Un-thought

Study Finds Evidence that more Income does not Improve Health.

2012-01-06T17:33:00.001-08:00

The incidental economist highlights a study that finds evidence that more income does not improve health.

Conclusions: These findings suggest that the ability to improve short-term health outcomes through public transfer payments may be limited. However, the lifetime effects on the health of people with higher incomes would still be a valuable avenue for future research.

Some may not be surprised by this but studies have consistently shown that people with higher income live longer on average. This study is evidence that though health correlates with income, income is not causal. It is evidence that that poor health causes lower income or something else is causing low income and poor health. We need a good test that will show which is the cause because for example poor impulse control could cause both bad heath and low income. Highly talented athletes could be a place to look. Athletics does not require a lot on impulse control.

It is my observation that a large amount of money can be destructive to some people’s health e.g. it allows some people to drink all day and drug all night and drive very fast care very fast.

BTW the is a section Of Glasgow Scotland where male life expectancy is below 55 years. Those people might be drinking themselves to death. Giving them free stuff (including free health care) might just speed up the process.

Andrew Cohen Proposes Licensing Parents

2011-12-27T08:54:00.001-08:00

I am against licensing parents but the his post is interesting because it makes it clear that there is a stronger argument for licensing parting which we do not license than professions that we do license.

I it is better to give everyone a license to be a parenting and then have rules that if broken result in loss of license. That is everyone has a right to be a parent but that right can taken away in a case of abuse which is the system that we have. I think the same for professional licensing but in professional licensing their might a case for a very easy test (that any college grad could pass with a few weeks of study) up front.

BTW related I think that anyone should be allowed to buy most medicines without a prescription but that one should have to pass a simple test and commit to taking the full regime to get an antibiotic.

Tyler Cowen on Better Verses smaller Government

2011-12-27T08:40:00.001-08:00

He writes:

The world is changing more rapidly, so automatic pilot isn’t good enough any more. “Good governance” and most of all adaptability have become more important. This will benefit the Nordic countries, the UK, Germany, Switzerland, Canada, and Singapore. It is mostly bad for India, Russia, and the Mediterranean countries, plus other countries with lots of corruption. It remains to be seen which category the United States and China will fall into

It seems to me that our Government is even more wrong than it is big and that it could deliver more and yet be much smaller if it were not so wrong. For example SS exists to prevent low life time earners from running out of money in their old age, but SS pays out more to high earners than to low earners. Other examples: the lack of sensible spending controls on medicare, the bloated military budgets and how about the war on drugs. I do not see how anyone can propose giving more money to the Government until they end the war on drugs and address the other problems that I listed.

Scott Sumner has Another Post Debating the Efficacy of Fiscal Stimulus

2011-11-22T12:03:00.000-08:00

Scott Sumner has Another Post Debating the Efficacy of Fiscal Stimulus.

To me it is a moot point because even if it works even taking the advocates numbers the cost is way too high per job saved/created. It is clearly better to use monetary stimulus combined with a wage subsidy.

This seems especially true in the current downturn because the lower skilled workers are so much more likely to be out of work. For the people at the bottom of skill levels a wage subsidy is a much cheaper way to create jobs than a stimulus which is likely to have quite a bit of crowding out. Even Allen Blinder an advocate of the first stimulus has said as much.

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High School Should not Just Prepare Adolescents for College

2011-11-22T11:54:00.000-08:00

Edububble excerpts:

High school, in short, should not just prepare adolescents for college and careers, but for successful lives as adults. And far from backing off modern notions of success, this approach actually embodies new understandings of what really helps people succeed: not just reading and math, but deeper life skills that aren’t reflected on exit exams or college applications.

I have been saying something like that for years.
Why is it that people complain endlessly about US children not do well on PISA and similar test but we seldom talk about what knowledge or skills would help them live better lives and what are the most efficient ways to get that knowledge and those skills to people.

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If the OWS People were Serious People

2011-11-19T14:27:00.000-08:00

If the OWS protesters were serious people the would carry signs that say things like:

One percent per year expense on a mutual funds is over 20% of the expected real gain! And you do not even beat the indexes! And you must have paid of congress because 401ks legally require us to use mutual funds!

Or

We know from Benford's Law that you are scamming us.

Or

Goldman Sachs runs the US Treasury, is it any surprise that it biased in their favor?

The Federal Reserve system cannot function well in a sharp contraction. We need free banking.

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Tyler Cowen Outlines a Way to Solve Italy's Debt Problems

2011-11-15T12:53:00.000-08:00

Tyler Cowne on a way to solve Italy's debt problems. Tyler suggests that a wealth tax would work.

My comments:

Unlike the Germans, Italians do not obey laws just because they are laws democratically enacted. This has good and bad effects. One result is that makes it difficult to collect any tax, let alone a wealth tax. So I think that Italy may have to default in some way.

But Italians should not disrepair. The biggest negative result from a partial default would be that it would make it difficult for the Italian government to borrow, but IMHO the benefits of being able to borrow are overrated.

To me the 2 benefits of borrowing are:

1. To move some of your consumption earlier in you life when it is more enjoyable.
2. It enables businesses with good ideas to grow faster.

A balanced budget amendment results in the same thing a government that cannot borrow. Also borrowing is not a great idea if you like Italy have rapidly falling population.

If I was an Italian citizen (or Greek) I would vote for default. I would say the government is debt not me.

Free Banking

2011-10-25T16:30:00.000-07:00

For a free banking system to work well the bankers need to know their business, they need to be greedy but not completely immoral and nobody needs to understand the monetary system. For the current system to work well the bankers need to be free of greedy and highly moral, and the median voter needs to understand the monetary system and the government regulators need to diligent.

Cigarettes the Drug war and Transfer of Learning

2011-10-25T13:47:00.000-07:00

Aaron Carroll over at the incidental economist blog has a good post on the costs of alcohol consumption.

In 2006, the economic costs of excessive drinking in the US were $223 billion. That’s about $1.90 per drink. Another way of looking at this is that the cost was almost $750 per person in the US.
Almost three quarters of that sum is from lost productivity. An addition 11% is due to healthcare costs and 9% is due to criminal justice costs.
Underage drinking cost $27 billion. Binge drinking cost more than $170 billion. Drinking during pregnancy cost more than $5 billion. Alcohol-attributable crime cost more than $73 billion.
The cost to the government was more than $94 billion, or about $0.80 per alcoholic drink.

It is funny that Democrats are on a holy crusade against smoking (there is now a big black market in cigarettes) but they do not touch alcohol due to our experience with prohibition. Worse yet, both Democrats and republicans are on a holy crusade against recreational use of drugs. I guess that is proof that knowledge in one area is not transferable to other areas:

Here are links to Bryan Caplan on that subject:

http://econlog.econlib.org/archives/2010/10/take_notice_of.html
http://econlog.econlib.org/archives/2011/01/the_case_agains_5.html

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A Progressive Consumption Tax

2011-10-13T06:57:00.000-07:00

You tax experts out their would this work?

Many economists have called for a consumption tax to replace the income tax. Invested money that is never spent promotes economic growth and has been compared to indiscriminate charity. The problem is that it is difficulty to make a consumption tax that is simple and progressive. So one way to achieve the goal might be to make it so a person can put as much money as they want, pre-tax, into an IRA. Then allow people to take as much as they want out of their IRA at any time but tax all withdrawals. You tax income not put in an IRA and the withdrawals at a same progressive rate. You could also allow people to buy a car or home in their IRA and rent them at market rates. The result would be a progressive consumption tax. You would also want to end the Corporate profits tax.

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Eric Falkenstein's and Research Shows that People Pay to take Risk

2011-10-13T06:11:00.000-07:00

I have been impressed by Eric Falkenstein's videos. In them he makes a case that because people are trying to out perform or to get rich quick, they drive the price of riskier stocks up so hat there is a cost to taking on high risk rather than a return. That is that higher risk stocks produce lower long term yields than lower risk stocks. This would explain a lot including why people buy the state lotteries and why they like large lottery pots. The implications are that investors should buy the safest stocks that they can find and hold long term. Low debt, high profit margin, low volitility and low beta boring enterprises like LOW,MCD, PG, KO, PEP, utilities etc. fit the description. .

There are now low volatility and low Beta ETFs to serve people who want to invest this way.

I highly recommend his videos. They are free and that just shows that you low risk is free and to take more risk you have to pay.

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Can Fiscal Stimulus Work

2011-10-10T07:02:00.000-07:00

Scott Sumner has a post on fiscal stimulus he questions the value of it as I do.
Scott questions if based on empirical evidence. I question it theoretically, how is it supposed to work.

My problem with understanding how fiscal policy could work is that you are taking just as much money out of the economy by selling t-bills as you are putting in.

Now, I heard one plausible argument for fiscal stimulus. It said that said if Gov announces say a big 10 year road building project a road construction company might borrow money to buy equipment and hire people and that borrowing would be monetarily expansive. I do not think that at any reasonable level could be enough to jump start the economy nor do I see it as good, maybe in the future there will be less borrowing/debt. That IMHO would be a good thing so if monetary policy can get the economy going with less debt that would be doubly good IMHO. Also the gov must at some point pay back the money that it borrows.

It seems to me that monetary policy is far better.

Great Quote from the Very Quotable Bryan Caplan

2011-10-06T07:54:00.000-07:00

Great quote from the very quotable Bryan Caplan here.

"The public is wrong. Indeed, the public is delusional. It's crazy to tax everyone to provide "free" pensions and health care for everyone. And it's logically impossible for benefits to permanently grow faster than GDP." Bryan Caplan

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The President's Latest Stimulus Proposal

2011-09-30T06:38:00.000-07:00

From a NY Times Editorial:

According to Mr. Zandi, President Obama’s $450 billion jobs plan could add 1.9 million jobs in 2012 and cut the unemployment rate by a percentage point. With interest rates so low, the government could easily pay for a bigger program.

Wow that is $459 billion / 1.9 million = 241,578.95 per job! One would hope that would make Mark Zandi against this stimulus plan but not so. He is for the plan. Now I admit that you do get some stuff for the money not just jobs, they are not digging holes and filling them in. I also admit that this is a great time to get ahead on building and fixing roads and bridges and some of the proposed stimulus is in tax cuts which is almost free. All tolled thought, $241,578.95 per job is still seems like a very expansive way to create jobs but since the median voter seems to demand jobs programs we should find cheaper ways to do it.

Perhaps this simplest way would be to replace the minimum wage with some kind of wage subsidy. The recipient would get the bast wage that he can find and the Government would pitch in enough to get the recipients income up to some acceptable level. We are already paying those who are still eligible to collect unemployment so we might as well pay them to work rather than paying them to not work!

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Warren Buffett's Article on Taxation has Spawned Some Good blog posts on Taxation

2011-09-26T07:44:00.000-07:00

Warren Buffett's article about taxation and tax rates has spawned some very good blog posts on the subject of taxation and who pays for what.

Here is a good post on the subject by John Goodman. In it he proposes a progressive consumption tax. There are things that we could do short of that. For example I wonder why we have a cap on how much a person can put in an IRA. Why not tax income when it comes out of the IRA to be consumed, rather than when it is earned. Investment helps us all in the longer term so why tax it?

Also it would seem to me simpler and better to tax a husbands and wive's income separately and let them divide the exemptions optimally. This would eliminate the marriage penalty making conservatives happy and would encourage more women to work in the taxed part of the economy making Democrats happy.

Of course I would also eliminate most deductions to simplify.

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Why Eliminating the Deficit is Technically Easy but Still Politically Impossible

2011-09-23T12:57:00.000-07:00

Why Eliminating the Deficit is Easy but Impossible

Below address the big expenditures and tell how they could easily be reduced without much causing much pain.

Social Security

Social Security is one of the highest areas of federal spending so if we are looking to reduce federal government spending Social Security is a good place to start. The first fact that stands out with Social Security is that it is a bob Peter to pay Peter program. What I mean is that it takes money from all of use to give to all of us. In fact it takes more money from the higher earners and gives more money to the higher earners but if ask people why Social security exists they will tell you that it exist so that no one will be destitute in retirement. And make no mistake about it in a rob Peter to pay Peter program, If you are middle class you pay the full amount for your SS plus the cost of inefficiency or dead weight losses.

Here are some excerpts from the Social Security web site:

The maximum benefit depends on the age a worker chooses to retire. For example, for a worker retiring at age 66 in 2011, the amount is $2,366. This figure is based on earnings at the maximum taxable amount for every year after age 21.

The average monthly Social Security benefit for a retired worker was about $1,177 at the beginning of 2011. This amount changes monthly based upon the total amount of all benefits paid and the total number of people receiving benefits.

BTW I leaned some thing from doing this research that is post. I learned that there is no minimum benefit from Social Security so it does not even cover some of the neediest people.

So if we want to keep people from becoming destitute in retirement but want to be more efficient and not discourage work and saving what can be done with Social Security to save money? You could means test the benefit in retirement but that discourages saving. What you could do is select an amount below the average benefit and give that to everyone. So how about we give everyone on the program $800/month that would reduce spending on the program by of over 32 percent.

The big problems here are that people are fooled into thinking that they are getting something for nothing and old people vote.

Schooling/Education

Schooling is another big Government expenditure and though most of the spending is at the state level a big reduction at the state level would allow the federal government to remit less to the states and localities.

The average cost per student per year is now up to $13,00. I pay $4,000 per year to send my son to private school. If you ask why the Government runs the schools a common answer is because otherwise people would not be able to afford to send their children to school. but lets face it if you earn median income or better you are probably paying the full $13,000 through taxes. I like to ask women if the state would pay you $10,000 each to educate your children would you home school them. The simple money saving solution is to start to charge families based on income for each child that they have in government schools. Poor people would use government schools for free and as income goes up the charge would go up more slowly as to not make it better to make less. At some point above the median income people would pay the full $13,000 per child. this would push people to find cheaper ways to educate their children. Of course this is politically impossible now because the median voter being rationally ignorant thinks that school is free paid for by the rich.

The big problem here is that people are fooled into thinking that they are getting something for nothing but I assure you that you cannot subsidize everyone and you cannot subsidize the middle class they pay every penny. On top of that the system is so inefficient that we can all be better if we just focus on subsidizing the poor rather that trying to subsidize everyone.

Medicare
Recently there was a big press story about changes in Medicare leading to "death panels" but it there is strong evidence that at least half of all healthcare spending is for care that net out negative on the harm verses benefit scale. The Rand Health Insurance is one big piece of evidence and differences by area on spending show the same results that is places the spend half as much per medicare patient often get better results that areas that spend more. Further no one is saying that you cannot opt for aggressive expensive care just that medicare should refuse to pay for it if it does not net about positive among the population. We evidently do to much medical and so medicare needs to have panels that decide what it will cover in what circumstances. This can easily knock medicare expenses down a third and still there would be waste.

Also between Medicare medicaid and plans for government employees government currently spends more that half of the money that is spent on medical care in this country. It therefore has considerable market power and so can more affect in market prices than it does. It could simple negotiate lower prices. Most of the difference in spending between the USA and Canada is due to higher prices not less care.

Licensing is an issue that also needs to addressed. It is currently to difficult and long a poses to become an MD, PA, NP, RN and LPN. The evidence is that this does not improve quality does push up prices. One piece of evidence is that PA, NP and midwives get as good outcomes as MDs. Generally with a reasonable range of qualifications it is not better people that improve outcomes but better systems.

Making it easier to become a provider would make for more competition and make it cheaper get care.

The big problems here are that people think that they are getting something for nothing and old people vote. People are also convinced that Doctor quality drive outcomes and that schooling it a very accurate way to screen for better doctors.

Defense

In reality we won the wars in Iraq ans Afghanistan within weeks of the invasions and those invasion are a good deterrent against allowing the establishment of Al Queda again in those countries. We could save considerable money by admitting victory in those countries and leveling them to work out their own salvation with fear an trembling.

Also we still have bases in Germany and Japan long after the end of the cold war.

The USA spends about what the rest of word combined spends on defense. We spend more 2x what number 2 China spends and there stuff is not as good as ours and much of there spending is wasted on foot soldiers nor does China look like a threat to us but like an ally.

We could easily cut military spending in half without compromising security.

Other Smaller Areas to Cut:

Energy has been an area of interest t me since my college days when I majored in resource economic believe me when I say that the Department of energy has accomplished nothing and should be completely eliminated. The same goes for the Department of education.

Why it cannot be done until a sever crisis hits:

The median voter thinks:

That corporations pay the corporate tax
That Warren buffet is under taxed
That schools are free to him
That SS is not a welfare program.

Related Issues for Other Posts:

Medicaid puts huge marginal taxes on the poor. Better huge deductibles that vary with income.

The corporate tax is paid by the people, either the stock holders, employees or consumers.

It is very hard to really tax the rich.

Hidden taxes everywhere don't be fooled if you are middle-class you pay every penny for every program/benefit that you receive from Government and then some.

Why we should just have a consumption tax. It hard to tax the rich. How to make a consumption tax progressive and keep wives in the in taxed labor force.

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Kevin Outterson at The Incidental Economist Blog Made the Kind of Post that Gets Me Going

2011-09-23T12:30:00.000-07:00

Kevin Outterson at The Incidental Economist blog made the kind of post that gets me going in high gear. He wrote:

Japan – better outcomes with older people at half the cost
Don’t let anyone assert (without data) that the aging US population is to blame for our high health care costs. Look at Japan. Despite one of the oldest population in the OECD and health expenditures half the US amount, Japan enjoys much longer longevity.

It is not clear that Japan has better out comes see here:

1. Asians live longer here too.
2. Japan has a much lower accident rate than the USA.
3. Japan has a much lower homicide rate than the USA.
4. Japan has a much lower multiple birth rate that the USA.

If you assume that all ethnic groups are equally health then we don’t have to go to Japan for an example we can adopt the the care level to that of Hispanics here in the USA and that will improve our longevity. I think it would not help, though it could be true that too much health care is killing whites. Hispanics have less access to health care than even black Americans.

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The Macro Resilience Blog Post on Snap Back

2011-09-23T07:46:00.000-07:00

The macro resilience blog has a post that uses a term "snap back" a term that I had never seen used in this context but it seems like a great way to describe the problem.

"The problem in a credit economy is not so much excess savings but as Borio and Disyatat put it, excess elasticity. "
...
"If our financial system is a rubber band, the long arc of monetary system evolution from a metallic standard to a credit economy via the Bretton Woods regime has been largely a process of increasing the elasticity of this rubber band (excepting the period of financial repression post-WW2 when the trend reversed temporarily). Snap-backs are inevitable – the question is simply whether the snap-backs are “normal” or catastrophic."

This "snap back" is the problem that I think competitive currency issuing can solve. In a system with bank's currency backed only in bank assets in the face of deflation banks would have an incentive to issue more currency to by up assets. This would slow the appreciation of currency (deflation) and slow the fall in asset prices. Further more if currency is not Government issued it might not out compete stocks and other investment so badly when people are scared.

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Productivety

2011-09-21T06:13:00.000-07:00

This is an interesting article The Greater Recession: America Suffers from a Crisis of Productivity with interesting graphs

His energy costs are off because he measures the cost of energy inputs but we do not buy energy we buy mobility, cool, warmth, TV viewing time etc. and those cheap new manufactured goods deliver more of those output per energy input BTU.

Also housing is on the mend recently. prices are falling. That leaves medical care and schooling/credentials which is what we really buy (education apart from schooling/credentials has gotten much, much cheaper since the internet). Medical care is a strange good but if you just look at output that is health life expectancy we are doing much better than in 1970. I think that schooling/credentials on the verge of big positive change. I think that we need a separation between education and grading/testing.

So I am very optimistic.

Very Informative Post on Infant Mortality

2011-09-16T10:03:00.000-07:00

There is a very informative post on infant mortality on The Incidental Economist blog. It talks about the racial differences in infant mortality. Excerpt:

Personally, I think there is some genetic component–at every gestational age, black babies are smaller than babies of other ethnicities (the distribution is still normal, but it’s shifted to lower weights–that’s why any discussion of racial disparities in low birthweight needs to adjust for this), but, at any gestational age, their survival is better (a black baby born at 31 weeks has better survival than a white baby, but, because there are more 31 week deliveries, overall mortality is higher in blacks), and there are differences in the distribution of pelvic shapes (black women are more likely to have a narrower pelvic outlet.

Cost per Job of Gov. Created/Saved Jobs

2011-09-13T09:49:00.000-07:00

From John Goodman's Blog:

A lot of new outlets carried Mark Zandi’s prediction:

“The president’s plan would provide a meaningful boost to the economy and job market in 2012,” Zandi concluded. “I expect the plan to add 2 percentage points to real GDP growth and 1.9 million payroll jobs, and reduce unemployment by a percentage point.”

Steve Allen’s response:

I entered these numbers into a spreadsheet along with the cost of each program (based on WSJ) of $175b, $70b, and $140b respectively. You can then calculate how much it costs (in lost revenue or greater expenditures) to create a job. The numbers are sobering: $233k per job for the payroll tax cuts and $350k per job for the infrastructure spending. And these jobs would only be around for the duration of the new stimulus package!

I am afraid that it is a political reality that we must have jobs programs (the median voter votes them) so we must find a cheaper way for Government to encourage job creation. I say we try to get the politicians, to replace the minimum wage with a wage subsidy and see of that works. We are already paying many of the unemployed.

SS is NOT a Ponzi Scheme but that does not Mean it is not Fraudulent

2011-09-09T06:43:00.000-07:00

SS is NOT a Ponzi scheme but it is a welfare program disguised as an insurance annuity. All welfare programs work the way that it works. That is, all such programs pay for current welfare out current income. Even charities work that way so that is not the fraud.. The fraud is that it is structured in a way to fool people into thinking that it is insurance/retirement annuity like what some insurance companies offer. It was supposedly setup the way it is to make it politically difficult to end. But the disguise makes it make a much costly welfare program that it should be and the disguise is meant to fool people and so it is a bit of a fraud. It is welfare program that distributes most of it funds to people who do not need the money.

SS as a welfare program should not pay out more to those who made more in their working years. As a welfare/insurance program if everyone got the same minimal amount in retirement, and we can debate what the amount should be, the tax could be lowered allowing individuals more control of their own money and retirement. That would make most everyone better off. It should also be funded through general revenue not some special tax.

A Theory of Our Current Long Lasting Unemployment

2011-09-06T09:20:00.000-07:00

It has been 3 years since the financial crisis and yet unemployment is still over 9%. So why? Well, from my admittedly narrow perspective the internet and China eliminated certain jobs faster than jobs could be added in other areas. For example due to the internet our company was able to reduce marketing staff. We found that marketing staff made very little difference because buying Google search terms was the only thing that significantly effected sales.

The way I see it the 2001 downturn corresponded with the fall in the need for certain worker due to the internet even while mechanization and China's fast growing economy eliminated many manufacturing jobs. Greenspan pushed interest rates down low enough that housing absorbed enough workers to mask the situation. Now that the housing bubble has burst we need some deep changes. There is as always plenty of work to be done but it takes time for new services to evolve and be accepted.

Taxing Warren Buffet

2011-08-22T07:18:00.000-07:00

Interestingly, if the goal of taxation to transfer consumption from one person to another, it would be impossible to at any acceptable rate to tax Warren Buffet. You would need to tax him enough to cause him to lower his consumption. Very unlikely. Saving and investing money that you will never spend is like indiscriminate charity.

By the same logic corporations cannot pay taxes. The corporate profits taxes fall on the shareholders, employees and the customers of the corporation in portions that depending on how competitive the markets are.

NOTE: That does not mean that I am for completely eliminating the Corporate profits tax because it might be good that people who work for, own or buy things from Corporation should pay a little more tax for the limited liability as a sort of as insurance premium. The corporate tax favors partnerships which are liable for more of their damages than are corporations but a few percentage points should be enough for that. Of course it would make more sense to charge more for that insurance to riskier businesses like banks and deep water petroleum drilling companies and companies with high debt than to low debt companies in safe businesses.

The Politicians are Very Smart, the Voters are Smart so Why...

2011-05-12T07:34:00.000-07:00

3. Used car prices are rising so much that many models are selling for more today than a year ago.

Thinking about the destruction of all those used cars in the cash for clunkers program. The politicians are smart but use that smarts to gain and keep office, the voters are smart but rationally ignorant. Everyone is smart but the outcome is very stupid.

Science and Specialization

2011-04-29T07:36:00.000-07:00

From Tyler Cowen quoting Tim Harford:

The toasting problem isn’t difficult: don’t burn the toast; don’t electrocute the user; don’t start a fire. The bread itself is hardly an active protagonist. It doesn’t deliberately try to outwit you, as a team of investment bankers might; it doesn’t try to murder you, terrorise your country, and discredit everything you stand for…The toasting problem is laughably simple compared to the problem of transforming a poor country such as Bangladesh into the kind of economy where toasters are manufactured with ease and every household can afford one, along with the bread to put into it.

My comment:

One implication is that greater specialization makes innovation much harder — hardly anyone has a good grasp of the whole

Could this be something that was/is made worse by signaling squeezing out education in schools? The principles of the science are simple, though not always intuitive, and an intelligent person could absorb there principles across all sciences pretty quickly but in order for sciences to be difficult enough to signal high intelligence we go in great depth in a single area describing the principles in depth with difficult math that almost no one needs to know. This leaves little time for a broad approach. If one takes a broad but shallow approach in school, say by taking all low level classes, he will not have signaled enough intelligence to move on in the sciences.

Means Testing Social Security and Medicare

2011-04-12T06:20:00.000-07:00

Great post by Caplan riffing on a post by Posner about means testing Social Security and medicare. My take is a little different on Social Security, I think that we should eliminate the SS tax give everyone over 65 the same amount as a welfare payment. This would make the program more an insurance plan than a retirement plan. It would be insurance against out living your savings and not having children that are willing and able to help you. It would reduce the burden on the young, who tend to be less wealthy than the elderly, and eliminate the burden on the working poor.

Reason to Reform SS

2011-04-01T09:03:00.000-07:00

Lately some Democrat pundits have started to call for reform of SS in order to reassure future beneficiaries about the program. I think that the fact that republicans are scaring people about SS is not sufficient reason to mess with it but I do think there is at least one good reason to mess with it.

The only reason to address SS now is that it would allow us to lower the SS tax (FICA). The way I see it SS is a pay as you go welfare program and so as long as it is not in the red now there is no problem with it except that young people trying to start families are over taxed to give more to rich and middle class people over 65.

WIll Healthcare Per Capita Spending Continue to Increase

2011-02-16T08:44:00.000-08:00

People seem to take it as a given that per capita health care spending will continue to grow for a long time and eventually break the bank. I am not convinced that it will continue to increase faster than inflation. There is not that much cutting (surgery), one of biggest expensive items, that can be done that is not already being done. Researchers have lately been finding that some surgeries do not help with survivability, this could lead to less surgery. On one of the other big spending items, cancer treatments, new ways of controlling cancers are likely to less expensive and more effective than the current methods. It is my impression that the rate of new drugs coming to the market has slowed and the existing drugs will go off patent this should produce some savings. My conclusion, I think that medicine as a percent of GDP may peak in 10 or 15 years at a lower point that most projections predict.

Population Pessimists are Wrong

2011-01-31T07:18:00.000-08:00

The population pessimists have reared their heads again in regards countries. For different reason they have pointed to the populations high Mexico, China and Egypt and Malthusian traps. As always the population pessimists are wrong.

It is almost impossible for a country to be over populated if the world is not over populated. A lot of people can live on a little piece of land. Food production is what takes land and food can be imported. Julian Simon was right and still is.

If the Health Insurance Mandate Holds Up in Courts Can We Privatise Schooling

2011-01-04T07:05:00.000-08:00

If the health insurance mandate holds up in the courts, it might mean that Government can charge people directly for the schooling of their children and still require they be schooled or educated*.

The Government schools could start charging the rich and middle class directly to send their children to public schools? This could save a lot of money for tax payers.

One of the stronger arguments for Government schools has been that it you are to require it you will need to pay for it. People hate unfunded mandates.

A win for Obamacare would mean that Government can mandate individuals to spend on things without funding.

NOTE: Obviously Government could subsidize the poor.

*My state actually has educational requirements for home schoolers in place of school attendance. They actually requires annual evaluations of the children being home school and they must show that they have learned something.

Thoughts On An Hourly Wage Subsidy

2010-12-16T08:03:00.000-08:00

While this article tries to show that marginal taxes on low income earners are so high that a person could do better making minimum wage than making $60,000/year. It is quite a bit off (for one thing you have to be pretty clever to get all those benefits), but if you take the total spending on just means tested welfare programs* and divide it by 20% of the USA population you come out with a subsidy of about $10,000 per person (per person not per adult person). That is without including the huge items like our very expensive free Government Education system and medicare and SS all programs which supposedly exist to benefit the poor and unwise. I would think that an hourly wage subsidy or as Charles Murray proposes a fixed payment to every citizen would be much more efficient. (I might ad to that Gov. provided health insurance with a deductible equal to last years adjusted income minus the poverty rate (outlined here) would be sufficient for the sicker than average people.)

While the current US welfare system is a bureaucratic mess and replacing it with an hourly wage subsidy would probably help, fraud would be a problem. The federal Government is very bad at finding and prosecuting fraud (I have seen estimates that as high as 30% of medicare spending is fraud). For one thing the Federal Government does not have enough people on the ground to find fraud. Policing fraud requiters people going undercover and doing stings. So I wonder if an hourly wage subsidy could be done at the state or local level. If done on a local level it might attract low skill workers into the area offering the wage subsidy and that would be bad but it would also attract low wage employers into the area and that would be good. It might net out positive and might be a more efficient way to attract business into that the tax holidays land deals that are used today.

It would require some changes in federal law to allow the states and localities to produce an hourly wage subsidy.

Still the current system is so expensive and ineffective I think that it would be worth a try.

Notes:

*Means tested welfare that includes AFDC, food stamps, subsidized housing etc.

Excerpt below

Means-tested welfare spending or aid to the poor consists of government programs that provide assistance deliberately and exclusively to poor and lower-income people. By contrast, nonwelfare programs provide benefits and services for the general population. For example, food stamps, public housing, Medicaid, and Temporary Assistance to Needy Families are meanstested aid programs that provide benefits only to poor and lower-income persons. On the other hand, Social Security, Medicare, police protection, and public education are not means-tested; they provide services and benefits to persons at all income levels. In the typical year, around 71 percent of means-tested spending comes from federal funds and 29 percent from state funds. Nearly all state means-tested welfare expenditures are matching contributions to federal welfare programs. Ignoring these matching state payments into the federal welfare system results in a serious underestimation of spending on behalf of the poor.

In FY 2008, 52 percent of total means-tested spending went to medical care for poor and lower income persons, and 37 percent was spent on cash, food, and housing aid. The remaining 11 percent was spent on social services, training, child development, targeted federal education aid, and community development for lower-income persons and communities. Roughly half of means-tested spending goes to disabled or elderly persons. The other half goes to lower-income families with children, most of which are headed by single parents.

Here is another calculation below of marginal tax rates on the poor:

With more than 70 overlapping means-tested programs serving different low-income populations, it is difficult to determine the average level of benefits received by low-income persons. One way of estimating average welfare benefits per recipient would be to divide total means-tested spending by the total number of poor persons in the United States. According to the Census Bureau, there were 39.8 million poor persons in the U.S. in 2008, the most recent year for which data are available. An additional 1.5 million persons lived in nursing homes. (These individuals, though mostly poor, are not included in the annual Census poverty and population survey.) Total means-tested spending in 2008 was $708 billion. If this sum is divided by 41.3 million poor persons (including residents in nursing homes), the result is $17,100 in means tested spending for each poor American. However, this simple calculation can be misleading because many persons with incomes above the official poverty levels also receive means-tested aid. Although programs vary, most means tested aid is targeted to persons with incomes below 200 percent of poverty. Thus, a more a accurate sense of average total welfare spending per recipient can be obtained, if total welfare aid is divided among all persons within this larger group. Dividing total means-tested aid by all persons with incomes below 200 percent of poverty results in average welfare spending of $7,700 per person, or around $30,000 for a family of four.

Links, links, links mostly on marginal tax rates for low income people:

http://www.econ.ucdavis.edu/faculty/dsrapson/DIPW_METR_1006.pdf
http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/2008/02/08/8/
http://politicalcalculations.blogspot.com/2009/11/age-and-income-driven-spending.html
ftp://ftp.bls.gov/pub/special.requests/ce/standard/2008/income.txt
http://mises.org/daily/3822
http://gregmankiw.blogspot.com/2009/11/poverty-trap.html
http://sites.google.com/site/jross08/WelfarePunishes.pdf?attredirects=0
http://www.be.wvu.edu/divecon/econ/sobel/UnleashingCapitalism/FinalChapters/Chapter11_booklayout_final.pdf

Random Clinical Trials and Ethics

2010-12-15T06:02:00.000-08:00

This is great little story that I got from Marginal Revolution.

One day when I was a junior medical student, a very important Boston surgeon visited the school and delivered a great treatise on a large number of patients who had undergone successful operations for vascular reconstruction.

At the end of the lecture, a young student at the back of the room timidly asked, “Do you have any controls?” Well, the great surgeon drew himself up to his full height, hit the desk, and said, “Do you mean did I not operate on half the patients?” The hall grew very quiet then. The voice at the back of the room very hesitantly replied, “Yes, that’s what I had in mind.” Then the visitor’s fist really came down as he thundered, “Of course not. That would have doomed half of them to their death.”

God, it was quiet then, and one could scarcely hear the small voice ask, “Which half?”

Dr. E. E. Peacock, Jr., University of Arizona College of Medicine; quoted in Medical World News (September 1, 1972), p. 45, as quoted in Tufte's 1974 book Data Analysis for Politics and Policy.

State Lotteries

2010-12-08T11:59:00.000-08:00

Bight futures scholarship + state lottery = The poor subsidizing the rich,
or
Bight futures scholarship + state lottery = The foolish subsidizing the wise
or less charitably
Bight futures scholarship + state lottery = The stupid subsidizing the smart.

Here is Julian Simon on state lotteries.

What I Would Have Done

2010-12-01T06:35:00.000-08:00

"Yesterday's Case-Shiller data showed that house prices in its 20-City index fell 0.7 percent in September. This would be an 8.5 percent annual rate of decline, which would imply the loss of more than $1 trillion in housing wealth over the course of the year." Dean Baker on his blog November 30th 2010.

The above data strengthens the opinion, that I have held from the beginning of the financial crises of 2008, that a sharper faster home price decline would have been better. Home prices seem to be getting back to tend anyway all that the Government action has done is delayed the inevitable and extended the crisis while making it less sharp, restricting the unemployment crises to weakest employees. If there was no TARP more banks would have failed home prices would have dropped like a rock to the point were value buyers and investors (cheap cautious people) and upstarts (young people with no debt) would start buying them up. Unemployment may have reached 20% but I think might have started to recover in 6 months to a year. We have had 10% unemployment for 2 years that means that some workers with the least demanded skills have been out of work for 2 years. I think that it would have been less damaging to have more people out of work for a shorter period of time. With 20% unemployment higher status people will be out of work and there may be more comradery and simpath for the unemployed. Also more create ideas to use these workers might come about.

Of course the fed would have had to buy a lot of stuff to pump money into the economy. If I was the Fed chairman, I would have gone as far as to have the Fed buy stocks to pump money into investors hands! I would also have eliminated the FICA tax to short up the balance sheets of working class and debtors.

One of the benefits of my approach is it would have killed more of the corrupt investment banks and I think that we would be better off without them.

An Idea for the Lottery

2010-11-29T19:13:00.000-08:00

The state lotteries have been called a tax on stupidity and predation on the poor but I have an Idea for a savings lottery, you have an account and you buy lottery tickets in the account. 50% of the money that you spend on tickets goes into an investment account, 10% goes to the retailer, 10% goes to the state and 30% is paid out in winnings.

Education or Schooling

2010-11-23T14:07:00.000-08:00

Eliezer Yudkowsky at overcommingbias writes:
some young man or woman is sitting at a desk in a university, earnestly studying material they have no intention of ever using, and no interest in knowing for its own sake. They want a high-paying job, and the high-paying job requires a piece of paper, and the piece of paper requires a previous master's degree, and the master's degree requires a bachelor's degree, and the university that grants the bachelor's degree requires you to take a class in 12th-century knitting patterns to graduate. So they diligently study, intending to forget it all the moment the final exam is administered, but still seriously working away, because they want that piece of paper.

Some people will tell me that Cuba has better schools than the USA, so I ask do they live better. What is the purpose of schooling?

Do schooling and homework squeeze out learning, in net producing a less educated population? Alfie Kohn claims that homework does not help learning. Science and history are evidently fun to many people, as evidence see the success of the Discovery, History and Science channels. So does homework squeeze out learning, useful science?

Is school just a long test?

Algebra for everyone

2010-11-23T14:02:00.000-08:00

If you want to have algebra for the purpose of education rather than for testing who is smartest, algebra that all children pass. You can do that by sticking to the simple principles of algebra. That is focus on the one rule and drill it into the students for years. The one rule is that you need to do the same thing to both sides of the equation. Algebra can be made both easy and useful. Leave the factoring of quadratic equations for the college bound such things are useless to 99% of people anyway.

ABS Link

2010-11-23T13:58:00.001-08:00

My company

Medial Self Care Has Its Time Come

2010-11-23T13:58:00.000-08:00

What do you do when you find some greatness in an article but cannot agree with most of its prescriptions? I rewrote it into my own piece leaving out what I thought was pure nonsense. Below is my version of the article:

1. All health insurance plans promote irresponsibility to some extent. People begin to believe that their doctor is responsible for keeping them healthy, not themselves. It might be good to not carry insurance at all but I recommend very high deductible insurance. Some might choose to go without insurance as they can pay after the treatment, most hospitals will set up payments.

2. Health insurance is a scheme, with the healthy paying for the old and chronically ill and those with poor health habits, though I should add that smokers actually cost insurance plans less money over the long haul since they die sooner. Clearly by logic more than half of people will pay less for health care if they do not carry insurance.

3. With a large pool of money available, the insurance pot gets raided and doctors and hospitals overcharge since there is no market control. There is nothing the plan won't pay for, no matter how expensive, because the desperate public will demand it. You learn your mother has breast cancer. You will stop at nothing to see she gets the most advanced care, and the more her disease progresses, the more you will demand something be done, even unproven treatment.

4. High-tech care caused Americans to falsely believe their healthcare system is the best in the world, and they want more of it. Fancy imaging technology (cat scans, MRIs), unproven but less invasive particle beam radiation treatment, robotic surgery – all are in huge public demand. A Rand Corporation study showed high-technology is the main driver in the high cost of health care.

We are living a fantasy to believe American government can provide all the high-tech medical care that is available (example: latest New York Times article suggests $5000 disease gene testing for all).

5. About 85% of Americans have health insurance. To provide insurance to the remaining population, largely illegal immigrants, places financial and manpower strains on the delivery of health care that the industry is not prepared for. It was Winston Churchill who said: "The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery."

6. Because other countries provide universal health insurance is only to say the bills are paid. This represents provision (welfare) for doctors and hospitals. The system rewards treatment, not cure. Modern medicine has substituted markers of poor health, such as cholesterol, PSA, blood pressure, rather than true end points, such as survival or being drug free.

While many Americans envy countries that offer universal health care, most universal health care plans will soon fail. The National Health Service in Britain is about to implode.

The day is fast coming when health insurance schemes collapse and self care becomes the order of the day. But many Americans aren’t ready for this.

Certainly many Americans are angry at the passage of Obamacare. But a man I met at a Postal Annex store said he needed the insurance coverage and welcomed it, as he has problems with his joints and diabetes. He wanted the medicines that only the insured can afford.

However, Obamacare, or even the pre-existing healthcare system, would not make him any healthier. But this man, along with many other Americans, has no perception of this.

Drugs will be prescribed for him that calm symptoms but never restore health and in fact may create new diseases. Some drugs cause the very disease they are intended to treat.

Obamacare pays more doctor and hospital bills, but it will also increase utilization and overall costs and it burdens the economy with higher health insurance premiums. AT&T reports Obamacare will cost them an extra $1 billion a year. For the 85% of Americans who were already covered by health insurance, Obamacare is a step down in availability of care. But recognize, the system is collapsing and unaffordable regardless of the insurance scheme in place.

Obamacare only adds to the nation’s growing healthcare bill. Medicare is not only insolvent, but it has $60 trillion of future obligations it cannot meet. The day is fast coming when health insurance cards will be worthless. American government will have to default on its promise to provide health care for all, especially its retirees, Obamacare or not.

Yes, other countries provide universal care, but they aren’t facing a population bulge of Baby Boomers now entering Medicare age, nor do other countries have so much unnecessary care (estimated $700 billion of needless care in the Medicare system, the Congressional Budget Office estimates). For example, PSA tests, mammograms and coronary angiograms have recently been reported to be of marginal value or over-prescribed.

Private practice American medicine can’t be compared to other countries that provide universal care. In those countries, their doctors on a fixed salary. More and more US doctors are now opting out of private practice and taking a salaried job.

However, the American public mistakenly believes their insurance companies are holding out on them and they are undertreated and deserve more care, not less. With Obamacare, Americans will experience more rationed care.

7. Waiting lines for care will predictably lengthen as there simply aren’t enough primary care doctors to handle the increased patient load. Americans are going to have difficulty getting used to delayed care instead of the accustomed care on demand.

Wait-a-while medicine is part of most universal health insurance programs worldwide. For example, in Canada, once target budgets are expended, patients wait months for a cataract removal/lens implant operation. During that wait time, if you fall and break your hip because you couldn’t see a step while walking in the dark, and then you succumb to pneumonia while laid up from the hip surgery, no one will blame it on delayed care.

8. Universal care just delivers more needless and ineffective care. Americans involved in the healthcare debate are arguing over the wrong issues. Americans want freedom to choose their health plan, their doctor, their hospital. This is not the problem. If you have no money, you can no more have the freedom to choose your doctor and health plan than to choose whether you would like to buy a Chevy or a Cadillac at the car lot. You can’t have these freedoms when treatment is no longer affordable. And why does the American public keep clamoring for care that doesn’t work and is even harmful?

The only three proven medical technologies are vaccinations, antibiotics, Trauma care like mending broken bones; replacing cloudy cataracts; repairing decayed teeth, drugs for the mentally ill. The rest are questionable.
Forty years of telling the cholesterol lie makes it difficult to undo the false cholesterol phobia. For example, eggs, loaded with cholesterol, have not been found to raise circulating cholesterol levels. For the majority of U.S. adults age 25+, consumption of one egg a day accounts for less than 1% of coronary heat disease risk. Health insurance pays for many false cures and unproven medical technologies. Universal health care seeks to pay for more of the same.

Americans have a knee-jerk reaction when they hear of panels who will decide whether your loved ones receive care in the last days of their lives. But Americans fail to realize hundreds of thousands of old and dying Americans are prescribed medicines that reduce pain but hasten death.

9. Self care is an underutilized option. However, Americans have been trained to run to the doctor when anything ails them. The typical senior American is taking a number of inappropriate medications and afraid to stop taking any of them.

Self care is not something doctors and hospitals want to promote. One would think managed care plans would promote self care because they would theoretically get to keep more per capita money that way, but they want to keep costs high so their cut of the financial pie remains lucrative.
Even in countries which provide universal payment for health care, there is increasing awareness that self care is a better route to take. One consultant in Britain says "the time has come to break the national dependency upon the National Health Service….. which denies the confidence to take control of their own and their families’ health."

Costa Ricans and Jamacans are almost as health and long lived as Americans with far less medical care. In the medicine vaccination yeild, I would guess, over 90% of the benefits. The rest of care helps here and there but if you have been vaccinated you got most of it. That is why Costa Ricans and Jamacans are almost as health and long lived as Americans

My Bet on Toyota's Sudden Acceleration Problem

2010-11-23T13:41:00.000-08:00

"The reason the NHTSA couldn't find the cause of sudden acceleration in Toyota isn't because they lack the technological expertise, it's because the problem doesn't exist (at least beyond the obvious mechanical issues like pedals getting caught on floor mats)."

"The symptoms and demographics of "unintended acceleration" are amazingly exactly the same as they've always been since long before cars had any sophisticated electronics. Funny how this new supposed electronic problem should exactly mimic another problem that's been seen for years. Not only that, but the symptoms surprisingly defy logic and physics in exactly the same way - somehow suddenly brakes which when fully applied can stop any modern car even at full throttle, somehow yet again stop working just when they're needed the most. Coincidence? Wouldn't you expect if it were really a new problem with the modern advanced electronics that just maybe it would produce problems previously unseen as well as not disproportionately hitting old people?
Who knows, maybe if NASA can finally put all this obvious nonsense to rest with a thorough debunking it will be worth it. But as it's hard to prove a negative, it will likely just end up with some noncommittal "can't rule anything out" BS and just be a total waste of money and time."

Posted by: Brian Courts

Why the Government does what it Does

2010-11-23T13:35:00.000-08:00

A commenter (with the handle Drewfus) on overcoming Bias wrote the following:

"I don’t think the purpose or motivation of these wars is access to resources, defense against terrorism, WMD’s or really anything particularly concrete. It’s more about confidence. Confidence that the political leadership remains in control of our destiny, and that they have secured the country from physical attack. Social life is just a succession of confidence tricks. Keynesian economics tricks us into believing the government has the economy under its control, and that even if we didn’t avoid recession this time, well, it would have been much worse if the government had done nothing. Same with terrorism. All that airport security really did help to keep the bad guys under control – our leaders have told us so. The medical profession has our health care needs under its control – why else would the government want to spend so much money on it? It must work!" Drewfus

Freedom is Counter Intuitive

2010-11-23T13:34:00.000-08:00

You would think that a country could do better with a central plan than with no central plan! But it seems to not work out that way. One would think that having more that one car company is redundant (or more than one currency (BTW we really have one real bank the federal reserve bank) you could eliminate all that redundancy, redundant design departments, Marketing departments (isn't marketing/advertising a complete waste to society? etc. All those economies of scale and all.

Are we not just better off to demand that people do not take drugs that are not OKed and approved by the central planers? Are we not better off to ban the sale of recreational drugs like heroin and why not alcohol too?

Isn't it counter productive that in a free society even BP has rights and can go to court and get a law banning deep water drilling struck down. That we the people should have an energy plan and it should not include BP!

Doesn't it seem crazy that the USA used to allow anyone without TB into the country?

And yet freedom seems to do well wherever it is tried. Freedom is not perfect because people are not perfect but it sure beats the alternatives.

Responce to crique of Gold and Ron Paul

2010-11-23T13:32:00.000-08:00

1. Though Ron Paul talks about the gold standard and 100% reserve banking, what he says he would implement is free banking, he believes that the people should be allowed to choose the form of money that they would like to use.
He believes that people’s choices would lead to 100 percent reserve gold standard banking, I do not. In the case of the Scottish free banking era (about 1750 to 1850) the system moved progressively away from gold through fractional gold reserves and the option cause. Just before the end of Scottish free banking system, the Banks kept gold reserves below 2% and the option clause allowed them to deny gold in case of a run. On the other had bank capital* was typically over 30%. Thus the system was moving toward money backed by only bank assets.

2. According to Christine Romer (no right winger) the depression of 1890 was not nearly as bad the Great depression. So the worst depression occurred after the creation of the Federal Reserve and as far as a financial system collapse the worst ever was the one that just occurred in 2008. The system is obviously fragile with serious feedback problems.

3. In the current monopoly currency system the failure of one bank weakens all the others. This sort of feedback is what led to the collapse in 2008. We need a monetary system where the failure of one bank strengthens all the other banks. I believe that fee banking would evolve into such a system.

4. The current system is not robust to changes in the demand for currency. Currency is not as different from checks as we tend to think. If banks floated their own currency rises in demand for currency could be accommodated without contraction of the money supply. If you think about it in a free banking system, if people drained their demand accounts and horded currency the banks would not need to contract as they do today. Money in currency would be no different to the banks than money in a demand account.

* Bank capital is equal to the value of bank assets - bank liabilities. Your mortgage is a bank asset and the money in your checking and savings account are bank liabilities.

The Testing Function of Schooling Often Squeezes out Education.

2010-11-23T13:25:00.000-08:00

Schooling is not equal to Education
The principles of most subjects including the real though subjects; physics, chemistry, accounting, statistics etc. are quite simple but people do not learn them well due to the need to make the subjects rigorous.
It is amazing what simple, practical, useful information typical college graduates do not know.
Why when people discuss schooling and how we need to better educate the population, do they seldom ask or say "what it is that people do not know or cannot do that would benefit them so greatly in life", but rather they make statements like "We need more college grads" or "Our students do less well in international comparisons". It seems we never ask "What is the most efficient way to get valuable knowledge and skills to people. I think it is because think that getting the knowledge and skills to people without credentials is a waste.
If schools exist to educate why do they do so much testing. Worse they seem very willing to blab the results of all their testing to other organizations.
Education is free but credentials are rather expensive. You can listen to MIT and Harvard lectures free on-line and you could always go an listen to some classes for free.
My grand parents went to 1 year of school each, yet they ran a successful barber shop and they seemed more educated than many college grads I know.
I know college grads who refuse to believe that 100 mpg carburetors do not exist. That despite my attempts to explaining the Carnot limit to them. On the other hand my grand parents could easily understand such things.

How Could the States Experiment with Health Care and Why Should They

2010-11-23T10:30:00.000-08:00

If I had my way Government would get completely out of health care but I do not see that as politically viable so I propose that the states rather than the Federal Government experiment with a program to provide insurance.

If any Government body should be experimenting with providing health care it should be the states rather than the federal government. The sates control medical licensing and that means that they control costs to a large extent. States do things like refusing to accept medical licenses from other states and countries that drive up costs. States refuse to accept medical insurance plans that are accepted in other sates this also drives up costs. If the Federal Government provides the money for heath care the states are not encouraged rightly license to maximize the cost benefit trade offs .

The big obstacle to the states providing health care is the danger that a state would attract the sick and poor from other states. A plan to avoid attracting sick people from out of state to the state would be needed.

The plan could include some period of time to establish residency. For example a state could have a 2 year period to establish residency before one is eligible for existing conditions. Insurance companies already police this sort of thing so it is possible.

To make the plans cheaper and less desirable to out of state people the insurance could be kept simple and minimal. Much medical care in the USA yeailds very low or even no benefit, a state plan could opt out of paying for such procedures. Since people trust Government more that insuarcne companies they could get away with refusing more care. An example or care that might be eliminated is heart bypass, there is no evidence that heart bypass surgery produces better benefits than less invasive and much cheaper care, except if the blockage is in the upper left ventricle (and even then the evidence is weak). Heart bypass is rarely done outside of the USA In the USA though heart bypass is commonly done for all kinds of blockages. The state policy would allow those who wanted to pay for such procedures to do so out of pocket but it would not pay for such procedures.

The states could also establish high means tested deductibles. Here is an article that proposes a $50,000 annual deducible. Here is me advocating a deductible based on income.

States could initiate some other experiments to save money. Here is Dean Baker's proposal to reign in costs.

Retirement Spending

2010-11-07T08:21:00.000-08:00

Lately there has been a lot of discussion of what the appropriate rate of spending in retirement is. My suggestion is that as far a stocks go you can safely spend your dividend plus half of the companies' retained earnings. Companies retain earnings because they have good investment options for that money. If the investments are in fact good that will increase the value of the company and future dividends and so you should not lose value. So why them do I say its only safe to spend half of the retained earnings 2 reasons: 1. Inflation means new capital inputs cost more than the depreciation of existing inputs. 2. Companies have historically not been good reinvesting retained earnings.

Now all of that is assuming that your stock investing is focused on dividend and future dividends. Thus that you favor companies that have a long record of increasing dividends.

ScheduleBase Released

2010-10-18T10:09:00.000-07:00

The company that I work for just went live with a great new scheduling product. It is called ScheduleBase and it is amazing what it can do. Check it out.

Please take a look it might help our Google positioning.

Let me know if you have any ideas to make it better.

Online employee scheduling made easy | ScheduleBase

www.schedulebase.com

How Much Tax Will Americans Pay

2010-10-06T18:10:00.000-07:00

The problem that I see with our rapidly growing Government is that people have ways of avoiding taxes. For example wives of high earners might work at home providing goods and services for in family consumption rather than in taxed worked, people might deal more in cash, or provide more of their own services, use barter etc.

For example a family with a low earner and high earner might keep the low earner working to help pay for the insurance, but if Gov. provides the insurance the low earner might quit a taxed job to provide services at home.

So the question is how much tax will Americans pay before tax avoidance starts to reduces the Government income.

The President's Education Speech

2010-10-06T13:54:00.000-07:00

The president's speech mentions affordable college below is an excerpt:

That’s why I’ve set some ambitious goals for this country. ... And producing 8 million more college graduates by 2020 so we can have a higher share of graduates than any other nation on earth.

In a single generation, we’ve fallen from first to twelfth in college graduation rates for young adults. That’s unacceptable, but not irreversible. We need to retake the lead. If we’re serious about making sure America’s workers – and America itself – succeed in the 21st century, the single most important step we can take is to offer all our kids – here in Austin, here in Texas, and across this country – the best education the world has to offer. ...

But we also know that in the coming decades, a person’s success in life will depend more and more not on a high school diploma, but on a college degree, on workforce training, on a higher education. And so, today, I’d like to talk about the higher education strategy we’re pursuing not only to lead the world once more in college graduation rates, but to make sure our graduates are ready for a career; ready to meet the challenges of a 21st century economy.

The first part of our strategy has been making college more affordable. I don’t have to tell you why this is so important – many of you are living each day with worries about how you’re going to pay off your student loans. We all know why. Even as family incomes have essentially flat-lined over the past thirty years, college costs have grown higher and higher. Over the past decade, they’ve shot up faster than housing, faster than transportation, even faster than health care costs. No wonder the amount student borrowers owe has risen almost 25 percent over the past five years.

Isn't producing 8 million more college graduates by 2020 the wrong goal. Shouldn't we first say what skills and knowledge do we want people to have? Shouldn't we ask and what is the most efficient way to deliver on that goal. When people say at we need more education we should all ask them why and what. If all we want is more college graduates that is easy, all we need to do is make school easier, cheaper, and more enjoyable for the students but I do not think that is what anybody wants (with the possible exception of Tyler Cowan).

We alway need to keep in mind that correlation is not causation. Having a college degree correlates with all kinds of good things but that does not mean that what is taught and trained in college produces those good things.

Are Domocratic Presidents Better for the Economy

2010-10-04T12:22:00.000-07:00

Many have stated that the economy performs so much better under Democratic Presidents. Unemployment is mostly what people car about economically. Lets say that by this they mean unemployment is lower under Democratic Presidents. So to lower unemployment is all we need to do is vote for Democrats for President.

Here are some problems that with that:

1.If the statement is based on statistical analysis it is way too small a sample.
2. If it is a principle based point then one exception would prove it wrong.
3. Nixon was more economically democrat than was Clinton.
4. All presidents faced different problems.
5. Warren G Harding looks best of all if you look at just the hard facts. Random?
6. If the people who make this claim are correct then they should blame the current 9.5 percent unemployment on Barack Obama.

Miller Center Debate: Is the Business Model of Higher Education Broken?

2010-10-04T12:18:00.000-07:00

I saw this PBS debate. The big focus seemed to be how do we get more of our people to get college degrees than other countries.

For what purpose? If all you want is more degrees you can just make college easier cheaper and more enjoyable. But that would destroy the value of the signal. Notice there is no discussion of what skills and knowledge would help people most and what is the best way to get it to the people who need it most.

I think the myth busters TV show is educational. Many games computer and others exercise thinking. History channel teaches history. PBS teaches cooking and gardening but none of these produces a signal and so the are not discussed when in debates like above. I consider this proof that schooling is primarily signaling.

Addition evidence that school in more about signaling/credentials verses education:

Most college professors lack much work experience

Midwives and PA's get the similar outcomes as doctors

If 16 years of education is better for college people can we be sure that it is not better for carpenters?

Sometimes it is better to be the best plumber than the worst lawyer.

Edmund Phelps and Unemployment

2010-09-29T07:20:00.000-07:00

On this econtalk Edmund Phelps talks about the tendency to have some level of persistent involuntary unemployment. He says that most everyone who has a job is overpaid becuase of the cost to employers of turnovers and keep the employees motivated and reasoably happy to work for the employer.

This overpayment leaves insufficient money to reach the market clearing 100% rate of employment and instead we have some persistent level of unemployment. I think he estimates that about 4% unemployment it about as close as we can get to full employment without creating a future distortion.

It seems that a increase in the rate of inflation can lower unemployment below 4% but since you cannot keep raising the rate of inflation for very lowing when you stop the unemployment rate will rebound to above 4%.

It would then be logical that in a period like we are in right now of a sharp decline in the inflation rate, people with jobs would tend to be even more overpaid, leaving even less money available to increase hiring and producing a high level of un-employment like we have today.

One response to this could be for the unemployed to accept very low wages much below their productivity level. The minimum wage would stand in the way of this, an hourly wage subsidy would work much better than this.

When pushing government to act on a problem we should keep in mind that political realities make Governments do things roundabout and very inefficient ways. I think therefore that if you are a supporter of raising the pay of the people at the bottom of the wage pyramid that you should think hard about possible offsetting behavior and never compromise and accept something like a minimum wage. Such compromises are often worse than nothing.

Super Bugs and Super Weeds

2010-09-24T07:06:00.000-07:00

When greens talk about proper use of DDT and roundup, I support them, externalities do exist after all, but many if not most want to ban its use altogether.

I hear people who want a total ban on the use of DDT and Roundup, who justify such by citing super bugs or super weeds. Super bugs or super weeds are just bugs/weeds resistant to the pesticide or herbicide that they want banned anyway so what what is the big deal?

Part this has to do with optimism verses pessimism if one is optimistic about a richer better future he says lets maximize the befits from roundup and DDT now when we need them more. Future generations will have better ways to deal with bugs and weeds. Even if they don;t they will surely have better means of dealing with other problems leaving them able to invest more of their energy on growing food.

BTW resistance usually costs energy to an organism and so if we stopped using DDT or Roundup the resistance would slowly be lost.

A payment method that makes sense for 3% of the economy does not make sense when the sector balloons to 20% of the economy.

2010-09-20T06:38:00.000-07:00

Here is an article that suggests life time health insurance

He suggests legislation that builds a a life time insuance scheme but we can build such a scheme ourselves.
He like most people debating this issue ignores the fact that if an expensive medical intervention works one can amortize the bill over time. Since young people can amortize a bill, people do not ever need anything more than very high deductible insurance throughout life. People could take the difference between a very high deductible premium and a comprehensive plan premium and save it for future expenses. You could use this to keep your medical spending stable throughout life.

The only question is why do they not do this. My theory is that employers took on medical insurance when medical spending was small and so it made sense for them to do so. Now employers are increasing deductibles and dropping insurance which makes sense (who wants someone else to make 20% of their expenditures) but is perceived as bad and painful.
A payment method that makes sense for 3% of the economy does not make sense when the sector balloons to 20% of the economy.

You Say the USA Should Have Better Mass Transit Like in Europe?

2010-09-08T12:19:00.000-07:00

The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension,” Manos put it to me. “And yet there isn’t a single private company in Greece with that kind of average pay.”

Government Subsidized Universities Marketing

2010-08-30T09:39:00.000-07:00

My son Daniel is senior in high school and he is getting a lot of marketing material from government subsidized universities. How does this make sense? This is from in state schools and out of state schools. Should the tax payers support this?

I imagine that this a very low cost but still why market something that will costs you more expense.

You a have a case where government subsidized universities are competing against each other.

One could argue that it could encourage more students to go to college (most people seem to that is good, I do not) but he did not start getting much marketing material until after he took the SAT signaling that he intended to go to college.

One could also say that it serves the function of funneling students to the school that is best for them but I find that pretty weak, the child could find that out on his own and marketing materiel does not cover much that would reveal that.

On Abolishing the Fed and Replacing It with Nothing

2010-08-25T18:29:00.000-07:00

Why not abolish the Fed and replace it with nothing . . .

Producing money has historically been a sovereign monopoly, but it’s not a public good. Barons, kings, and bishops outlawed private mints so they could gain monopoly profits on the seigniorage. Is monopoly ever good?

The U.S. and Britain went the opposite way, charging zero seigniorage so that private mints were unprofitable. But when gold and silver were discovered in the American west, the government was a bit slow to establish a branch mint. A private mint quickly sprang up in Denver, charging seigniorage a bit below the cost of shipping metal to Philadelphia and back.

The Fed doesn’t need to be ‘replaced’, not by the government anyway. The market will provide money, one way or another.

I know, we would have to do without all the brilliant policies that central bankers use to smooth out the trade cycle. But they aren’t working out so well, are they?

The U.S. had its first trade-cycle downturn in the 1820s, when the Second Bank of the United States was in operation.

Has our economy been generally less unstable with central banking than without? I do not think so.

The median voters ideas about what money is and how the monetary system works are so far from reality that they cannot be expected to oversee the system and in a democracy the median voters rules.

I Found a Great Quote

2010-08-17T13:20:00.000-07:00

Men do not make laws. They do but discover them.
-- Calvin Coolidge, 1914

Calvin is often quoted which is interesting because he is known as being very taciturn.

BP could offer $400/b for petro from the spill

2010-06-14T12:06:00.000-07:00

I wonder, since it seems that BP chemically test to see if tar was from their leak, if they could offer say $400/barrel for petroleum from the spill to get people to be creative and do the cleanup, rather than having to contract with all those fishermen individually.

More Bail Outs

2010-05-11T06:40:00.000-07:00

More bail outs as the EU announces a trillion euro bailout for the Piigs.

The excuse for all these bailout is that they cause feedback that will cause even more failure.

So why do governments treat monopoly as bad in private business but make monopolys of their own and treat them as good. I am referring to the government monopoly on currency/money which is in my mind at the root of the feedback problems in the financial system. The feedback is what lead to the bailouts.

We need to design a monetary system with a fail safe. We need to design it because it cannot evolve because of the central bank's monopoly! You cannot have natural selection without diversity!

Bryan Caplan blogs on the bailouts

Another blogger that thinks like I do on the subject.

Comments on EconTalk Podcast on Finacial Fragility

2010-05-04T06:27:00.000-07:00

EconTalk has a wonderful provocative podcast with Nasim Taleb author of "The Black Swan".

They discuss the the fragility of the financial system. Here are my comments:

I have this idea that the Federal Reserve and US treasury has a monopoly on money and so the system is fragile. Also in a monopoly it is difficult to set price.

I think that the monetary system is not robust because it did not evolve or at least its evolution was stopped when central banks were created. From your (econtalk) Free Banking Pod Cats with George Selgin I got the idea that free banking was evolving toward a system where money was backed in nothing but assets of the bank. The evidence is that they had gotten to the point where they held 30 capital but only 2 percent gold. The money was backed in bank capital not gold to dump the gold backing all together would be only a crisis plus one innovation away. IMO such a system would be robust.

Having said all that I do not think that we could ever convince the median voter to allow free banking and allowing the monetary system to evolve so I am open to the post Keynesian idea that government should in a recession just spend money without selling bonds and tax the money back in response to inflation.

Now on Nasim's ideas about nutrition and exercise I think that he should just say we do not know.

We know we need some small amount of exercise (like walking), we know that we need a minimum of some vitamins, minerals and amino acids. We know nothing beyond that!

Interesting Study Shows that in the USA Latinos Outlive Whites.

2010-04-28T12:49:00.000-07:00

Interesting this study shows that int the USA latinos, who of the groups studied have the least access to health care outlive whites. Even more interestingly latinos in the USA out live most Europeans.

Add to that the fact that the eight Americas study shows that rural northern whites (with less access to health care) out live the general population and you begin to wonder if access to more health care shortens life!

Of course remember that homicide and accidental deaths move the life expectancy averages more than health care, beyond vaccinations, over the counter meds like aspirin/Tylenol and antibiotics.

Still a little shocking!

Hat tip to Bryan Caplan

Is Too Regulated to Fail a Good Policy Goal

2010-04-19T07:02:00.000-07:00

Is too regulated to fail a good policy goal or is it impossible? Isn't the failure of the weakest players in any industry a good thing?

Knowing how Goldman Sachs, Lehman etc. operated I think that we would all be better off without their backward and corrupt ways of dealing but a bail out was passed with more Democrats than Republicans votes to bail them out!

Economic freedom, though the greatest economic system by far does not shield us from economic ups and downs. It certainly does not shield us from painful creative destruction, but the alternative is slow decline and under performance a la Cuba and North Korea.

(BTW for those who insist that Sweden is the real relevant alternative rather than Cuba and North Korea, even the most active Governments in free economies have not been able to prevent all finical meltdowns, see Sweden's banking colapse in the early 1990s. it is only a complete governmnet take over like in Cuba and North Korea that can avoid booms and busts.)

IMHO free banking with money backed by bank assets (which was evolving in some places) would have given a fail safe to the financial system where one failing bank strengthens others. The monopoly federal reserve system that we have now is plagued by feedback where the failure of one bank weakens the others.

It seems the financial system is complex enough that no one knows enough to regulate it or to run the currency system on a monopoly basis. The finical and banking systems should have been allowed to evolve longer before governments stepped in and created central banks. Diversity gives strength and resilience. A central bank is a monopoly entity. It eliminates all diversity in currency issue. This causes problems. It is more difficult for monoplolies to set market clearing prices. In a one currency system what do you value the currency against? The CPI attempts to measure currency against a basket of goods but the CPI did not properly measure the rising cost of real-estate. In a multi-currency system beanks must keep their currncy on par with other currencies and sop must make continual small adjustments.

Diversity gives strength and resilience if one currency of many collapses the slack can be filled by others

Keep in mind that with all the regulations that have been added thus far the financial crises have gotten progressively worse. That fact alone should give us pause.

Worse than regulation are government guaranties. Take the example of FDIC insurance, before the creation of the FDIC banks typically kept 30% capital (in banking capital = assets - liabilities) now banks keep 10% capital and they only keep that becuase it is mandated by law (regulation) but because it was law it is not a cushion because if capital drops below 10% the bank is declared regulatorily bankrupt!

Some Questions for Democrats

2010-03-31T06:01:00.001-07:00

How much welfare is enough and how should it be structured? Not just AFDC but Social Security, Medicare, food stamps, HUD, Fannie and Freddie, Gov. education etc.

How much of their own wealth should people be required to spend on their own medical care before the state kicks in?

What marginal tax rates are acceptable for the what incomes (low and high)? Right now low income people face huge marginal tax rates. I am getting at incentives here.

Does FDIC create bad incentives that might require an eventual virtual gov take over of banking? If so how do we keep lending from becoming too politicized and corrupt?

Is there a level of regulation and complexity where more regulation is counter productive? What is that level?
Is too regulated to fail an achievable goal?

Single payer and monopsony the seems to be the long range goal of Obamacare, how do you think that will work?

A Friend Asks for Opinions on Range of Issues

2010-03-30T07:47:00.000-07:00

He asks:

Could any of you tell me about four CONCRETE changes that are desired. If the changes are something like:

NO TAXES

NO SOCIAL SECURITY

NO UNEMPLOYMENT PAYMENTS

NO MEDICARE

NO REGULATION OF SECURITIES TRANSACTIONS

NO FOREIGN WARS

NO EXCESSIVE MILITARY EXPENSES

You will have to include a few words regarding how to compensate for any unwanted consequences of the change.

Respectfully - Gomor

It is difficult once these programs are started and people have become depend on them so:

SOCIAL SECURITY
I would lower the SS tax and payout the minimum payments to all SS recipients and raise the retirement age to 70.

MEDICARE
Seniors would not like this but I would start using evidence based medicine in Medicare. I would also put a high deductible on Medicare. $5,000/year to start.

Means tested programs make some sense (robbing Peter to pay Paul) but programs like SS and Medicare make no sense. They amount to robbing Peter to pay Peter.

TAXES
I would replace the income tax with a national sales tax and excise taxes (maybe even a carbon tax). At some point I would eliminate the SS and Medicare taxes.

UNEMPLOYMENT PAYMENTS
Similar to SS lower the payout to some minimum level. Interestingly you could replace unemployment payments and SS payments with a fixed amount of money given to every citizen but that is too radical and creates some bad incentives.

REGULATION OF SECURITIES TRANSACTIONS
We have gobs of regulations and we still have periodic financial collapses (and BTW they have been worse since the civil war (civil war laws pretty much ended an level of free banking) and worse yet since the creation on the federal reserve and FDIC) and lest you think that this is because conservatives had power for a few years (congress and the white house) Sweden had a finical collapse in the early 1990s. So the regulations seem not to work. We might as well allow free banking but the transition could be brutal so we must go slow.

FOREIGN WARS
I am against foreign wars unless we are attacked. Defense only. We won everything that there is to win in Iraq and Afghanistan time to end the police work in those countries and bring the soldiers home. We got Sadaam and we toppled the Taliban.

EXCESSIVE MILITARY EXPENSES
We spend almost as much on military as the rest of the world combined, and the other strongest countries are our allies (France and UK). I think that we can afford to cut military in half at least.

Population Density

2010-03-29T08:02:00.000-07:00

What my time living in Honduras (low national pop density compared to my native Rhode Island) showed me is that crowding is generally a result a lack of a tranportation rather than population density.
Rhode Island has a population density of 900/sq mi and Honduras has a population density 77/sq mi. Rhode Island does not seem crowed at all. Honduras on the other hand can seemed quite crowed. Poverty and poor transportation cause people to crowd in together.

People talk about crowding in Japan, and Japan does has good transportation, but you will notice that people seldom talk about crowding in the Netherlands. I think that part of crowding in Japan is the result of their Government's attempt to keep Japan growing most of their staple foods. Agriculture does take up land but even if that was a national goal you could achieve it without preserving so much farm land, by using more intensive agriculture.

Some population densities:

1 Macau 20,824.38
2 Monaco 16,486.67
3 Hong Kong 6,571.14
4 Singapore 5,539.77
5 Gibraltar 4,486.92
6 Gaza Strip 3,090.71
7 Holy See 1,977.27
8 Bermuda 1,249.44
9 Malta 1,192.51
10 Bahrain 1,014.66
11 Maldives 1,000.73
12 Bangladesh 949.28
13 Jersey 773.46
14 Taiwan 685.47
15 Mauritius 639.03
16 Barbados 602.77
17 Nauru 505.00
18 Korea, South 477.49
19 Netherlands 466.45
20 Puerto Rico 433.94
21 San Marino 417.68
22 Tuvalu 407.23
23 Mayotte 398.23
24 Martinique 388.24
25 Marshall Islands 361.32
26 Aruba 355.83
27 Saint Vincent and the Grenadines 354.47
28 Lebanon 348.26
29 Virgin Islands 343.34
30 Guernsey 337.04
31 Belgium 336.82
32 Japan 336.72
33 India 336.62
34 Rwanda 326.85
35 American Samoa 320.53
36 Sri Lanka 295.72
37 Reunion 287.09
38 West Bank 285.66
39 Grenada 285.32
40 Israel 282.82
41 El Salvador 281.81
42 Guam 280.28
43 Philippines 266.11
44 Comoros 259.32
45 Saint Lucia 252.49
46 Haiti 249.79
47 Guadeloupe 246.74
48 Jamaica 244.92
49 United Kingdom 244.69
50 Vietnam 237.62
51 Germany 234.86
52 Cyprus - Turkish Sector 224.76
53 Burundi 223.62
54 Netherlands Antilles 216.49
55 Trinidad and Tobago 214.83
56 Liechtenstein 200.36
57 Italy 192.96
58 Micronesia, Federated States of 187.32
59 Switzerland 182.94
60 Nepal 177.65
61 Korea, North 177.61
62 Pakistan 177.37
63 Seychelles 173.99
64 Dominican Republic 168.04
65 Luxembourg 165.92
66 Saint Kitts and Nevis 159.25
67 Sao Tome and Principe 154.88
68 Tonga 151.92
69 Cayman Islands 151.29
70 Tokelau 147.10
71 Andorra 146.53
72 Antigua and Barbuda 146.01
73 Northern Mariana Islands 145.49
74 China 133.69
75 Moldova 133.67
76 Gambia, The 133.63
77 Czech Republic 130.72
78 Man, Isle of 128.72
79 Montserrat 128.53
80 British Virgin Islands 127.71
81 Poland 126.79
82 Anguilla 126.48
83 Denmark 126.36
84 Nigeria 124.98
85 Albania 122.79
86 Armenia 120.04
87 Kiribati 119.25
88 Thailand 118.43
89 Indonesia 118.32
90 Uganda 114.19
91 Guatemala 113.77
92 Kuwait 111.73
93 Slovakia 110.58
94 Hungary 110.31
95 France 108.09
96 Portugal 107.86
97 Malawi 106.30
98 Serbia 103.06
99 Cape Verde 100.68
100 Cuba 100.09
101 Austria 98.37
102 Slovenia 97.28
103 Romania 96.96
104 Syria 93.53
105 Togo 93.43
106 Azerbaijan 91.85
107 Dominica 86.51
108 Turkey 85.11
109 Cook Islands 84.17
110 Croatia 82.91
111 Ukraine 82.51
112 Ghana 82.11
113 Greece 81.86
114 Cyprus 81.61
115 Macedonia, The Former Yugoslav Republic of 81.37
116 Samoa 80.69
117 Spain 78.43
118 Bulgaria 74.13
119 Sierra Leone 73.95
120 Burma 73.10
121 Georgia 72.69
122 Costa Rica 72.53
123 Lesotho 70.15
124 Bosnia and Herzegovina 67.97
125 Egypt 67.58
126 Morocco 66.46
127 French Polynesia 66.14
128 Cambodia 65.87
129 Malaysia 65.06
130 Qatar 63.26
131 Brunei 61.29
132 Tunisia 61.24
133 Swaziland 57.29
134 Benin 57.00
135 Uzbekistan 56.66
136 Wallis and Futuna 55.22
137 Norfolk Island 55.06
138 Lithuania 54.98
139 Honduras 53.60
140 Ethiopia 53.30
141 Ireland 52.74
142 Senegal 52.35
143 Mexico 52.15
144 Iraq 51.90
145 Jordan 51.32
146 Kenya 50.61
147 Belarus 50.10
148 Cote d'Ivoire 49.74
149 Cocos 45.43
150 Ecuador 45.38
151 Fiji 44.49
152 Guinea-Bissau 44.09
153 Tajikistan 42.77
154 Burkina Faso 42.28
155 Bhutan 41.53
156 Palau 40.32
157 Afghanistan 39.88
158 Iran 39.84
159 Nicaragua 39.23
160 Turks and Caicos Islands 39.22
161 Colombia 37.84
162 Panama 36.56
163 Latvia 36.44
164 South Africa 35.60
165 Tanzania 35.29
166 Cameroon 32.92
167 Eritrea 32.84
168 Estonia 32.60
169 Yemen 32.09
170 Guinea 30.66
171 Liberia 30.35
172 United States 29.77
173 Faroe Islands 29.35
174 Zimbabwe 28.87
175 Saint Pierre and Miquelon 28.79
176 United Arab Emirates 28.29
177 Bahamas, The 28.17
178 Venezuela 26.31
179 Madagascar 25.58
180 Mozambique 24.39
181 Kyrgyzstan 23.76
182 Laos 23.43
183 Congo, Democratic Republic of the 22.26
184 Sweden 21.69
185 Peru 20.80
186 Djibouti 20.36
187 Brazil 20.32
188 Chile 20.00
189 Uruguay 19.06
190 Christmas Island 17.58
191 Saint Helena 17.43
192 Finland 16.89
193 Equatorial Guinea 16.60
194 Solomon Islands 16.54
195 Sudan 14.51
196 World 14.42
197 Norway 14.42
198 Paraguay 13.68
199 New Zealand 13.63
200 Argentina 13.42
201 Algeria 13.07
202 Zambia 13.05
203 Vanuatu 12.81
204 Oman 11.52
205 Somalia 11.38
206 Saudi Arabia 10.97
207 New Caledonia 10.63
208 Papua New Guinea 10.39
209 Belize 10.34
210 Angola 8.97
211 Turkmenistan 8.95
212 Russia 8.61
213 Mali 8.55
214 Niue 8.09
215 Congo, Republic of the 7.96
216 Niger 7.86
217 Bolivia 7.36
218 Montenegro 6.66
219 Kazakhstan 6.30
220 Chad 6.00
221 Central African Republic 5.53
222 Gabon 4.76
223 Guyana 3.58
224 Canada 3.36
225 Libya 2.84
226 Iceland 2.72
227 Suriname 2.67
228 Mauritania 2.51
229 Botswana 2.50
230 Australia 2.47
231 Namibia 2.00
232 French Guiana 1.88
233 Mongolia 1.67
234 Pitcairn Islands 1.04
235 Western Sahara .90
236 Falkland Islands .23
237 Svalbard .04
238 Greenland .03
239 Antarctica .00
239 Ashmore and Cartier Islands .00
239 Baker Island .00
239 Bassas da India .00
239 Bouvet Island .00
239 British Indian Ocean Territory .00
239 Clipperton Island .00
239 Coral Sea Islands .00
239 Europa Island .00
239 French Southern and Antarctic Lands .00
239 Glorioso Islands .00
239 Heard Island and McDonald Islands .00
239 Howland Island .00
239 Jan Mayen .00
239 Jarvis Island .00
239 Johnston Atoll .00
239 Juan de Nova Island .00
239 Kingman Reef .00
239 Midway Islands .00
239 Navassa Island .00
239 Palmyra Atoll .00
239 South Georgia and the South Sandwich Islands .00
239 Spratly Islands .00
239 Tromelin Island .00
239 Wake Atoll .00

The healthcare bill of 2010 passed

2010-03-22T10:48:00.001-07:00

The healthcare bill of 2010(my name for it) passed. I guess that it will, in net, be bad for us (especially for those with some knowledge of how to get good heath care at a good price), but that the politicians will hide the costs very well and make the benefits obvious so that most people will like it. IMHO we were headed into a painful but positive period in health care were more and more employers would drop coverage and raise deductibles. That would be painful for many, but that pain would have resulted in the people forcing some much needed sanity in health care provision.

Afghanistan

2010-03-16T09:47:00.000-07:00

Iraq's GDP is $12.5 Billion, Afghanistan's is $10 billion. Estimated cost of our "war on terror" so far is nearly $1 TRILLION! Take a second to take that in.

A retired ag. economist spent time in Afghanistan about four years ago. He was one of the few who ventured out of the cities, meeting with villagers on setting up ag. co-ops.

His report: "This is just a bunch of villages, run by the village elders and the local immam. Some guy who they never met comes in once and awhile from the central government and makes promises and leaves.

Life goes on in the village.

There is no central government. These are dirt poor farmers in dusty isolated villages who have run their lives following the village elders and the local immam."

A friend of was an officer over there he told me that the day the USA army pulls out of Afghanistan it will revert back to what it was before we went in.

I see the action in Afghanistan as a huge waste of resources. The strategy is misguided. Centralizing control doesn't work in the US. why would it work in Afghanistan? All its doing is creating opportunities for corruption.

On top of that we are also trying to fight our irrational drug war there. The drug war creates financial opportunities for terrorists, just as it does in places like Columbia and Oakland California.

It takes a $1 million/year to maintain one US soldier in Afghanistan for one year? You could hire about a thousand Afghans for that.

We won all that can be won in Afghanistan we need to pull out. We won the war it is long over. Our soldiers can move about Afghanistan with impunity. It is over we won lets bring the troops home!

Thoughts on the FairTax

2010-03-16T09:34:00.000-07:00

The main complaints about the FairTax are that it is not progressive enough and that it would lead to a large black market.

People often say that the FairTax in not viable politically because the people who currently do not pay income taxes would never support it. But many Americans believe that the rich do not pay taxes and so the FairTax might appeal to these folks. Ask blue collar people if the rich pay taxes, you may be surprised. Some of the problem comes from the media who love to report that people like Ross Perot, who get most of their income from municipal bonds, pay no taxes but the municipal bonds only allow the holder to pay, through lower interest rates, taxes to local governments at a slight lower rate than they would pay to the federal government.

Here Erikson and Althaus say
On economic issues the fully informed electorate is more supportive of free-market solutions and opposed to government services. Yet the informed electorate is also more supportive of taxation. Not only would "full information" push redistributive preferences generally rightward; the biggest push would be among the poor, perhaps unexpectedly... The net result of greater awareness would not simply be a more conservative electorate economically, but also one with smaller class divisions. This is far from the vision of liberal reformers.

This would be another reason that the people might like the FairTax.

Replacing the income and SS taxes with an NST could work given…

Road taxes are already collected that way.
Most funding for fire, schools, courts and police work is from local government taxes.
Agricultural subsidies are vote buying schemes we could do without.

And...
Seeing that the rich live much longer than the poor it would be sensible to re-work SS so that everyone gets the same amount of money. This could be done in such a way as to reduce the cost of this program. SS is already less progressive than most Democrats would want.

Medicare funding is also regressive and makes no sense since in the current formulation Gov. does not have much pricing power and since the least effective medical care spending is that spent on old people and, again, since the rich tend to live much longer than the poor, we might be able to set up a system that any American can get medical care from Gov. less that Medicare costs today.

Documentation on the living much longer than the poor:

For here in this multi-deprived inner city area, the average life expectancy of a male is just 53.9 years. In Iraq, after 10 years of sanctions, a war and a continuing conflict, suicide bombs and insurgency, the average man has a good chance of making it into his 60s; the life expectancy of a male there is 67.49. In Iran it is 69.96, in North Korea, 71.37 and in the Gaza Strip it is 70.5.

Our military budget has not yet been brought in line with the fact that the USSR is no more, it could be greatly reduced.

The black market in alcohol cigarettes and gasoline seems small and the tax rates for these are high.

Economists estimate that small business owners only pay 70% of the taxes that they are required by law to pay and farmers only pay 50%.

But the change over is very risky and may be politically unfeasible, much of the above spending cuts may not be politically feasible

Robbing Peter to Pay Peter

2010-03-16T09:26:00.000-07:00

I understand taxing the rich to help the poor. What I can't understand is taxing everyone to help everyone. Means-tested programs like TANF and Medicaid aren't crazy; they take from Peter to pay Paul. Universal programs Social Security and Medicare are crazy; they take from Peter to pay Peter.
[Bryan Caplan]

I have been telling people for a while that "you cannot subsidize the middle class" and "if everyone is subsidized no one is subsidized".
I would extend Bryan's comments to Government education. The rich and middle class should pay on a sliding scale to send their children to Government schools. T

Also consider my suggestion for healthcare that subsidizes the poor encourages the competent to shop for price and value and avoid huge marginal tax rates near the point where medicaid eligibility ends.

My blog post on a healthcare compromise

The state would provide insurance to all Americans but the annual deductible would be equal to the family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300. So a family of 4 with a trailing year adjusted income of $30,000 would have a deductible of $5,300. A family of 4 with a trailing year adjusted income of $80,000 would have a deductible of $55,300. Middle class and rich people could fill the gap with private supplemental insurance but this should be full taxed. This would encourage the middle class and rich, who are generally capable people, to demand prices from medical providers and might force down costs. They could opt to pay for most health-care out of pocket while the poor often less capable would be protected.

I see 3 possible ways to cut medical spending:

2010-03-16T07:40:00.000-07:00

A friend wrote:

I have a very simple change in proceedure that could appreciably reduce health care costs: Mandate that the cost of each proceedure must be stated before the patient decides to choose whether to have it done;

I have three excellent examples - a year ago I was planting and scuffed my Achilles tendon. The doctor said why don't we get a MRI just to be sure - I said OK and it was done. Nowhere was it stated that the MRI would cost $1700 and waiting a few days would give the same answer. About the same time I had a skin specialist look over some scruffy looking places. He sprayed them with liquid nitrogen and they went away - but I had a little bump and he said why don't we get it biopsied? I said OK and later got the bill for about $700. If I had known the cost, I would have said why don't we wait a little while and see if it goes away? A few years earlier I had a mild distress in my chest and went to the emergency room. Whiz - Bang and I am in the "Heart Catheter Lab" with a thin probe doing its work in one of my cardiac arteries. A few hours later I find that I have incurred a bill for $35,000. Much later I learn that a medical approach has as high a success rate as angioplasty with a stent.

In all of these cases, if I had been told: "This is what the cost will be - do you want to do it?" I might have been inclined to save the money.

This is non-partisan - What do you think?

I see 3 possible ways to cut medical spending:

1. Put more of the costs of medical care on the patients.

My friend's comments above beg the question of why costs of procedures are not stated or even asked for!

I think the answer is because few people pay directly for medical care. Putting more of the costs of medical care on the patients means most people should have deductibles and copays in the tens of thousands of dollars per year.

This would be facilitated by a separation of health insurance from employment. I do not think employers would have taken on provision of health insurance for their employees if it was 17% of the economy when they started. Spending 17% of the USA economy needs the attention of everyone each with his specific and individual knowledge of his own circumstances, delegating it to employers when it was 4% of the economy made more sense.

2. Monoposony

Single payer where the government like in Canada and Japan pays for all medical care and so can set the price pretty low. This though, creates shortages but the shortages are somewhat mitigated because governments through excessive regulations and licensing have created a shortage of provision and so some of the shortage would be absorbed. Further even if quality and access is reduced it seems that medical care beyond vaccinations, antibiotics, trauma care and a few other cheap things yields very little improvement in health, so lowering quality and access is not so bad.

Still the government of Canada socialized medicine when it was only about 2% of GDP. It is now 8% of GDP in Canada and this seems to be loosening monoposony's grip. Again they need more people actively working to lower the spending. Also the shortages can still be a drag even though somewhat mitigated.

2. Making some procedures illegal

Researcher after researcher has shown that back and neck surgery do not work. Heart bypass other than for the upper left ventricle has be shown to be less effective than non surgical treatment. One could go on and on. These non effective procedures could be banned. The problem here that people would not like this and it could effect future innovation.

I choose option 1 and the good news is that the bad news in healthcare, that employers are dropping coverage and increasing deductibles, is moving in that direction.
The current bill is a complete joke.

Is the USA Healthcare Market Moving in the Right Direction?

2010-03-08T13:36:00.000-08:00

I have been paying close attention to the debate on health insurance for a few years. Lately I been hearing of more and more employers dropping health insurance or raising the deductibles for their employees. Judging from people I know, when their employer is not providing health insurance and people buy their own insurance they opt for high deductibles. This is IMO what needs to happen. Insurance should be only for what you cannot afford not for what you can afford. I think most Americans would be better off and have a better relationship with their insurers and health care providers if they had annual deductibles of $20,000 to $50,000. This would also cause some healthy price and spending consciousness. Today nobody is looking to save money on treatments and that has lead to absurd and spiraling health care spending.

I do not think employers would have taken on provision of health insurance for their employees if health care spending was 17% of the economy when they started. Spending 17% of the USA economy needs the attention of most all users with their individual situations and demands. Delegating the spending of 4% of the economy it to employers is much more sensible than delegating the spending of 17% of the economy to employers.

So aren't these trends likely to slow the rise in medical spending which is the only real problem with health care in the USA and if so is this just a needed adjustment?

One unrecognized fact that I have learned about health care is that health care beyond vaccinations, antibiotics and trauma care has very little impact on health. This idea has popped up again in the debate over how many lives would be saved if everyone had health insurance.

In theory universal health insurance save the person who due to a lack of insurance does not have a symptom checked until it is too late and so dies. Advocates of Government provided heath insurance like to cite a poorly done study that showed 40,000 premature deaths per year in the USA due to lack of health insurance but startlingly many more studies can find no additional deaths.

Everyone insured or uninsured gets the most effective basics; vaccinations, antibiotics and trauma care. Thankfully vaccinations, antibiotics are very cheap and affordable, they are cheap enough for public provision. Trauma care can be expensive but it is uncommon and has a big payoff, the patients are often young and most can completely recover and so can pay down a large bill over time.

Let me make a note everyone knows cancer survivors who are grateful that early treatment saved their lives but autopsies often find that people had cancer for over 30 years and died of something other that cancer. Also cancer treatment takes some lives, operations and hospitals are dangerous. We really do not know how many lives Cancer treatment saves because some cancer is slow growing and probably would not have killed and fast growing cancer often kills despite treatment. It is only in cases of moderately growing cancers that lives are saved. We do know which particular cases of cancer are slow growing which is why it is mostly treated

Some people may counter that if one life is saved then we should do it, but this is inconsistent and counter productive. It is inconsistent in that we know a lower speed limit could greatly reduce deaths due to auto accidents but we do not want that. It is counter productive in that if it makes us poorer we could loose lives for other reasons (one simple example is that driving is much more dangerous than flying and the richer we are the more likely we are to fly than drive on long trips).

Financial crisis of 2008

2010-03-08T13:27:00.000-08:00

The problem with the banking system is not corrupt people (people are always corrupt). The problem is that the system is not robust to corruption. The current system has feedbacks that magnify rather than reduce problems. One big bank failure should strength all other banks, instead it weakens them.

Part of the problem is that the green back is too strong. It is too highly desired. It is treated by most people as safer than real assets despite being just paper. In a contractionary banking crisis people want greenbacks and Federal Government bonds over real assets. If this was not so people would rush to spend their cash and Government bonds on real assets like Restate and loans would be strengthened.

We need fundamental change. the old saying, "anything that can happen will happen holds". If greed can break the system it will.

We need a fail safe mechanism.

I have seen 3 proposed solutions:

Possible solution 1. The post Keynesians say that Government should stop selling bonds at all and use seniorage (the creation of money) in recessions and depressions to increase aggregate demand and taxes in inflationary periods to reduce aggregate demand. As far as I can see this should work. The down side is that it separates taxing from spending giving more power to the state. Also would require the raising of lowering of taxes and spending in response to economic conditions. Politicians have real problems reducing spending and raising taxes.

Possible solution 2. Some free banking advocates advocate currency made by banks backed only by bank assets. The banks would never have to pay out in Gold, so there would be no danger of bank runs. If the demand for currency was to rise they would just print more. If bank assets value falls so does their currency but only relative to other bank's currencies. we generally are not aware of it by currency is not that different from checks and bonds.

Possible solution 3. 100 percent reserve banking. Noble economist James Buchanan has come out for this option. This was once only proposed by fringe economists. Presumably savings accounts would no longer exists but would be replaced by bond funds that fluctuate with the bond market and the strength of the bank's portfolio. The money market accounts would become short term government bond funds. A better term for fractional reserve banking is "maturity-transformation" , it makes things clearer.

http://unqualified-reservations.blogspot.com/2010/maturity-transformationI like 02/maturity-transformation-cat-bag-out.html

We can never be sure if either system would work to prevent bouts of high unemployment but we do know that what we have now produces bouts of high unemployment.

The Middle East Petroleum Dependency Myth

2009-12-09T07:13:00.000-08:00

The middle east petroleum dependency is the myth that we need petroleum from the Middle-East and that our military actions help in this regard. I think that this is a dangerous idea that many voters to have.

I see no reason for our military to be in Iraq or Afghanistan. We do not need Iraq's petroleum. Perhaps if we had a separation of economy and state politicians would be less spooked by the myth that we need Middle-East petroleum. There is more feed stock for making Gasoline and diesel fuel in Canada tar-sands than in all Middle-East petroleum, also there is CTL and GTL.

Now I am NOT saying, as many democrats do, that we should not buy Middle-east Petroleum. I see no benefits to us or them from us cutting them off from petroleum income and having higher fuel prices here. I am just saying that we should not worry about the negative economic consequences of a stoppage of Middle-East petroleum that could come out of a war or an embargo, pirates in the gulf or any other reason. The consequences would be short run.

My guess is that we are in Iraq and Afghanistan because there are many voters who want the USA to look very powerful and fearsome to would be attackers, but I think had we left Afghanistan as soon as toppled the Taliban and Iraq as soon as we got Saddam we would look more powerful and fearsome than we do today.

Welfarize and Minimize Social Security

2009-10-02T07:09:00.000-07:00

Welfarize and Minimize SS

What is the purpose of Social Security? Is it a welfare program or an investment program?

Democrats talk of the SS tax as a regressive tax but also argue that SS is an investment. If SS is a welfare program why is most of the money paid out to the rich and middle class? If it is an investment/insurance program why do they call FICA a tax and complain about the poor paying a high tax rate? If it is an investment program why does the value go to zero on death. If it is insurance against out living one's support system and savings why do the rich get a bigger benefit payout?

The rich and middle class do not need SS they can generally take care of themselves.

One of social security’s effects is that though children still provide for their parents by paying the SS tax, the parents look to government and honor Government for taking care of them in old age. They show appreciation to government (and politicians particularly FDR) for the SS benefit rather that to their children who actually pay for their SS. They do not see it, but the money is coming from their children. Studies have show that government funded pensions weaken family bonds. It has become shameful to rely directly on your children in retirement but perfectly OK if the money passes through government. This seems a bit absurd.

Even the economics of this are bad! Most families would be better off providing in kind benefits (like housing) to their parents rather than money (which is what SS gives). It more efficient to have one better house rather than 2 homes. The elderly can contribute around the house but instead we have more separate living. Some of this surely would have occurred without SS as people have gotten wealthier but SS surely contributed to the current state of the family.

According to some writings of FDR, SS was implemented to encourage older workers to retire in the mistaken belief that this would increase employment for younger people. This was a mistaken belief because the SS tax tended to decrease employment, few people in government at that time understood that.

So what to do, it seems unlikely that Amercans would ever vote to abandon SS. I see no practical way to get rid of SS now, so I propose that it be welfareized. To welfareize it we should:

1. End the charade of the separate SS tax and fund the program from general revenue. It is not now nor ever was a retirement plan, it has always been a pay as you welfare program.

2. Make the pay out (the check recipient receive each month) the same for every one, currently the more money you made in your work years the more SS you receive.

3. End the charade of the “trust fund” a “trust fund” never existed and cannot really exist (apart from the US government buying foreign bonds which would be politically unpalatable and somewhat risky) because when you are the source of all money as the federal government is it impossible to save up money for later use. Again the program has always been pay as you go where the money the young people pay goes to current recipients.

4. Increase the age one needs to reach to start collecting SS. When FDR started the program the average life expectancy was 62 years and to start collecting SS you had to be 63 years old. People today are much healthier at 63 than people were in the 1930s and most jobs are less taxing .

All of this would help decrease the tax burden on young workers and encourage people to seek other ways to live in their old age.

To Subsidize Everyone is to Subsidize No One.

2009-09-24T18:43:00.000-07:00

If you subsidize everyone you subsidize no one.

Therefore it is very difficult, if not impossible to subsidize the middle

class. You would have to tax the rich at a very high rate which might

impact investment. Since investment is like indiscriminate charity it

might actually produce a lower standard of living for the middle class.

So if you are middle class and you think that you are not paying for

your children's education you are wrong. You are paying every penny.

If you are middle class and you think that you will make out if medical

care is socialized you, again, are most likely mistaken.

Love of Money in the Bible

2009-09-24T13:20:00.000-07:00

1 Timothy 6:9-10 (King James Version)

⁹But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition.

¹⁰For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

First a better translation of "root of all evil" would be "root of all kinds of evil".

Further in the bible the words love and hate are often used to mean in a relative way. Thus the passage:

"If any man come to me, and hate not his father, and mother...he cannot be my disciple." (Luke 14:26)

What it means is that one should not put even father, and mother above God. If your father or mother wants you do immoral things you should not do them but put God first. (note:Luke the writer wrote elsewhere to love your parents and he was not stupid.)

So the passage that talks about the love of money is a warning against putting money above God and or morality. E.g. doing immoral things to get money.

Some Revealing Healthcare stats

2009-09-16T06:43:00.000-07:00

Lots of Healthcare Stats Here : I see 2 things in these stats:

1. The political power of providers in the USA. Groups like the AMA (the AMA is in effect the doctors union). They often assert this power through over regulation and excessive licensing which insure that they will be used to do things that less licensed people could do. They also use licensing to keep supply low and in turn prices high.

2. Monopsony enabling the squeezing of providers is a big factor in how other countries achieve lower healthcare spending. Monopsony is a monopoly of buyers. So for example in Japan the government pays for almost all health so they can tell the providers (doctors and hospitals) what they will pay. The only alternative to accepting the low compensation that the providers have is to leave the business of healthcare. This gives the single payer great power to reduce prices but creates the shortages and waiting that we hear about.

A Healthcare Compromise

2009-09-09T07:58:00.000-07:00

This is a compromise between advocates of government provided health insurance and those against:

The state would provide insurance to all Americans but the annual deductible would be equal to the family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300. So a family of 4 with a trailing year adjusted income of $30,000 would have a deductible of $5,300. A family of 4 with a trailing year adjusted income of $80,000 would have a deductible of $55,300. Middle class and rich people could fill the gap with private supplemental insurance but this should be full taxed. This would encourage the middle class and rich, who are generally capable people, to demand prices from medical providers and might force down costs. They could opt to pay for most health-care out of pocket while the poor often less capable would be protected.

It is not a perfect plan but it might help. Some deregulation of health-care would also help the poor gain access. The gauntlet that Doctors have to run these days to get to practice seems like an anachronism in today’s world. Let smart people get to practice medicine after on the job training. Let the medical businesses decide who is qualified to practice medicine. 12 years of training to tell if my child has an ear infection is overkill and reduces access to health-care for the poor.

Another benefit of my plan is that it would encourage capable Americans (the rich and middle class) to be a counter weight politically against the providers.

Here is an article that makes a strong case for a system similar to the one that I propose. His plan suggests a insurance for catastrophic events that cost more than, $50,000 combined with a large health savings account.

Italian Spinach Pie Recipe

2009-07-24T12:26:00.001-07:00

Italian Spinach Pies

In Providence RI, Italian bakeries sell spinach pies. Similar to a spinach calzone. Delicious try this recipe:

Dough

1 3/4 cups warm water
!/2 to 1 teaspoon yeast (the longer you are willing let it rise the less yeast you can use. Less yeast and longer rise time yeailds better texture, bigger holes)
1/3 cup olive oil
2 1/2 teaspoons salt
5 cups bread flour

Filling:

1 lb spinach fresh or frozen - NEVER EVER canned!
4 cloves garlic crushed
1/2 cup sliced fresh mushrooms
1/4 cup canned slice black olives
Crushed red pepper to taste
1 teaspoon salt
1/4 cup olive oil
garlic salt

Dough:

In a mixer whisk water a Little flour and yeast together and allow to stand for 3 minutes. Then Whisk in oil, salt and flour. Knead to make dough.

Allow to rest for a few minutes and then form into a ball. Let rise for 4 hours or better over night.

Filling:

If you are using frozen spinach thaw and drain well. If you are using fresh spinach just clean and dry and use it as is, alternatively you can saute is slightly to mak it easier to work with . Put the spinach in a bowl and add the olives, mushrooms, garlic, salt, olive oil and crushed red pepper. Mix lightly with a spoon.

Stretch the dough like for pizza and cut into 4 pieces. Place filling in the center of each piece and roll the dough over like a calzone forming a pocket.

Preheat oven to 425 F. Bake pizza for 15 minutes at 425 F. Reduce heat to 375 F. and continue baking (for a total of 30 to 35 minutes) or until golden brown.

Cool and eat at room temperature.

Italian Bakery Pizza recipe

2009-07-14T12:35:00.000-07:00

Italian Bakery Pizza

In Providence RI, italian bakeries sell a crusty pizza with simple toppings (crushed tomatoes, herbs, olive oil) with no cheese or pepperoni. It has a great olive oil and garlic taste. Try it. Here is a recipe for that pizza.

1 3/4 cups warm water
!/2 to 1 teaspoon yeast (the longer you are willing let it rise the less yeast you can use. Less yeast and longer rise time yeailds better texture, bigger holes)
1/3 cup olive oil
2 1/2 teaspoons salt
5 cups bread flour

Topping:

1 28-ounce can Italian plum tomatoes - drained
2/3 cup tomato puree
crushed red pepper to taste
1 teaspoon salt
1/4 cup olive oil
1 clove garlic - crushed
1 to 2 tablespoons fresh herbs (or dry)

garlic salt

Dough:

In a mixer whisk water a littel flour and yeast together and allow to stand for 3 minutes. Then Whisk in oil, salt and flour. Knead to make dough.

Allow to rest for a few minutes and then form into a ball. Let rise for 4 hours or better over night.

Topping:

Drain tomatoes and place in a large bowl. Crush well with your hands add puree. Add pepper and salt (to taste), sugar, oil, herbs and garlic.

Deflate dough. Line a 20-by-15 inch baking sheet with parchment paper. Coat pan generously with olive oil - about 1/4 cup (this seems like a lot but trust me) and sprinkle with garlic salt. Press out dough to fit pan. If dough resists, let it rest for a few minutes, then gentle coax it to fit the pan. Drizzle olive oil lightly on top of doughthen sprinkle with garlic salt. Spread on tomato topping to cover lightly. Reserve excess for later use. Let dough rise until quite puffy (30 to 45 minutes).

Preheat oven to 425 F. Bake pizza for 15 minutes at 425 F. Reduce heat to 375 F. and continue baking (for a total of 30 to 35 minutes).

Cool and eat at room temprature.

Freedom and Changes in the Level Regulation

2008-09-22T07:04:00.001-07:00

The problem that I see here is that when people have freedom sometimes bad stuff happens but with highly restricted freedom different bad stuff happens. Unfortunately people are inclined to believe that if you try to prevent bad stuff from happening through restrictions of freedom (generally called by the nicer name regulation) then less bad stuff is likely to happen. But human behavior is so complex and our understanding of it so limited that the restrictions of freedom beyond some old tried and true basics are not likely to have a bet benefit but. This seems to the story for not only economic issues but for things like recreational drug use.

Another big problem is that changes (either more or less regulation) can cause bad stuff to happen in the short term but be good long term. In the case of deregulation people get angry but in the case of more regulation people assume that regulation was meant to do good and so they support it.

The adjustments can be harsh. E.G. if you suddenly legalized all recreational drugs the news people would have a feast reporting on lives destroyed by drugs.

Freedom advocates get blasted for the great depression but FDR is lauded because he tried stuff, but the great depression lasted 10 years after the election of FDR. I think that if FDR was a do nothing advocate (freedom advocate) and depression persisted he would have been gone in 4 years. The country would have recovered either way. There is little evidence that FDR's policies helped end the depression sooner than otherwise. There was a rather sharp serious depression in 1920 - 1921 but Warren G. Harding did little to address it in fact, he cut government spending but the economy quickly recovered.

Katrina a Short Retrospect

2008-09-04T11:43:00.000-07:00

Scientific models predicted 61,000 deaths if New Orleans was hit by a category 4 hurricane (if you do not belive me look it up). Katrina relief over all was an incredible success!

That is not to say that people were not hurt they were, but overall the response was amazing this is an amazing country.

The reporting was sensational and made things sound far more chaotic and violent than reality. One heartening thing to a libertarian was that unlike predictions and what reporters said even the poor people in New Orleans did not resort to violence despite no police presence. The people even in very bad conditions kept a level of civility.

Perhaps people are disappointed that non-government people had to do so much.

Basic Principles of Stock Investing

2008-04-14T08:51:00.000-07:00

The Basics of
Stock Investing

(Basic
Principles of Stock Investing)

Selecting a Brokerage

Choose lowest cost brokerage.

Generally you want the brokerage that charges least for trades. The only other concern is
the finical stability of the brokerage. This is to ensure that the broker be able to deliver your money. So you want the cheapest brokerage that seems stable enough to return your money to you in hard times.

A broker’s advice is of little value because the broker’s interests are not necessarily aligned with your interests. Further more keeping in mind efficient market theory, which will be discussed below, it is doubtful whether the brokerage’s advice will help you in anyway.

If the brokerage is a large broker it is difficult for their advice to be of value or to lead to market beating performance. This is because if a large group of investors with a large amount of money decides to buy a stock the stock price will go up. So if a large brokerage firm like Merrill lynch recommends a stock to their clients if will have a short term effect of driving the price up but only the first investors who act on the recommendation will benefit, the great majority will have to pay a higher price for the stock because of the recommendation. Unless you know that you have knowledge of recommendation ahead of everyone else it is of no value. Because of this reality when a large brokerage gives a strong buy rating on a stock it means you have bough this stock 6 months ago.

The bottom line is shop for price. I currently use Brown & Company because Brown & company charges only $5.00 a trade for market trades.

Evaluating stocks

There are only three ways that companies can return money to investors. Companies can pay dividends, they can buy back their own stock and the company can be liquidated with the money returned to investors. These are the only ways that money is returned to stock investors. Investing without focusing on the money that companies pay back to investors is just gambling that there will be a bigger fool to sell to down the line.

Companies can only pay money to investors that they have earned. So earnings are important both current and future earnings must be considered when evaluation stock. But earnings are not the only thing you need to consider, you should also ask yourself whether this company will eventually pay a dividend or buy back its stock in sufficient volume to justify the price of the stock. Some companies have good current earnings and good rapid growth but are in businesses that are temporary in nature an extreme example of this would be the companies who prior to the year 2000 where making their money fixing Y2K bugs. You need consider whether a company's business model will be viable in 15 years, if not the dividend must be big enough to give you not only a return of your money but additionally some extra to cover for the eventual capital loss.

The value of any stock is based fully on the amount of money that is will eventually return to the stock holders.

How much return is enough?

In economics there is a concept called the discount rate. (htp://economics.about.com/cs/economicsglossary/g/discount_rate.htm) That is the
value of having your money to spending today as compared to having to wait to spend it. It is considered that it is 3% better to have your money now. So inflation plus 3% is the minimum return one would want on zero risk investment. (Note: no such investment exists although short term government securities, the kind that money market funds hold are about as close as you can get. They still have some risk due to inflation or some major calamity).

When investing, stocks like bonds, are judged by return on investment. For example if a particular stock is currently paying a 3% dividend appears to be able to pay that dividend indefinitely and there is no inflation then that stock is just matching the discount rate.

Beyond the discount rate a good rate of return is based on the return provided the alternatives like bonds, money markets and real estate.

Keep in mind that a stock that is not currently paying a dividend will have to
payout enough dividend in the future to make up for the return that you
are not receiving now.

Before buying a stock try to think of all the things that could make the company’s
earnings fail to reach the level required to produce the returns that you are looking for. There will always be some things that can ruin any investment even very wise investments.

Examples include:

Inflation

Economic collapse

Natural disaster

War

These should not keep you from investing but you should be aware of them

Company specific things that might be enough to keep you away from an investment include:

Is the company running out of market (like in the example above of software companies specializing Y2K fixes)

Limited lifetime demand for the product produced. (IE buggy whips being
replaced by cars).

Lack of franchise products. (What we call "me too" products with nothing specific to differentiate the company from others have little franchise value.)

Rising competition.

Finally a caution about companies that buy back stock rather than paying a dividend is in order.

To calculate the annual rate of yielded from a stock repurchase you must take the annual reduction in the number of shares outstanding and multiply that by the price of the stock. You cannot just look at the amount of money that the company spent on the repurchase. This is because many companies that buy back stock also compensate employees with stock. If they buy back 1,000,000 shares but compensate employees with stock giving them 1,000,000 shares then they have in effect returned nothing to share holders. They have used the money to compensate employees and have done noting for the shareholders.

What accounts for the rise in stock prices over the years

An important question to start off with on this subject is: How much of the stock market gains over the years where due to the increase in earnings and how much due to growth in the average PE (PE = the price of the stock divided by the earrings per share) of stock. Growth in PE indicates a growing comfort with stocks but I would assume that at some point when the long-term return of stocks drops below the discount rate (about 3%.) the growth in PE will stop.

Another factor keeping stock rising is the growth in the population. More customers for coke
means more profits for Coka-Cola (KO).

Another factor is the growth in productivity of public companies?

Another factor is the rate at which public companies have grown in relation to private companies? (If public companies relative to private companies, do a growing portion of business then this can justify a growth rate in stock prices in excess of growth in productivity plus growth in population).

All returns should be measured in fixed dollars that means that each years growth rate should be reduced by that year’s rate of consumer price inflation?

Consider as many of the possible causes of the rise in stock prices as you could discover?

Inflation is due to growth in the supply of money. Deficit spending is only one way that the money supply grows. Friedrich Hayek, he won a noble prize for his is work on the business cycle and money supply.

The 1920s, the 1960s, 1970s and the 1990s where periods of rapid growth in the
money supply. In the 1960s and 70s money supply growth was driven by Deficit spending.

The 1920s and 1990s money supply growth not driven by Deficit spending but by loose
monetary policy by the federal reserve.

Each period of increase led to bubbles and crashes.

Money supply is important because more money makes for higher prices, with more money in the economy people can pay more for stock bidding up the prices.

Also on the subject of money supply consider that when money supply increases the upward pressure on prices is uneven and those products with highest demand and least short-term supply elasticity, like oil, tend to rise more than other products and can bring the end to the boom.

Efficient market theory

Be aware of and respect efficient market theory. Over confidence is a great danger for investors. As I heard one famous investor say what makes you think that you can invest better than anyone else.

The Efficient Market Theory says that security prices correctly and almost immediately reflect all information and expectations. It says that you cannot consistently outperform the stock market due to the random nature in which information is spread and the fact that prices react and adjust almost immediately to reflect the latest information. Therefore, it assumes that at any given time, the market correctly prices all securities. The result is that securities cannot be overpriced or under priced for a long enough period of time for investors to consistently beat the average.

The theory holds that since prices reflect all available information, and since information arrives in a random fashion, there is little to be gained by any analysis. It assumes that every piece of information has been collected and processed by thousands of investors and this information is immediately reflected in the price. Studying historical data since past data will have no effect on future prices cannot increase returns.

So if Efficient Market Theory is correct or close to correct and it deserves “great respect” why shouldn’t I invest in a index mutual fund?

The following are some reasons why I think that despite efficient market theory investing in individual stock rather than index mutual funds can be worthwhile:

a. Because the .5% cost that index mutual funds charge is high. For a portfolio valued at
$100,000.00 a .5% cost is $500/ year. At a cost of $5.00 per trade that is 100 trades a year that is allot of cost.

b. I believe that at times the market can be beat. For example in the year 2000 it became obvious that the market was a poor investment.

Note: This does not mean that it could not have gone up but that the return as noted above was very low.

c. Even if the market cannot be beat it is fun to try.

Risk aversion verses ignorance of the risks

Sociologists who study such things tell us that people are naturally risk averse. So why do so many people blindly take huge risk in the stock market?

Sociologists study people’s aversion to risk by making simple models where the subjects in the study understand the risk.

In contrast many people invest in what they see as sure things. In this case they are taking on huge risks but they think that they are not taking much risk at all.

In the case of the stock market the longer a bull market lasts the more comfortable people become with the market. Even though the market gets riskier and riskier the higher it goes, people's perception of the riskiness of the market is diminished because looking backward it looks less risky. Thus due to ignorance the riskier stocks get the more likely the risk averse are to invest in stocks. This is the explanation of the paradox of if people are risk averse why do they take such great risks in the market.

To lessen the risk of the market you must evacuate stocks based on returns. You should judge your investing on the returns that it produces rather than the value of your portfolio.

Profit margin and economic problems

The profit margin of a company effects its valuation because in a recession companies with wider margins will generally be more able to last out the recession and recover market.

Economics pages and principles verses stock information.

I find the economics web pages much more objective than the stock web -pages

Probability

If a balanced coin is flipped 49 times and every time it comes up heads what are the chances that it will come up heads again? Well we should all know that the answer is: it has a 50% change of coming up heads.

Have Realistic expectations

One of the surest ways to get scammed it to have unrealistic expectations. Always respect efficient market theory. With the discount rate of 3% plus inflation 4% plus inflation is a good return 25% above the discount rate return.

Demographics

The demographic argument is that the aging baby boomers may pull their money from the market creating a long down turn. This should increase the caution with which one engages in the stock market during this ore baby boomer retirement period. Caution even more highlights the need to focus on divided as the return from stocks. Seniors needing money to live on are more likely to hold onto dividend paying stocks beyond the retirement age. Also if the stock is paying you a good dividend and you view dividends as the end (rather than price appreciation) you should be in a much better position to just sit back and collect dividends.

Balance your portfolio with “puts”

A “put” is an option that bets that a stock fall in price below that specified, “strike price” by a “strike date”. Puts can be bought and sold. An alternative to the put is to write a covered call. When you write a call you are selling a “call”. A call is a bet that a stock will rise above a given “strike price” by a given “strike date”

believe that as a hedge against a general market downturn investors should include some down positions in their portfolios. If the S & P 500 drops 20 percent in one day it is comforting to watch the value of your puts rise.

I like to buy puts on story stocks. Companies that unlikely to even make it to profitability. Using puts rather than “shorting” the stocks limits you liability for the occasional case where one of these story stocks does become a great success.

Schooling is not equal to Education

2008-03-04T07:14:00.000-08:00

These two stories give me a chance to make some points about schooling:

This from Robina Hanson's blog overcomming bias:

Human capital offers an interesting case study in theory versus data. Just as most people think it obvious that medicine deserves most of the credit for health gains, most people think it obvious that education deserves most of the credit for human capital gains. Do-gooders the world over have for centuries "known" that what the poor really need is more medicine and education (and religion and art).

We theorists will tell you that, yes productive people tend to be better educated, but there are many possible explanations for wealth-education correlations. For example, schooling could be a credible signal of ability, or school could be consumption that the rich can better afford.

Most who study education are data-crunchers with little patience with such abstract theorizing. But until recently they were troubled by the fact that data on nations across time seemed to show a negative relation between wealth and education, even after controlling for measures of physical capital! For example, see this 2001 Pritchett paper.

This from the Wal Street Journel:

What Makes Finnish Kids So Smart?
Finland's teens score extraordinarily high on an international test. American educators are trying to figure out why.
By ELLEN GAMERMAN
February 29, 2008; Page W1

Helsinki, Finland

High-school students here rarely get more than a half-hour of homework a night. They have no school uniforms, no honor societies, no valedictorians, no tardy bells and no classes for the gifted. There is little standardized testing, few parents agonize over college and kids don't start school until age 7.

Yet by one international measure, Finnish teenagers are among the smartest in the world. They earned some of the top scores by 15-year-old students who were tested in 57 countries. American teens finished among the world's C students even as U.S. educators piled on more homework, standards and rules. Finnish youth, like their U.S. counterparts, also waste hours online. They dye their hair, love sarcasm and listen to rap and heavy metal. But by ninth grade they're way ahead in math, science and reading -- on track to keeping Finns among the world's most productive workers.

Points:

What is valuable education

Education, skills and knowledge seem to me to be very valuable in general but schooling is only valuable to the individuals who do better than average and to a certain extent to employers for grading people. IMO schooling is more about testing than teaching. If one looks at school objectively it seems that one would come to this conclusion. School helps with some useful skills like reading and arithmetic but it teaches very little information that will be useful to the students in life. Students would seem to better of watching myth busters than in a class.

What are the returns to schooling

Richard Vedder has found that the statistics by state shows that those states that increase education spending faster have slower economic growth than similar states that increase education spending slower. More education spending means more taxes and maybe less spending on physical capital. In a diminishing returns case should we not all agree that at some point spending on education would have a negative effect on economic growth? So then the argument is about at what point we go negative not if we ever go negative.

If you look at individuals, I am convinced that some students would be much better off if the money spent to school them was instead spent on physical capital that was then given to them. A poor student with 12 years of schooling will generally do less well that a poor student with 3 years of schooling and his own bulldozer and trailer to carry it to jobs.

How much instruction in needed

The un-schoolers are matching schools with minimal instruction and input. Most children, with individual instruction, can be taught to read, write and do addition, subtraction, multiplication and division in a very short period of time. So the returns on further instruction may start to decline rapidly a very low level of instruction.

Is it possible to educate those who do not care to learn

To paraphrase Murray Rothbard it seems that if a child does not want to learn and if his parents do care if he learns or not, the child will not learn in school or out of school.

Human brain's up take of information and what we learn

If human brains take up information at a fixed pace is it not possible that the useless information that we learn in school in order to make the grade squeezes out some other learning that might be more valuable in our lives? Rather than trying to teach children more maybe we should try to teach them more useful things.

Old Age is Mostly not Treatable - Medicare is the Stupidest Program Imaginable!

2008-01-30T07:03:00.000-08:00

Medical care for the elderly yields the least bang for the buck of any medical care.
Since it is only part of the market the program has little ability to control costs.
Free care for mothers and infants would make far more sense.
I believe that the program started because the medical establishment was taking to much of the inheritance of the American people but the program did not address the problem, it just shifted the payment to the tax paying population.

Study after study shows that medical care for the elderly has very little benefit for health. In fact some studies have shown medical care for the elderly to have a negative impact on life expectancy and quality of life (see the work of Robin Hanson). One study showed that people who choose hospice on average actually lived longer that those who chose more aggressive care.

If the US government was the sole buyer of medical care they would have some power to affect price. They could set price for procedures which might cause rationing but they could push prices down, but because Medicare is only about one third of the market they have to pay close to the market price.

Now if the politicians who enacted Medicare where truly interested in helping people the best bang for buck in healthcare is in care for mothers and infants. Care for mothers and infants can yield sizable benefits in quality life years.

So why did Medicare get enacted? I see two reasons. First there was a real problem in that people whose parents became too ill for them to care for would hand their parents off to the medical establishment who would treat them to a level that would put large cost burden on the families. Secondly the elderly reliably vote in large numbers and Most will consume medical care at some point. Young people (in the child bearing years) do not vote in large numbers and only a small percent need the care as most babies are born healthy.

And so we have Medicare and the medical establishment takes over people lives at the end and often does more harm than good.

A related story to show in real life an alternative to excessive care in late life

My mother (86 years old) has always had an attitude of trying to avoid doctors. For years we (the family) have tried to get her to go to regular doctors appointments. She resists saying that they always find something wrong. She will go if she is very sick. Once after much prodding she went to a doctor and asked about a symptom of having frequent bowel movements. She was diagnosed with Crohn's Disease. They gave her prescriptions for meds which she took for a while but the meds made her feel worse that the frequent bowel movements so she stopped taking them. Now she avoids certain foods and she says that the symptoms have lessened. She is now all the more determined to avoid doctors. After many years of trying to encourage her to get regular care I have begun to wonder if her way is not the better way. One thing that she fears is the medical establishment taking over her life at the end.

My mother has always said that doctors are fine if you have something that there is a cure for but there is no cure for the disease of old age. Some times it seems that it is better for old people to not know all the diseases that they have. If the symptoms can be treated great but the treatments should be balanced against the harm that they do.

From talking to my parents and their friends all that most old people care about is the expense. In fact once their health makes them unable to care for themselves they often prefer to die so they do not much care about the quality of care. Often it is family and the medical establishment that give them care that they do not want. That is why they strongly support medicare. It is not that they demand the care it is that they It back to the orgional problem they do not want the medical establishment to steal their money by giving them care that they do not want.

This Blog

2007-11-12T07:08:00.001-08:00

In this blog I would like to focus on questioning underlying assumptions that most people do not often consider. For example there is a debate about how to improve education in America. A point in the debate is how to improve the test scores of American children. Since I would like to question some of the assumptions inherent in debate I would ask are these tests relevant to life, if not why do we care if our students do less well than students elsewhere. I would question another assumption by examining whether better schooling will help improve people lives or not. It may seem like the answers to these questions are simple but I still think that they are worth examining. I will in the process consider the assumptions against some radical alternatives and look at what actual data says. In this Blog I would like to identify this type of assumption and examine them.