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

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

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

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

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

From John Goodman's Blog:

A lot of news 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 for 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

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

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.