Monthly Archives: February 2011

The real 1970’s

A new site has appeared devoted to bashing 70’s nostalgia. I support this as I now hear the 70’s portrayed as carefree, but I sure don’t remember it that way. (Watergate, stagflation, changing morality, so on) People always want to think they face problems that are more challenging than those of their parents and grand parents. I think that’s nonsense.

From the site:

Hey, it’s an unfinished site with only one thing on it! That must mean it’s in “beta.” But since there’s a lot of content in that one link, then it’s maximum beta – or, to make it really super 70s, “Betamax!” Ha ha. Can I write for the Hudson Brothers’ Summertime replacement variety show now?

Don’t know who the Hudson Brothers were? We’ll get to that.

There’s a notion in the minds of some that the 70s were a carefree time, cool and kitschy and fun! and innocent, in a peculiar fashion. It was not. For one thing, there was peculiar fashion. For another – well, consider this site a brief against the nostalgia that inevitably attends any bygone time. Every era has its good points and regrettable trends, but for sheer idiocy, ugliness, meretricious music, televised banality and general malaise the 70s are unparalleled.

Trust me on this. I was there.

Epic #NewsCorpFail

John Quiggin

via Epic #NewsCorpFail.

Ms. Regan had once been involved in an affair with Mr. Kerik, the former New York City police commissioner whose mentor and supporter, former Mayor Rudolph W. Giuliani, was in the nascent stages of a presidential campaign. The News Corporation executive, whom she did not name, wanted to protect Mr. Giuliani and conceal the affair, she said.

Now, court documents filed in a lawsuit make clear whom Ms. Regan was accusing of urging her to lie: Roger E. Ailes, the powerful chairman of Fox News and a longtime friend of Mr. Giuliani. What is more, the documents say that Ms. Regan taped the telephone call from Mr. Ailes in which Mr. Ailes discussed her relationship with Mr. Kerik.

Enough with the (Canadian) wait times, already

I added the parenthetical as the argument is made in favor of status quo health system in the US based on shorter wait times than in Canada.  Seems its not even always true. 

Other things to consider are that Canada is ranked higher on economic freedom than the US by some reckonings.

I’m not necessarily in favor single payer, but I think it is a fact that the US health care system doesn’t compare favorably with that of many other nations.  The obama reform may need a lot of fixes and replacement of portions, but let’s not just go  back to the pre 2010 status quo.

Enough with the wait times, already
Aaron Carroll
Fri, 25 Feb 2011 17:23:01 GMT

It constantly amazes me how entrenched many people get in opposing health care reform. I’ve been getting a strange number of emails defending the health care spending seen in my post yesterday. Please understand, that spending is what’s bankrupting us. You can hate the PPACA, you can hate single payer, you can hate any form of government regulation at all, and stil recognize that we spend too much on health care.

But forget that for a second. Many of you are defending the high costs of our health care with the usual “wait times” meme. You defend our very, very high level of spending by accusing other systems of having long wait times. You believe that we are buying “no wait times” with our spending.

No.

First of all, what do you mean by wait times? Perhaps it’s “do you have to wait to see a doctor when you’re sick”?

alt

Let’s own something right up front. We beat Canada. Let me say that again: WE BEAT CANADA. There’s a reason people always cherry pick Canada to talk about wait times. But many, many other countries do better in terms of getting people in to see the doctor when they are sick.  We also do better in terms of getting people in to see specialists (although we’re not #1), and we do better in how long people need to wait to get elective surgery (which is ELECTIVE), but that’s not the same.

Here’s another telling metric, however:

alt

People in the US feel like their doctors don’t know them. Why could that be?

alt

One reason is that more people feel like they don’t get enough time with the doctor. Since we’re so obsessed with wait times (even though we don’t do very well in winning that battle), doctors are forced to see more patients every day in order to avoid them. So, yes, you might not wait as long to see your doctor, but when you get there, he or she won’t have much time for you.

One of the reasons for this is that we have so few doctors in this country:

alt

And that’s after spending way, way, way more money than anyone else.

How is this defensible? We’re failing. We really are. I have no problem with disagreement on how to fix the system, but it’s hard to believe some many of you want to defend the status quo.

UPDATE (from Austin): Colleague and occasional co-blogger Steve Pizer has co-authored (with Julia Prentice) a recently published paper on wait times and diabetes care. They conclude, “Decreasing wait times has the potential to reduce A1C levels by 0.18 percentage point for patients with baseline A1C levels exceeding 8%. This effect is roughly one-third of what is achieved with the most successful existing quality improvement strategies.” I will encourage Steve and Julia to write a blog summary of their paper.

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Software picked, likely related articles at The Incidental Economist:

Why Wisconsin?

TheMoneyIllusion

via Why Wisconsin?.

 

Keep in mind that almost all generalizations about Wisconsin are slightly inaccurate, as it’s hard to make generalizations about highly average places.  For instance Wisconsin does have some professional jobs in insurance, biotech, etc.  But Wisconsin is un-average enough in one dimension to make at least a few generalizations possible.  And that dimension isn’t dairy farming, it’s lots of cities with 50,000 people that make things.  It’s easy to convince foolish rich people in West LA to waste $300,000,000 on boondoggle high schools, they even think teachers are poorly paid.  But in a community of 50,000 people, most folks pretty much know what’s going on, and they accurately perceive that the public employees are currently doing better than they are.  In the end the GOP may over-reach, as Wisconsin still has that strong Northern European social democratic tradition.  It’s still a Democratic state.  But the fact that the battle in Wisconsin is even this close should be a wake-up call that there are some internal contradictions in modern liberalism that are a long way from being resolved.

Can’t be beat the bulge

An interesting post from Modeled behavior.  The main thought is that the demographic bulge would create challenges for retirement with or without Social Security.

http://modeledbehavior.com/2011/02/22/the-401k-pyramid/

Matt Yglesias notes

Imagine a society with no Social Security, and also no imprudent or short-sighted people. Everyone puts a healthy share of their annual income away in a savings vehicle, and everyone manages to retire on a decent income. Thanks to the ups and downs of the financial markets, there’s a certain inefficiently noisy quality to the income of retired people, but due to the magic of infinite prudence the problem is very manageable. Now imagine that demographers are predicting a one-time demographic adjustment in the ratio of old people to non-old people in the population. This will lead to a decline in the rate of economic growth, and therefore to the expected return on investment. Either workers will need to start increasing their savings rate, or else they’ll need to accept lower living standards when retired. In other words, they’ll face the exact same choice we currently face in the form of higher taxes or lower benefits. Of course people could try to compensate for lower expected returns by engaging in riskier investment strategies, but we’re talking about a perfectly prudent population.

Under the circumstances, I don’t think anyone would be saying “saving for your retirement is a pyramid scheme—it depends on the assumption of future economic growth!”

Actually the problem goes beyond a simple slow down in economic growth and there was significant hand-wringing about it a while back. It was called the “Asset Market Meltdown Hypothesis.”

As it was often put, “so exactly who is the baby boom generation planning on selling its 401(k) assets to?”

The issue is was that real rates of return to should vary inversely to the supply of capital. There are only so many good investment opportunities, so the more people invest, the lower the rate of return. The way this ought to play out in the asset markets is that prices should rise very quickly as people pour their money in but then grow very slowly, once everyone is in.

That’s depressing enough as it goes, but the kicker is that the reverse should happen on the other side. That is, asset prices should fall rapidly as everyone tries to sell out, then hit some bottom level and grow steadily from there.

Perhaps, disconcertingly the US stock market looks like it could be in the middle of such a story.

FRED Graph

You can see a little bit of a take-off in the 1980 then another sharp jump upwards in the mid 1990s and of course, the market has moved essentially sideways since then.

We can also see that the excess growth period matches the increased percentage of workers using 401(k)s

The core issue, that Matt hints at, is that having an equity stake in the America’s future capital is not somehow more fundamentally sound than having an equity stake in America’s future labor.

International capital flows could mitigate this somewhat by allowing American corporations to seek out opportunities in other countries the drive down in the real rate of return could be avoided. However, at the same time international labor flows could solve the Social Security problem.

Also, to turn your mind around. Here are inflation adjusted stock market values

FRED Graph

Here are inflation adjusted stock market values per US worker

FRED Graph

The ARRA Hearing

The time it takes to turn the fiscal ship is very long.  This means its necessary to start to work to balance the budget even though the recovery from the 2007-2009 recession is in its early stages.  If we wait the deficit will continue to balloon even as that is inappropriate for where the economy is at and the overall debt burden goes beyond what the the bond market will sustain.

One way to understand this is to focus on how the stimulus spending from 2009 has been too slow to really contribute to recovery.   John Taylor has some interesting testimony on that:

The Empty Chairs at the ARRA Hearing
JohnBTaylor@Stanford.Edu (John B. Taylor)
Wed, 16 Feb 2011 20:19:00 GMT

My testimony focused on the eight quarters of data since the start of the stimulus which have now been made available by the Department of Commerce, updating a recent study by John Cogan and me. The most striking finding of that data is that only .04 percent of GDP in the large $862 billion package went to federal infrastructure spending, and the large amounts of funds sent to the states for infrastructure spending have not resulted in an increase in infrastructure spending. Raul Labrador of Idaho asked me if the stimulus package would have worked better if there had been more infrastructure spending, but the lesson is that it’s not really feasible to start large government infrastructure projects in a timely enough manner to affect the economy in a recession. There is no such thing as “shovel ready.” In my view we learned that from the 1970s stimulus packages, and indeed it is part of the reason that many of us teach in elementary economics that such discretionary stimulus packages are ineffective.

The power of the rich: A Libertarian View

Cafe Hayek

via The power of the rich.

Geopolitical unrest and world oil markets

Econbrowser

via Geopolitical unrest and world oil markets.

Top 10 Greatest Presidents

I’d rank Carter much higher, but I’d agree with a lot of the rest of this ranking.  I think returning the canal zone was the right thing to do, irrespective of the”realpolitik” perspective.

ProfessorBainbridge.com

via Top 10 Greatest Presidents.

Dumping Violence on the Poor

Dumping Violence on the Poor
Casey B. Mulligan
Thu, 17 Feb 2011 13:06:00 GMT

Copyright, The New York Times Company
The war on drugs sends middle- and upper-class American problems to the residents of poor areas. Nevertheless, the federal government continues the war in earnest.

Almost 20 years ago, an infamous memo by Lawrence H. Summers, at the time the chief economist of the World Bank, stirred a debate as to whether it was appropriate for the United States and other developed countries to pay poor countries to accept dirty industries, toxic waste or other garbage from the developed world.

Both sides in the debate seemed to agree that it would be inappropriate to force poor countries to accept our garbage, without compensation. But that’s very much what the war on drugs does.

The war is an outright prohibition on the sale and consumption of contraband substances in the United States. That prohibition is enforced domestically by federal and local law enforcement and abroad by the United States military.

Some of the most violent battles are fought in Mexico, Guatemala and other countries poorer than the United States (see especially the comments of Gary Becker of the University of Chicago on this topic). The war also foments violence in our poorer inner cities.
Yes, the war makes it more costly for Americans to obtain the prohibited substances. Yet plenty of people in the United States are willing to pay the higher prices – prices far in excess of what it costs to grow, harvest and manufacture the drugs.

The gap between the prices consumers pay and the production costs creates a profit opportunity for someone willing to break laws, battle law enforcement and deliver drugs to Americans.

Some of these contraband entrepreneurs – drug smugglers and dealers – are from poor countries or poor neighborhoods in the United States, so in this way some American consumer dollars make it to poor areas.

Of course, most people in poor areas are not in the contraband business and have no part of the drug industry’s revenue. Yet they suffer enormous harm from the violence and the drug activity.

The war on drugs thus pushes the “toxic waste” of America’s drug consumption into poor neighborhoods with no compensation.

Middle- and upper-class parents are unlikely to witness personally the war’s violence, and they want to discourage their own children from taking drugs. So many of them appreciate that the war makes it more difficult, or at least more expensive, for their children to obtain drugs.

And their appreciation is an important reason why our federal government has yet to legalize drugs and strongly discourages states from doing so.

Legalizing and taxing the use of what are now illegal substances would remove the profit motive for dealers and smugglers, and the revenue might be used to help the residents of poor neighborhoods, as Professor Becker notes. The great challenge to ending the war on drugs is finding a way to give American parents the protection they want for their children.