Tuesday, July 31, 2007

"The Bronx Is Burning" Generates Sufficient Heat

I don't watch much TV, but once in a while the folks that produce that normally inferior product will tackle a subject of true importance, like the life of Alexander Hamilton or the 1977 Yankees. The latter subject is the focus of a series by ESPN Entertainment called "The Bronx Is Burning" which I can only assume is based on the Jonathan Mahler book of the same name. Frankly, I am partial to the 1978 season, with several of my heroes slaying the hated dragons of the day (Bucky Dent's legendary shot, Nettles's "hot corner" performace against the Dodgers and Thurmon Munson's tagging of the Royals in game 3 of the ALCS - hard to believe that I grew up hating and fearing the Kansas City Royals!), but '77 was thrilling to this young whipper-snapper all the same. Frankly I was young enough where this was essentially my first baseball memory. I vaguely remember the '76 season, but not really. I'd collected baseball cards for a few years but '77 was the first year I remember events unfolding. It was like baseball had just been created, and who was baseball's Adam - why who else, but Reggie Jackson. No kid my age read the papers or followed the clubhouse soap opera, we just watched the games, and Reggie was the king. I ate more goddam 'Reggie Bars' even though it was positively the worst candy bar going. Thus I was deeply engrossed in ESPN's new series for the memories it brought back and a chance to relive that crazy year and see it within the context of the social upheaval of NYC at the time. It is not the best television ever but Turturro is a surprisingly charismatic Billy Martin and Oliver Platt manages to showcase the rare nuggets of business genius against a backdrop of an otherwise annoying Steinbrenner that defines the love-hate relationship that Yanks fans have with the Boss.

No doubt the Yanks of modern times ('96, '98-'00) were a better ball club but I guarantee there won't be a made for TV series made 20 years hence about that team that will be worth watching, like "The Bronx Is Burning" is.

Monday, July 30, 2007

Savings Rate Shocker!

This ought to be an earthquake news event in the narrow subset of financial/economics news, but, as Luskin states, it ain't gonna be. It is one thing for pessimists to tout the savings rate, which is meaningless (more here), as evidence of impending economic doom. It is entirely another thing to tout a savings rate that was totally wrong, indicating a negative when in fact it was positive. Now the argument is not a theoretical one over the merits of the savings rate, but one of degree as the pessimists will surely continue to complain that Americans don't save enough. Of course this puts them in the role of arbiter of what is "enough". How do they know? Good question. Probably that same vaunted expertise that led them to make the silly argument that the richest people on the planet don't save money.

Global Warming Versus The Black Swan

OK, so I'm not immune to reading a trendy book now and again. Right now, Nassim Nicholas Taleb's "The Black Swan" is the hot book of the moment in my business. I have mixed feelings about the book, but it undeniably has its virtues. Particularly in its discussion of the failure of expertise. Taleb hues to the belief that the world is simply too complex for "expertise" to really exist, and he discusses at length the demonstrable failure of so called experts' predictive efforts. This isn't a new concept, the dismal receord of prediction and forecasting is well known, so much so as to be part of the 'wisdom of the common man'. Still, Taleb arrays the evidence and the argument against expertise impressively, and as he demolishes economists, securities analysts, CIA intelligence analysts and all manner of forecasters, I can't help but thinking about global warming. The global climate is mind-blowingly complex, just the sort of system for which expertise is essentially unattainable. The implications of this are that it is a near certainty that current consensus predictions of global warming and the damage it will cause will be proved wrong. The current forecasts of what temperatures and climate conditions will be 50 years hence may be too pessimistic or even too optimistic, but they are all but certain to be wrong. We may indeed be in life threatening climatological danger, but it won't be because of excessive man-made greenhouse gases in our atmosphere, or we may be in no danger whatsoever. We are simply unable to know. (Of course, scientific absolutists will vociferously disagree but that doesn't mean their predictions will be any good.) If that sounds too fatalistic, it is. That is proably why humankind has had a fatalistic outlook for much of its existence, and much of the world still does. What are the policy implications? We should probably encourage smart things that reduce pollution at the margin, but mostly we should not inhibit spontaneous technological discovery (which, for example, could yield a 'Black Swan' advancement in fuel technology) by picking winners today (i.e. ethanol) and we should maintain a level of flexibility just in case the consensus is dead wrong. Certainly what we should not do, is elevate global warming prevention to the central organizing principle of society as Al Gore suggests.

Friday, July 27, 2007

FREE JOHN EDWARDS !!!!!!!!!!!!!!!!!!!!!!!!

I forget what the name of the "rule" is but it basically says that in America today, everybody will be compared to Hitler, or that if you are compared to Hitler it will be by somebody who is actually more like Hitler than you are. I don't know , but whatever, it is pretty damn close. A corrolary to that rule is that when you claim that "they" (they being the fascistic superstructure intent on crushing dissent) are "silencing you" it means that you have too much airtime relative to the cogency of your message. Thus Cindy Sheehan is "silenced"! (Good God I simply can't hear this woman's critical message!) Now, the phoniest Democratic politician who is not John Kerry is claiming to be SILENCED! The censors are working overtime to insure that you don't hear this guy's message of raging, inflammatory ineqaulities that are riping America asunder. You can't learn that LITTLE GIRLS CANT AFFORD COATS!! You are blind to the fact thatt high capital gains taxes mean that MINERS ARE DYING in West Virginia!! You will never know that if we just raised taxes a little, people could AFFORD TO GO TO THE DOCTOR!! "They" want you safe in the ignorance that "YOU ARE POOR ( which means you have a TV, own a car, and are very likely overweight) BECAUSE A RICH PERSON WILLS IT TO BE SO!!!!!!!!!!!!!!!!!!!!!"


Ford F-150 Greener Than a Prius? Maybe.

It should be fairly obvious to people with a basic level of common sense that city dwellers and jet-setters claiming to be more fervent envirnmentalists than people who live out in the sticks is a ridiculous premise. Turns out that those country bumpkins and woodsmen may be even better environmentalists than we thought. Check out this new study (also note the skeptical view of Toyota). After all, you don't see many Priuses out in the sticks or on the farm.

Now just give them a diesel power-train for that F-150 and some ULSD B20 in the tank and we are really talkin' green!

And don't forget, there is an option for us city slickers out there!

Oh, and how about a tax-break on my ULSD or bio-diesel purchases!

Thursday, July 26, 2007

Liz Edwards: "Screw the Citrus Industry and Its Workers"

Apparently not content that her husband is the silliest and phoniest major persona in the 2008 presidential campaign, Liz Edwards wants a piece of the action. She's sworn off tangerines (at least sworn of them while at home in NC) in the name of global warming. Apparently she has no sympathy for the largely unskilled workers in the citrus industry for whom tangerine exports represent meaningful work and the chance to make a living. Also, has this woman ever looked at an electoral map? Does she know where tangerines are grown? Florida and California.

Wednesday, July 25, 2007

"Hi I'm Dr. Smith and the Government Coerced Me to See You Today"

The WSJ has an article today that illuminates the major flaw in universal healthcare insurance schemes - they don't ensure care. The article chronicles the experience in Massachusetts where universal coverage was the goal of legislation passed under Governor Romney. There is a doctor shortage and those who now have insurance under the new law cannot get in to see a doctor. Twice in the article we hear the refrain "Health-care coverage without access is meaningless." Indeed. The basic flaw in the law's logic is that insurance coverage is the supply of healthcare. Insurance is not supply, just a method of paying the supplier.

Additional problems come with how do you define access and how do you ensure it. Is access to healthcare a Johns Hopkins-trained doctor or a state college trained one or is it some lower qualified technician? If we've legislated price caps to keep insurance affordable, what if our caps are lower than the Johns Hopkins-trained doctor will accept, what if they are lower than any physician will accept? How do we match a doctor with a patient? If we don't do it through price, we must force that doctor to see that patient. Do we really think we can tell some of our most highly educated citizens who they must accept and provide their expertise to? Even if we thought we could get away with that for a time, do we really think that this won't change the incentives to become a doctor over the long term? This is the dangerous game we are getting into when we claim that healthcare is a right and we travel down the road of "universal" schemes. People who spend hundreds of thousands of dollars and over a decade building up an expertise are not going to stand for getting meaningless sums of money for their highly skilled services. (I regularly hear complaints from talented young doctors who are getting paltry sums like $300 for a minimally invasive procedure like a gall bladder removal.) Surely people will choose other careers if they see that monstrous expenses and years of difficult training will win them the privilege of performing $300 appendectomies.

The fatal flaw of "universal" heathcare is that regardless of how one pays for healthcare (with cash, an insurance claim, or a government check) you have to "contract" with a willing supplier of care. A doctor's training - his/her expertise, skill and proficiency - is their property. We have no claim upon it or right to it save what we can negotiate with him/her. We can spout platitudes about our rights all we want, but unless we convince a doctor to supply us with care, to meet our demand, there is and can be no healthcare. Once we get into the business of dictating prices that the doctor must accept to avail patients of his training and skill or mandating that he/she see certain patients, we are, at best, changing the incentives that lead our best and brightest to become doctors and, at worst, engaging in coercion. Our world-leading quality of heathcare will not long endure if this is how we are going to treat physicians under whatever "universal" schemes that our politicians cook up and manage to pass. The only alternative that preserves incentives for the highly talented and motivated to become doctors, constantly improve their expertise, and treat patients with the highest level of care is the price system. We must not dictate prices to physicians or mandate who they must treat, but instead focus on encouraging innovative ways to pay the prices that prevail for their services.

Tuesday, July 24, 2007

Rudy Campaign Hits Upon the Killer Slogan

The Rudy campaign has hit upon a soundbyte that I think is a winner and should be flogged incessantly from now til November of next year...

"Rudy Giuliani took Democratic White House hopefuls to task Monday for being soft on terrorists and hard on capitalism. "

Soft on terrorism and hard on capitalism. Dead on. Devastating.

N.B. it is curiously similar to "Dead Terrorists and Tax Cuts". Where have I heard that one before?

Wednesday, July 18, 2007

A Little Excitement Before I Leave

Well folks, I narrowly escaped the explosion in midtown Manhattan today on my way home from work (and to commence a few days of vacation). When I heard the explosion, it was clear that everyone around me was thinking 'Oh no, Terrorism!' Not me. I was thinking "Oh no, 'NYC's decades-old, crumbling infrastructure!' And I WAS RIGHT!

Don't get me wrong, I don't minimize the threat of radical Islamic terrorism (or even radical Puerto Rican terrorism) that New Yorkers face, but I know that when I ride the subways I am probably as likely to be killed by NYC's physically decrepit infrastructure as I am by some morally decrepit jihadi. Now, last year Dinesh D'Souza got taken to the woodshed by pretty much everyone across the idealogical spectrum for blaming terrorism on liberal politics. Fine. It's is not liberal politics that we can blame for our terrorism risk, but I tell 'ya it certainly is liberal politics that we can blame for the type of risk that we saw today. Decades of being held hostage by and caving into our rapacious public sector unions, like the transit workers, has sapped the resources that we desperately need to maintain and upgrade our public infrastructure. High pay, effectively guaranteed jobs, no accountability, cushy retirement, and free birth control - all undue spending that diverts resources from track upgrades, wiring upgrades and PIPE replacement, all activities that aim to prevent something like what happened today from happening.

Well, that's it. I'm off to the great interior of our great nation.

To Tide You Over (All 20 of You)

Blogging will be light for a couple of days, so check out my latest, incredibly insightful healthcare post as well as my two 'Healthcare Clearing House' posts here and here.

A Less Rough Vision of Healthcare Insurance

I think a free market, private system of health insurance should be the dominant system for healthcare coverage in the US. (As I have said, the chronically sick and otherwise uninsurable ought to have a government provided safety-net system to alleviate their healthcare costs.) First principle - the vast majority of Americans are not currently sick and are thus not at risk of falling into the uninsurable category and there is no reason to believe that healthcare insurance can't look exactly like life, auto or home insurance. I have tried to outline a rough vision of this type of healthcare coverage before, but lately I've been trying to put some dimensions around it. Given that the vast majority of our healthcare spending relates to only five diseases, I thought I'd tackle one of them and create some food for thought with a little financial analysis. I chose breast cancer. Now breast cancer comes in various degrees so I chose an extreme case. Meet this woman. Here are some basic parameters about her - she was diagnosed with aggressive breast cancer at age 43 and she claims it costs her $300,000 each year for treatments to keep her alive. I doubt it cost her $300k for each year since 1998, but it costs her that sum now. Even so, I make the assumption that it will cost that amount for each year of treatment. To keep this woman alive for 15 more years would cost $4.5 million (take out inflation for now). Let's factor in the time value of money which makes that 15 year treatment bill $2.73 million in net present value terms (7% discount rate). The incidence of breast cancer has held steady at 100.6 per 100,000 women for about a decade and a half. So now let's go back to 1997 before this woman was diagnosed with her cancer. In a uniform pool of 100,000 women, an insurer would expect to encounter a cost in NPV terms of $2,750 per woman to keep each woman who contracted breast cancer alive for 15 years at $300,000 per year. So I ask, would there be 100,000 women willing to pay $2,750 to be free and clear of all breast cancer treatment costs for 15 years should they be diagnosed. I think women would gladly pay that. Clearly though that could be paid in installments, say annually, which would be only $183 per year. That is hardly beyond the reach of most women at risk.

Let's explore this a little more and take it closer to home. The ever-ravishing and always lovely Mrs. Baseball is 38 years old. Her fate may or may not be identical to that of our Assertive Patient, meaning that at 43 she will be diagnosed with a virulent breast cancer. The calculations say that in five years time to begin treating Mrs. Baseball for 15 years at $300,000 per year, the NPV of expected costs is $2.08 million. Thus, in a pure pool of 100,000 women, the expected cost per woman would be $2,100, or $105 per year for twenty years (less even if you factor the time value of money to me the payer). Would I pay that kind of money to have Mrs. Baseball be able to receive that kind of treatment and have our family avoid financial ruin? The question answers itself, but let's compare that calculation with another one just to see if we are not being outlandish here.

My wife and I both have life insurance policies to provide for the Baseball kiddies should we shuffle off the mortal coil - $3 million of coverage each to be exact. It costs about $1000 to insure Mrs. Baseball's life for $3 million which is roughly comparable, but greater, to the breast cancer treatment NPVs discussed above. That's $2.74 a day, less than a tall mochachino at Starbucks. But wait. The death rate from all causes for adults 25-44 in the US is 177.8 per 100,000. So Mrs. Baseball has a greater risk of dying from any cause than she has of getting breast cancer. If an insurance company is willing to underwrite a greater amount, $3 million, for a riskier proposition, death, for less than a fancy cup of coffee then surely an insurance company could offer coverage for breast cancer treatment along the lines of my example for at least a similar amount, and lower likely.

My numbers are pretty conservative (i.e. not every woman will require $300,000 per year in treatment), so this is just the realm of the possible. You could even pad the numbers a little to generate even fatter profit margins for the insurance companies and you still can imagine a generous coverage package for a trvial cost. This is the world of free market, private insurance. This is the realm of the possible. The notion that is flogged by collectivists that insurance companies are the source of the problem and must be reined in, regulated and robbed of profitability is absurd. It is based on the frankenstein, quasi-free market monster of yesterday's HMO or today's employer-focused healthcare insurer, not the pure risk-based insurance of the private sector.

What about the Assertive Patient? Well, she is likely uninsurable at this point in the private insurance world. For her we need a governemnt solution to help her with the costs of healthcare, but it is absurd to propose that we need a government solution for the millions of women who are not like her. Those women are insurable and should be able to get great coverage at low cost. No insurance crisis exists for these women, no crisis except that our current system disallows businesses from offering a pure insurance product for them. To assume the liabilities of those millions of women without regard to risk will yield two destructive results. First we'd be opening ourselves up to tens of billions of dollars in unfunded liabilities and, second, we'd be forcing ourselves into rationing care for those women outside of the price mechanism and any such rationed care is going to be degraded care. Is this what we want for our wives, mothers, sisters and friends? Or do we want risk-based insurance that can deliver generous coverage for the cost of a cup of coffee?

Latest From the Official Overseas Journal of Rubinomics

I have a new name for a certain pink, foreign newspaper. Henceforth on these pages it will be known as the Official Overseas Journal of Rubinomics. Today the OOJR offers another treat...

Recently I wondered if the current administration wasn't finally getting our fiscal act together (relatively speaking) just in time for a President Hillary Rodham Clinton to use the perception of fiscal health to launch an LBJ-style Great Society spending binge. Her partisans are clearly signalling her to do just that. Well, today in the pages of a pink, foreign newspaper, some guy who is either smoking crack or is an academic (there are no other possible explanations) seems to think that the Democrats are saving the day only to tee up a honey-pot for Republicans to ravage:
"Privately, though, many are starting to question why a 2008 Democratic president should bother improving the government’s balance sheet if the end result is just a bigger pot for a future Republican president to lavish on his or her friends. "

The article does make some decent points but there are too many howlers to really take it seriously. Here's another: "in the case of the US, it is hard to tell how the Bush tax cuts will play out." Hard to tell, huh? The Treasury is right now collecting more tax revenue than it has ever collected, with receipts growing in each year since 2004. The forward looking stock market is setting new highs. The federal fiscal deficit is lower than a decades-long average as a percentage of GDP. The tax cuts, which are bringing in record revenue from dividends and capital gains, are the only thing that are helping us keep pace with out of control spending.

Finally, Rogoff makes the critical error of equating the current account deficit with debt. He states we're borrowing $800 billion a year. Not true. Foreigners are investing $800 billion in the US. Some of that is invested in US government debt obligations but much of it is pure investment like Toyota factories, sushi restaurants, and New York skyscrapers and West Virginian warehouses. (And alot of it is capital simply returning to safer shores, seeking to avoid things like coups in Thailand, nationalizations in Venezuela, political uncertainty in Turkey, etc.) I'm sure Don Boudreaux would happily explain the distinction to Rogoff.

And of course there is the usual IMF worship when Rogoff cites the IMF's doom and gloom predictions for the US which are consistently proved wrong.

In the end though I can't argue with Rogoff's bottom line, that deficits to do matter. Indeed they are hardly meaningless, but his motivation is not to cure the deficit but to raise taxes. I wonder if Rogoff would be as concerned over the deficit if the most likely political remedy were to abolish the Departments of Energy, Education, Housing and Urban Development, and slash other cabinet department budgets by 20%.

Past editions of the OOJR here, here, here, here, here and here.

Tuesday, July 17, 2007

Reduced Standard of Living Coming to the Garden State

More on New Jersey's ongoing campaign to destroy its economy, via Jersey Nut.
This seems like an ongoing series, which it oughtn't be.

Libertarian Hawks

Pro-War Libertarians? Yes. Maybe next year we'll see a similar piece titled "Libertarians and the Bombing of Iran's Nukes."

The Energy Problem Is So Complex

An Indian company drills for gas off the coast of India and finds lots of it. They plan to invest to harvest the gas and pipe it to the home market nearby, which suffers from high energy prices because its demand for energy exceeds what it produces locally. Wow, what a concept. Who ever thought of letting that company drill so close to home?

Reid: When We Dems Get Bought, We STAY Bought

That was quick. We got our answer to the question of Hillary's motivations in less than a few days. Harry Reid says that the Senate won't be taking up the issue of increasing taxes on hedge funds and private equity this year. Actually I was only jesting about being in the dark on this, I think it was fairly obvious that Hill was out to burnish her populist bona fides while happily continuing to gorge on hedge fund/PE campaign cash, which comes at the low low cost of keeping all this higher tax talk just that - talk. Don't get me wrong, I don't support raising taxes on hedge funds - first, because I believe generally in low tax rates on capital income, and second because such a tax policy would be a very large pole up my fiscal posterior (lest you think I am some revolting plutocrat whose greed knows no bounds, let me assure you, Steve Schwarzman I am not) - but it is the rank political cyncism on the part of the Dems that sticks in my craw. All they are doing is waging a PR campaign, dragging hedge funds/PE through the mud and posturing loudly over "unfairness" while they rake in campaign cash from just those industries. How about, for a change, we here politicians say "Raise taxes on rich, mostly liberal, New York finance types? What are you, crazy?" or "Oil companies? Dude, I LOVE oil companies!" That would be a fine day indeed.

Friday, July 13, 2007

Hillary's Sticks the Tax Kinfe In Hedge Fund Back

Whereas Chuck Schumer is not ready to whack his constituency's leading industry with punitive taxes, Hillary Clinton is. What's more, she's willing to stick the tax knife into a great many of her financial supporters. Mark Lasry of Avenue Capital (who also employs Chelsea) comes to mind, but there are numerous hedgies and big money private equity folks who have ponied up big time for the Dems and Hillary's presidential run recently. Now that she's got the campaign loot, this is how she pays them back. Or maybe she is burnishing her populist credentials free of charge by supporting this knowing that it will never pass, precisely because the hedgies have bought off so many Dems and it will likely get a Bush veto. Which is it? Cynical ploy or good ole' fashioned betrayal?

Ray Nagin, Beacon of Racial Unity?

Somebody named Zoltan Hajnal opines in the WSJ today that white America is no longer uncomfortable electing black political leaders. If this is true (and I think it is to an extent) it is a welcome development naturally; political leaders shouldn't be favored or handicapped based on their races but on their true policy views, character and capacity to lead. Unfortunately Mr. Hajnal doesn't make the case. In the article he does not cite one single instance of a black politician to butress his thesis. Hajnal merely states that there are lot of black politicians out there, ipso facto us whiteys are OK with them. Again, I think he is correct to an extent, white Amerians are more or less open to the idea of black political leaders, but I think this is grounded in the theoretical rather than the empirical. White Americans are probably more open to black political leadership by virtue of the profound moral standing and achievements of the civil rights movement embodied by Martin Luther King rather than by the collective performance of actual black politicians. Of course, one cannot paint everybody with the same brush, and I have highlighted on this blog a black politician of inspiring promise (no, not Obama, this guy), but let's be brutally honest, the record of the most prominent black politicians in America can hardly be seen as winning over white America. Just today, one of the most prominent black politicians of the past 20 years here in the northeast was indicted for corruption. Long time residents of the region have always known Sharpe James for what he truly was, the head of a cynical and corrupt political machine that perfected the art of promoting white flight. Can we really say that the Morial-Barthelemy-Morial-Nagin experience in New Orleans has been one to inspire whites to vote across racial lines? David Dinkins, Tom Bradley, Kwame Kilpatrick, John Street? Do any of these guys strike you as making Hajnal's case? What about Congress? John Conyers, Maxine Waters, Sheila Jackson Lee, Jesse Jackson Jr., William Jefferson, Alcee Hastings. Who is making Hajnal's case? Who is winning over white votes through force of character and leadership?

The point that can be taken from this is not necessarily a racial one - that the transformations that our society undergoes are no thanks to the doings of those who occupy office. Our outlook on many areas of life are shaped by those outside politics, those people and events that move history along. I think Hajnal has come to the right conclusion on the wrong evidence.

Just Call Me the The Speculative Optimist

The Skeptical Optimist sees something awry about the recent 2007 fiscal budget deficit forecast that the White House released recently. He postulates that something bad will happen to derail the current virtuous trend very soon or that the White House is padding so as to surprise on the upside. I vote the latter. One thing that I, as a fairly close observer over the past few years, have noticed about this administration's political tactics is that they wait patiently (often to the chagrin of their cheerleaders who interpret the patience as indifference) while their political opponents stick their necks out farther and farther before they chop off their heads. Such is why I wouldn't have been surprised if Osama bin Laden had turned up dead at an opportune time (I still wouldn't). Nor will I be surprised when in the heat of the 2008 campaign, some things happen or start to get revealed that drastically alter the political calculus of the race to the detriment of this administration's opponents. As it relates to the deficit, I wouldn't be surprised if the deficit went away and the administration floated the idea of a surplus and allowed whoever gets the Republican nomination to ramp up the talk of additional tax cuts just as the 2008 campaign gets hot.

UK Schools: Churchill Out, Vegetarianism In

For those who sense the decline of the best traditions of civil society in their gut but are hard pressed to point out direct evidence, once in a while we get the real deal, the hard evidence that reveals the erosion, nay, willful destruction of our heritage's virtuous elements. Today comes news of just such evidence. Even if you are not a Churchill fan, you should at least be for the vigorous and rigorous teaching of history to children.

Why I should be up in arms about this I don't know, this has been happening in our country too, albeit stealthily. Subjects such as the founding era and great figures such as Washington and Jefferson have been taking a backseat to trendy hogwash for a while now. I guess it is just the brazen arrogance of the education establishment that gauls me, that they can issue edicts whitewashing major elements and figures of history.

Wednesday, July 11, 2007


If I had to distill my policy desires down to their crudest essence (and I have) they can be summed up as "Dead Terrorists and Tax Cuts."

So. Tax cuts, check. Dead terrorists, check. Musharraf in '08!

Yes, Elite Nannies Are Overthinking Healthcare Reform

In my second Healthcare Clearinghouse post I linked to a speech given by Senator Tom Coburn M.D. on healthcare reform. In it, Sen. Coburn makes this stunning statement:
"If you look at our health care market and what is spent every year, 75 percent of the money we spend is spent on treating five diseases, of which the vast majority are preventable, and we can lessen the impact of those tremendously through prevention strategies." (Those diseases by the way are heart disease, stroke, chronic obstructive pulmonary disease, diabetes, and cancer.)

Wow. Think about that. Just five diseases are the vast majority of our healthcare spending. What's more, we have vast amounts of data and medical literature on these five diseases. We can predict their incidence pretty well and we even know effective strategies to prevent them. Actuaries could quantify and price out the risk of needing treatment for these five diseases easily. What's more, insurance companies could reliably give discounts to people who chose to adopt preventative measures into their lifestyles. In a previous post where I outlined a vision of health insurance that would cater to the individual and insure for the most obvious needs, I conceptualized insurance for just one common disease and then for maybe 5 common diseases. My thought was that you could build from there to encompass quite alot of health risks, but clearly we only need to address these five diseases to have a massive impact. People who wanted to have insurance for the other 25% of healthcare spending risk could get that too as a supplemental or from a specialty provider, much like there are specialty insurers for things like art, fine wine, boats, athletes' bodies and more.

Our healthcare system's problems are caused by flaws that are actually quite small and easy to fix. Aside from the terrible effects that a collectivized approach would have on our system and our liberty, a greater government role in healthcare violates the basic principle of choosing an easy solution over a hard solution that would have equal outcomes. A federal market for health insurance combined with unifying the tax treatment of purchasing healthcare insurance would largely unshackle the system to solve the problems it now faces.

Rudy's Foreign Policy Team

Foreign policy has never been my strong suit (nobody has ever accused me of being diplomatic), so I had a vague notion that Rudy has asembled a good foregin policy team, but the Powerline guys seem to think the team is better than good. As readers will know, Rudy has asembled a fantastic economic team too, that is particularly strong on tax policy. What's more, it looks like Rudy is signing up some heavy hitters from the business world too. I noticed that Wilbur Ross has lent his name to the Rudy campaign. Conventional wisdom of course dimisses Rudy as both idealogically incompatible with the conservative base (I hate that term but that is the accepted parlance of the modern age) and not sufficiently steeped in the Republican Party establishment to build the campaign machinery that it takes to win the White House. I don't know. Seems like Rudy is building a pretty good campaign edifice. Could the conventional wisdom be, gasp, wrong?

Tuesday, July 10, 2007

Pessimists Take Another Blow to the Head

The priests of Rubinomics, those chaps who tell us that the 2003 tax cuts did nothing to spur the economy, that income inequality is a pox on capitalism, and that we need to ramp up government spending to ensure a bright future are just taking hit after hit from the economic data. All these blows to the head have disoriented them and resulted in increasingly humorous attempts to bash the current economic expansion. I've read enough of this stuff to sum up what constitutes a healthy economy to the Rubinomists - plenty of unionized heavy industry. If we are not building factories for heavy industry that can be staffed by plenty of unionized, $80/hour workers, we just aren't running a sound economy. We still do alot of that type of stuff and we are still pretty good at it, but those days are past. We are a service economy now and we create most of our opportunities for "knowledge workers." Where do "knowledge workers" actually work? Well, they can work anywhere really, but basically, they still work out of offices. So, one thing that companies do when they are optimistic about the future is sign leases for offices to house all those knowledge workers. Judging from this report, there seems to be a fair bit of optimism across the business landscape. The strong demand for office space deals another blow to the head of this silly notion that corporations are pessimistic and scaling back and that the only logical consequence is a US recession.

Subprime Meltdown Kick Starts Sausage Making

I have noted that the subprime mortgage 'crisis', if it is that, is a tale of greed and stupidity, mostly on the part of people who knowingly borrow more than they can afford to pay back to lenders. That doesn't mean we won't get dumb laws passed in the wake of this 'crisis'. The laws will come in two varieties. The well-meaning laws that aim to protect people from themselves but that have malign unintended consequences and the outright punitive laws against easy targets that aim to display politicians' populist bona fides. Here is a rundown of the sausage making, er, legislative landscape.

Here's my favorite: "Some states would establish foreclosure-prevention plans, including a Massachusetts bill that establishes a fund to lend up to $25,000 to homeowners facing foreclosure." People facing foreclosure simply can't pay. If they can't pay the bank, they can't pay the government either, so what makes anyone think that these "loans" won't simply be handouts that create incredibly bad incentives for people to stretch themselves when buying a home and taking out a mortgage. Also, where would those government "loan" proceeds go? To the banks most likely to get the foreclosure process stopped, which seems to me to be just another elaborate corporate welfare transfer payment, a subsidy of sorts to banks for not being nasty to people by seizing collateral.

Monday, July 09, 2007

Good Problems to Have

In the upcoming US election our society will be engaging in a massive national debate on how to divvy up our colossal national wealth. We'll be asking 'should we be giving more or less money to (blank).' In the blank space you can insert a slew of various slices of society from those aspiring to attend college, to sick, young children of modest income families, to farmers, to refiners of ethanol, to investors, to teachers, to makers of military aircraft, and even such non-traditional interest groups such as Iraqis, Aghanis, Palestinians, and Sudanese. Isn't it great that we can wrestle with these questions of where to spend our money, when, in the cradle of western civilization, they can't even pick up the garbage?

Aviation Porn

You've got to suffer through alot of corporate schmaltz, but you actually get to see the plane at the end. It is a beauty.