealed, and sexual orientation should not affect your ability to serve in the military. That out of the way, this is an example of terrible statistics.
This assumes that a gay man is just as likely to join the military as
a straight man, and that a gay woman is just as likely to join the
military as a straight woman. If you believe that gay men are less
inclined to join the military than straight men, and/or that gay women
are more inclined to join the military than straight women, this is an
I make no assertion as to the reasons for this, and I'm sorry if it's
seen as a stereotype; as a conjecture for other reasons other than the
"butch women/effeminate men" stereotype, there's a decent probability
that people don't realize DADT affects gay women, as well; certainly
the media presentation seems to focus on the dismissal of gay men, so
gay men may not wish to join in the first place while gay women don't
think it'll affect them.
hospitals to treat more people as outpatients so that they are never
admitted to be readmitted, it lets hospitals make doctors' schedules
instead of doctors - and the hospitals will probably want to increase
the number of patients)
The bad points seem much, much worse to me than the good points are
good, which is why I don't like this reform.
At some point, lobby-busting and union-busting needs to happen; the
Wyden bill would have been much, much better.
The good parts:
"Most impressively, the Baucus bill includes many provisions to make
government-run health care more rational. It would bundle payments to
hospitals and encourage doctors to work in efficient teams. It would
punish hospitals that have to readmit patients. It would create a
commission to perpetually squeeze costs. It would improve information
technology. It would measure the comparative effectiveness of
different treatments. No one knows how much savings would be produced
by these changes in payment method, but they could be significant."
The bad parts:
"The Baucus bill centralizes power, in contrast to the free choice
approach, which decentralizes it. The Baucus approach aims to reduce
costs, expand coverage and improve efficiency by empowering regulators
to write a better set of rules. It aims to rationalize the current
system from the top down.
This approach has many weaknesses. It entrenches a flawed system. It
creates greater uniformity and rigidity. It redistributes income from
the politically disorganized young to the politically organized old.
It squeezes people into a Rube Goldberg complex of bureaucracies based
on their income level. It will impose huge costs on people as they
rise up the income ladder, distorting the whole economy.
The biggest problem is that it will retard innovation. Top-down
systems just don't innovate well, no matter how many Innovation
Centers you put in the Department of Health and Human Services. The
bill will retard innovation by using monopoly power to squeeze costs.
It will also retard innovation by directing resources toward current
care (and current voters) and away from future technologies and future
The parts that could have been great but were killed by unions and
politicians seeking reelection:
"The Wyden approach — first introduced in a bill with Robert F.
Bennett, Republican of Utah, and now pared down to an amendment to the
current bills—would combine choice with universal coverage.
People with insurance could stay with their existing health plans. But
if they didn't like the plans their employer offered, they could take
the money their employer spends, add whatever they wanted to throw in,
and shop for a better option on a regulated exchange. People without
insurance would get subsidies to shop at the exchanges.
Americans would have real choices. The vigorous exchanges would reward
providers and insurers that are efficient, creative and innovative.
But barring a legislative miracle, the Wyden approach was effectively
killed in committee last week. The business and union lobbies worked
furiously against it. They want to control their employees' and
members' benefit packages. Many politicians support it in principle
but oppose it in practice. They fear that if they try to fundamentally
reform the system, voters will revolt."
Thursday, October 8, 2009
attention to the incredibly worthy causes some of the leading
candidates have fought for, I have listed below some of the favorites.
Denis Mukwege - Opened a clinic treating rape victims in the Dem. Rep.
of Congo. Has helped over 21,000 women during its 12 year war, working
18 hour days.
Sima Samar - Afghan Human Rights worker. Has fought for women's rights
in Afghanistan and is currently the head of the Afghanistan
Independent Human Rights Commission. She's also the United Nations
Special Rapporteur on the situation of human rights in Sudan.
Hu Jia / Wei Jingsheng - Chinese Human Rights workers. Both have been
jailed for government opposition. Hu Jia also has worked on Chinese
environmentalism and the Chinese HIV/AIDS epidemic.
Of course, there are many other worthy candidates.
The prize does have a tendency to get very political (Yasser Arafat's
inclusion in 1994, or Al Gore over Irena Sendler, for example -
http://en.wikipedia.org/wiki/Irena_Sendler), and rumor has it Obama's
been nominated, though nobody's quite sure on what grounds - maybe the
call for nuclear disarmament? Anyway, these heroes may or may not get
the recognition they deserve. I include them here in the hopes that
perhaps it will increase their exposure, just a little bit.
As a side note, I've been looking for a way to donate to the Mukwege
clinic. Does anyone know where I can do it?
1. Make a will
2. Pay off your credit cards first.
3. Get term life insurance if you have a family to support
4. Fund your 401k to the maximum
5. Fund your IRA to the maximum
6. Buy a house if you want to live in a house and can afford it
7. Put six months worth of expenses in a money-market account
8. Take whatever money is left over and invest 70% in an index stock
fund and 30% in a bond fund through any discount broker and never
touch it until retirement
9. If any of this confuses you, or you have something special going on
(retirement, college planning, tax issues), hire a fee-based financial
planner, not one who charges a percentage of your portfolio
I'd look at this list and add
4+5a Alternate between an IRA and a Roth IRA (or similarly, a 401k and
a Roth 401k), to diversify risk (Roth is better, but the government
could easily change the rules and strip existing Roth IRAs of their
8a. The funds should be with reliable brokers. A non-index stock fund
can be appropriate if the strategy is a clear long-term winner and the
manager is good. Many people don't have the expertise to figure out if
the latter sentence is the case.
Interesting thought. I like it, a lot, actually.
Obama administration considering tariffs on Chinese steel pipes.
I have to wonder if he's desperately trying to curry union favor to
get the Cadillac tax passed (or some other part of healthcare reform).
Stupid, stupid, stupid.
The Taliban calls on Chinese Uighers to wage a holy war against the
the reasons I believe that every student should take a statistics
class or two is because people often dishonestly or unknowingly
misinterpret the statistics they portray. I present below a few
examples that irked me, just from today's news:
Ensuring everyone has health insurance is a great and important goal
(my issue has always been with the monopsony effect of a public
option, and with finding ways to efficiently fund healthcare, not with
the policy goal of everyone having healthcare), but the statistics and
spin of that article are an embarassment, truly. Because using
improper facts and statistics to justify a cause is inexcusable no
matter how good or bad the cause is, I highlight them:
-It's not 15%, it's 5%, because the other 10% are a combination of
illegal immigrants who don't qualify, people with high incomes who opt
out of employer-subsidized insurance, people already implicitly
covered by Medicare and Medicaid who haven't enrolled yet but would
get benefits if they needed it, and a 6 million person census
overcount. You're improving access for 5% of Americans.
-Bush's tax breaks were 2.4 trillion over 10 years... the terrible
implementation of healthcare that Congress wants would be half of that
*per year*... the comparison is a terrible one. There's also evidence
that Bush's tax breaks actually did help the economy, a lot, for
everyone, but that's a whole separate argument.
-the "socialized health" bit is retarded, because innovation in sewers
and police are less important than healthcare innovation
-there may be 45,000 people who die annually from not having
insurance, but contrary to how he frames it, the net gain in lives
saved would not be 45,000 if universal care were initiated. There are
illegal immigrants, who comprise a very large percentage of that
number, and there are also the people whose lives would have been
saved by innovation that doesnt happen as a result of the bill. On a
net basis, we'd be lucky to achieve a third of that number. Still
significant, but it's gotta be framed properly.
- Soft drinks being 5.5% of a person's calorie intake doesn't
acknowledge the fact that quality of calories is very important. 100
calories in vegetables is digested very differently to 100 calories of
cookies; the latter is far more likely to spike your insulin and
result in obesity/diabetes/heart disease etc.
- The fact that West Virginia and Arkansas have soda taxes and have
the highest obesity rates in the nation is completely meaningless. It
is likely that the reason they have soda taxes is because they have
the highest obesity rates in the nation, and it's a way to combat the
problem. From what I understand in WV, the tax, as well as adjusting
the placement and availability of bad food in schools, have been
instrumental in slowing obesity (I haven't seen stats on Arkansas)
-The argument that "delays have gone up as air travel passengers have
gone up" is somewhat misleading, as well. It could be true, but the
magnitude is much less than implied. The average age of airplanes in
the fleets of the largest airlines has risen over time, and the
variety of planes they fly has gone up as new planes have been
developed but old ones phased out less quickly. Thus, it takes longer
to check all of the planes (mechanics have to look for different
things on every plane, which takes time), when something's wrong it
takes longer to find the correct parts and equipment and use them
properly, and more things go wrong because the planes are older. This
is why "hub" airports, with more big (and old) airlines, have more
delays, while smaller airports, with more small (newer) airlines, have
-vaccinating just the center of social networks against disease may be
more effective than vaccinating the same number of people selected
randomly, because they may see more people, but unlike obesity, STDs
and politics, a person's charisma presumably has no effect on whether
they get the flu - just their exposure to other people who could get
the virus. If there are 5 friends and one is at the center,
vaccinating the one does not protect the other 4 from giving it to
each other. Technically correct, magnitudal implications far
overstated- the vaccination program certainly wouldn't be "1/3" the
cost. Current methods require about 95% of a population to be
vaccinated for everyone to have "herd immunity"... if this number
reduced it to 85% it'd be miraculous.
quickly than presented - non-wage benefits like healthcare (rising in
cost because of new technologies) have gone up a lot and two wars
sapped a huge amount from middle class incomes (2% annually if spread
across everyone equally; closer to 6% annually if focused on the lower
and middle class)
There's another point, however: the middle and lower class are
affected more by a weaker dollar because they have less savings to
invest in hedges against rising costs.
David Malpass addresses this in a very insightful article:
Agreed entirely, but there's a problem he misses, though. There is no
way to consistently strengthen the dollar at the current level of the
Federal Budget. You cannot have a strong dollar for any sustained
period of time when the national debt is growing as rapidly as ours
is. Inflation is almost inevitable.
Thus, a lot of government spending on redistribution, and protections
for the lower class actually exacerbate the problems the lower-class
faces. We're getting closer to an inflection point (if the US dollar
loses some status as an international reserve currency or as the
currency of oil), this would exacerbate quickly. The budget deficit is
also twice the size it's ever been excluding world war 2, so that's
gonna be drastic, as well.
the range of bottles it applies to.
"Taxing" bad behavior (in this case, not recycling) is a good thing,
not a bad thing. We seriously underrecycle anyway, so this will
correct a market failure. For once, well done, Massachusetts.
Wednesday, October 7, 2009
One of the dumbest lawsuits I've ever heard.
1) Individuals have first amendment rights. I don't think companies do.
2) How is it even remotely a good idea for ANYONE - the companies, the
patients, the doctors or those of us footing the bill - to allow
promotion of off-label use? I sympathize with the notion that proper
off-label use can do wonderful things and could even reduce costs.
However, isn't the downside here a lot worse? If a condition has no
cure, and something in the marketplace can treat it off-label, it's a)
very likely that the doctor on the case will figure this out and b)
it's very likely the drug will be submitted for testing to the FDA.
PROMOTING its use, however, seems like it opens up a can of worms -
basically circumventing the whole purpose of the FDA.
Dumb dumb dumb.
I oppose the healthcare plan on the basis that it doesn't allow
drugmakers to profit from their beneficial research. I've always been
more skeptical of drug marketing - while there is a benefit to
informing the public and informing doctors that they don't have to
live with the conditions they have, and that treatment exists, drug
marketing far exceeds the level required for that social purpose and,
empirically, hasn't helped the drug makers. The idea of "restricting"
(not directly, that's government interventionist scary, but by
withholding funding to labs that work with companies that spend too
much on marketing, or something along those lines) industry
ad-spending isn't a bad one. Advertising off-label is an order of
magnitude dumber than that.
faces: Nuclear, Debt and Climate
Examining the effect of state-level healthcare reform
The author doesn't think it has been very successful. Of course, it
depends how you define success, but they certainly didn't accomplish
what they were intended to.
More strengthening of Unions by the administration
No disagreement here - deceptive banking fees suck
Tuesday, October 6, 2009
if this is true, welcome back inflation. They've been talking about it
for months (years, really) so this story may not be as imminent as
marketwatch says it is... but its almost inevitable sooner or later.
It may not happen til the US economy has recovered a little more -
China certainly would oppose it anytime before then.
Currently, oil is traded in dollars. Countries that wish to buy oil
must thus have dollars to pay for it.
What this does is create a sort of artificial demand for dollars,
where people want lots of dollars but not to purchase American goods.
Switching away from it means there are more dollars out there than
This results in inflation.
Ideally, the remedy for this would be higher interest rates, but the
problem is, higher interest rates throttle the economy by making it
hard for people to get credit to buy houses, cars, start businesses,
etc, as well as making it more attractive to put your money into bonds
or the bank instead of spending it.
The other remedy is to reduce government spending - fiscal
conservatism. Unfortunately, both the Obama and the Bush
administrations have been spending like drunken sailors and it would
be extremely difficult to rein in spending quickly enough.
harder for cancer and heart disease patients to get care:
Obama declines to meet with the Dalai Lama so as not to upset China...
despite a willingness to slap tariffs on Chinese tires to help unions,
and to meet with any large number of dictators:
From the Canadian national Post (no link):
Opponents of the [U.S. health-care] public option maintain that
Canadian-style health care would entail rationing, caps on care,
bureaucratic interference in medical decision-making and even "death
panels" deciding when the ill become too expensive to save.Most
Canadians believe this is a gross exaggeration of reality. But then
how to characterize Ontario's decision to cut off funding for
colorectal cancer patients taking a life-prolonging drug, in order to
save $9-million [about US$8.4 mllion] a year?Andre Marin, the
province's plain-speaking ombudsman, said the decision "verges on
cruelty." Marin said the "arbitrary" limit on the number of cycles of
the drug Avastin that Ontario will fund forces patients to pay out of
their own pockets or abandon treatment.Avastin does not cure cancer,
but prolongs life when taken in conjunction with chemotherapy
treatment, adding, on average, nine months of survival."For patients
whose cancer has already metastasized, it stops their tumours from
growing and prolongs their lives, at least for a while. It is, without
exaggeration, their lifeline," Mr. Marin said.
Why did Argentina not develop?
(Location probably factors more into it than Glaeser- a former
professor of mine - acknowledges. It's not even a particularly well
written post... just an interesting one.)
Monday, October 5, 2009
Just as in finance, it's a positional externality thing - firms and
clients do better if they win than if they lose, so they constantly
want to hire better people than the opposition. It's not always clear
who's better, though, so firms need to hire lots of good people to
find one superstar. It's pretty close to a zero sum game, though -
each case has winners and losers - so salaries go up, attracting more
talented people. You end up in a "keeping up with the Joneses"
situation where lots of good people become lawyers and firms keep
paying them lots of money.
You can't regulate it easily, though, short of some very scary
communist impositions on industries.
The solutions, however, differ for law and finance. The main
difference with law and finance is that you can simplify the legal
code to make it less important to have a great lawyer... that will
make great lawyers less important and reduce the number of "best
minds" that go into law. The world is complicated and there will
always be situations that require great lawyers, but if there are less
of these situations, there's less lawyers.
Finance, that can kind of work (make M+A less intensive and crazy by
changing tax laws and such, discourage fast trading with taxes, etc).
At a certain point, equity and debt capital is necessary for growth,
and the day stocks and bonds stop being an attractive place for smart
people is the day that the US economy has started collapsing... so
there's not a whole lot you can do to keep them out. To an extent,
there's societal value in funding good enterprises and having people
who can discern good from bad enterprises, so you don't want your
financiers to be incompetent, but I understand that effect is only
important up to a point, and we're probably beyond that point.
Still, I fully acknowledge that there's progress that can be made with
some simple regulations on banks (compensation controls are
scary-communist, but certainly risk controls and elements that make
the market fairer for long-term investors instead of short term
speculative traders... basically, reduce the profits of being a middle
man with no societal value as opposed to a provider of capital with
forced to give up Social Security payments (which they paid taxes for
their whole lives)?
Zelaya is currently blaming Israel for helping Micheletti rise to
power and keep him down with "high frequency radiation":
Carville claims that if you don't want America to have the Olympics,
you don't love America:
note that the Olympics usually loses billions of dollars in actual
money and commands the attention of politicians for 7 years, at the
expense of more pressing social projects.
When did the right all of a sudden encompass the reasonable positions
in politics? A year ago, they were slobbering all over Sarah Palin;
now they're the only ones with any sense of the center.
We seriously need a third party.
former president of the AMA. Totally agree.
On what planet does it make sense to actively acknowledge any Iranian
nuclear program as legitimate? and how does it make sense to help them
enrich their uranium!?
Friday, October 2, 2009
and minuses are, but the article is interesting, at least:
Thursday, October 1, 2009
The big problem is that anyone with a talent for rating securities will make a lot more using that talent on the buy side - to operate a hedge fund or mutual fund, or invest money, than they will for telling people about it. There is no easy quantitative method for rating securities that doesn't require human discretion. So while the NRSROs have plenty of problems, the solution isn't to disband them for a worse alternative, it's to help people understand that they're not guaranteed ratings - everything has risk.