News Roundup

Populist Anger

Is this the early 1900s again? If so, who would be this era’s William Jennings Bryan? Regardless, class relations have worsened since Reagan took the throne. The financial crisis just showed that the rich get bailed out by their connections in the government while the “common man” can barely afford to buy food. All that rage (partially their own fault for overconsumption and leverage) has to be channeled somewhere. We’ve seen it directed at AIG executives, congressional Republicans, and now Democrats. The only surprise is the resiliency of the American Myth (formerly American Dream) of upward mobility. People still cling to that antiquated romantic notion and steadfastly avoid uprisings and revolutions. Right now, soak the rich is as far as they’re willing to go, perhaps because most people still entertain absurd notions that they’ll ever be rich.

On a similar note, the same disenchantment can be found in the former Soviet bloc, where the market has failed to deliver on improvements in standard of living. Already there are yearnings for the “good old days”. How long there before blood spills?

The Future of Polisci

Perhaps some of the distrust of politicians has spilled over into political science as a field, even though most politicians are lawyers by trade, not political theorists or professors. As a result, people (Tom Coburn et al) are asking whether political science is even relevant as a field of study. They have the academics scrambling to justify their department’s existence. Having taken a single class in the field during my undergraduate years, I have fond memories of abstract discussions on power, systems, and gatekeeper institutions as well as more applicable overviews of industrialization, the Soviet Union, and South Africa.

My personal take on the future of political science is that it is best served by delving into modern affairs and proposing policy. Leave the models and theorizing about resource distribution to economics, a more suitable field for the arcane and theoretical.

The TFA Controversy

When I was in Berkeley, Teach For America was quite a big recruiter on campus, and I got to know (and almost signed up for) the program. Ostensibly, it is a social work group targeting low-income kids in need of a quality education. In practice, it is a resume building experience for privileged kids, most of whom will step into the corporate life at some point. I have no doubts that the teachers are motivated, bright, and effective in teaching. The only issue I have is that the participants are not career teachers, so most of them will only teach for 2 years.

As for the unions’ argument that TFA teachers are underpaid scab workers, I have to disagree. Obviously there are people willing to do the work for less pay than what unions currently pay. Many of them achieve good results in standardized tests. I pose the question to unions: why are your teachers not meeting the same standards as a bunch of scabs?

Failing Our Youth

I’m not usually a big fan of Paul Krugman when he mouths off about political economics (too much Greg Mankiw influence), but he’s usually sound when highlighting social failings and doing technical work on macroeconomics. He is mostly spot on by sounding the alarms on education, as many education secretaries have done so before. Having spent many years in academia, I have witnessed firsthand that most of the US’s top tier talent is imported. That source, while welcomed, can be volatile. If the US falls behind in research output, new discoveries, availability of funds, or quality of life, students will go elsewhere. A particular concern is that the underclass does not seem interested in advancing through education. I’ve got no ideas of what incentive program can be devised to help them realize that education is their best shot at social mobility.

How Business Supplanted the Humanities

Most undergraduates today in public schools choose some form of business/economics as a major for good reason. The expected return in terms of income is much greater than if the student had chosen a more academic discipline such as English or history. One can make the argument that engineering offers on average higher returns than business, but when you weigh the expended effort, the potential for professional degrees, the higher social status, and a vastly higher earning ceiling, business still wins out.

Where do I see the English and history departments headed? Obscurity. It’s up to them to reinvent themselves as applicable to attract more students. Until then, they can at least take comfort in the fact that they’re being subsidized by larger departments within a college. I don’t mind that subsidy since any well-rounded individual will take at least one course in those disciplines, and that requires faculty and an accompanying department.

Who Are the Most Racist People?

In my experience, it is East and South Asians (not South-East Asians, mind you) in a tie for the title of most racist. Those groups have large populations, relatively homogeneous populations but with a significant ethnic presence that discrimination becomes habitual. Though whites in the US get the most press for hating on blacks and Hispanics, they’re actually pretty tame in their outward interactions (discrimination tends to be subtle and based on avoidance rather than confrontation). In Asia, racism manifests itself as verbal slurs, hate crimes, and sometimes enforced policy. In the article linked, there is a NYT piece on race relations in South Korea. Notice the amount of flak received by the woman for consorting with a foreign man.

Oh My, What a Big Beard You Have

In a twist, operatives in Afghanistan who grew long beards to blend in and to be socially accepted are now stigmatized b/c of their aggressive behaviour. Their characteristic beards are now ways for the local population to identify and avoid these rough sorts. I think most people knew from Iraq that using independent contractors as security detail did not turn out well. Using them in Afghanistan as infiltrators is not going to work any better. There may be more culturally sensitive ways to carry out investigations, but some of what these special ops do is unavoidable.

China’s “Little Emperors”

It’s a good position in China to be an only son. Parents spoil the child and cater to his every whim. It’s much better, however, to be born to a rich family as well. The divide between rich and poor has been steadily accelerating since market reforms began, but unlike the West, poor Chinese families do not have the social safety net to care adequately for their children. Corrupt officials and the high-rolling lifestyles of the rich has led to nationwide resentment and social unrest, not a good situation for the ruling party.

The Need For a Human Rights Watch

According to Nickelback, Amnesty International was founded by a British lawyer who was shocked to read that two Portuguese students had been imprisoned for toasting freedom. It turns out that societies like AI are as needed today as ever. One criticism though is that they don’t focus enough attention on western countries, such as the US, when they commit human rights violations. Guantanamo is a sore thumb in that as long as it exists, people will wonder what sort of violations take place there because of its reputation. The only reasonable course of action is to return to Geneva Convention accords with respect to treatment of prisoners of war. Otherwise, I would happily endorse sanctions against the US in violation of human rights.

Research Summary – Telomeres

Not much to comment about here other than to say: “click through to the article”. Kathy Collins is an outstanding professor and researcher at Berkeley, and her work on telomeres will be critical to controlling the aging process down the road.

Socialism Beats Capitalism; Dictatorships beat Democracies

A well-run central planning system that can make the optimal and most efficient decision every time (arguably the same results as a pure market system) is superior to the market system because it can arrive at its decisions quicker and without the overhead of competition. Likewise, an enlightened dictatorship is more decisive than a democracy in implementing policy. I doubt that anyone will argue against this.

Now the question is that how do we ensure that these plutocrats make the best decisions every time without mistakes of succumbing to self-interest?

For the record, if anyone’s wondering, there is no country that has a perfect democracy or a pure market economic system. There is always some layer of indirection, corruption, or inefficiency involved.

Good Governance Ideas

As a political moderate (that’s the term I use to describe a “classical liberal” who is, in terms of today’s political spectrum, socially liberal and economically conservative), I’ve often disagreed with both parties on their approaches to policy. This is still true for the health care bills floating through Congress. Ostensibly, the Democrats want to address rising costs and uninsured people, but the Baucus bill focuses heavily on the latter. The CBO projects that costs will rise compared to the current plan. I recently listened to a podcast on why costs are high, and agree for the most part with the argument that none of the stakeholders have any incentive to hold costs down. Patients don’t foot the bill, doctors will be sued unless they order tests for every remote possibility, and insurance companies are too cowardly to confront the other two.

How do we turn back the tide? One idea is to expose patients directly to the cost of treatment and to force care providers to compete on cost. The insurance companies can function as it does with respect to car insurance. For a premium, the insurance company will pony up to a certain amount per year in treatment. Patients will be required to put their own money into health savings accounts, which will function much like IRAs and be subject to a government match up to a certain amount. Note that there is no adjustment or subsidy depending on income level. It’s really the individual’s responsibility how much value they place on their care and how much they expect they will need. So, if you start saving when you’re young, you’ll have a nice nest egg when you’re older and more susceptible to needing care. Having this system of patients paying out of pocket will make them more price-sensitive, acting as a market-driven deterrent against excessive treatment and rising cost.

The second component of my plan is to have hospitals and clinics compete in terms of pricing. All other businesses except for utilities and monopolies compete. The end result is reduced prices and increased choice. What if hospitals offered patients treatment options and an accompanying price, leaving the choice of which one to pursue in the patient’s hands? It just seems ridiculous to me that consumers are so insulated from the cost of procedures. Do you know how much that MRI you just got costs? Exactly!

Thinking along these lines, I come up against my basic opposition to entitlement programs. The two issues I have is that they’re inefficient and unfair. The first is obvious. There’s a problem when a person receives more benefits (food stamps, unemployment insurance, welfare, medicaid) when poor, so much that it pays more to earn less (when the difference is relatively small). Note my earlier reference to a 70% marginal tax when benefits are factored in. This is inefficient because it prevents the economy from operating at peak efficiency. Individuals have reduced incentives to work and to contribute to the overall welfare of the country.

The second problem of fairness is that a wealth transfer program run by the more numerous poor will always seek to take more and more from the rich. We’ve seen taxes go up and entitlement programs expand. Where is the limit? There’s nothing putting checks and balances on the growth of handouts. A person, once accustomed to a certain level of comfort, will seek to improve that level, and for the poor, nothing is more convenient than Robin Hood politics. The issue of fairness also ties back to the problem of inefficiency. For a rich person, what is the incentive to work more and create more jobs when most of the extra money earned will go to subsidizing a poor person?

With that said, I’m not against some kind of social safety net. After all, circumstances change, disaster can strike, and the rich can suddenly become poor. A safety net is also in society’s best interests, reducing drug use and crime, which are common results of poverty. Therefore, I propose scrapping all entitlement programs and tax breaks, shifting them into a flat rate handout to every taxpayer (including foreign full-time workers who pay taxes) and citizen (including unemployed ones). A single cheque every year for say $8,000 adjusted for inflation would be less than the per capita expenditure of current entitlement programs plus the overhead in administering them. This plan is neutral in terms of income level. An added bonus is that the money is more tuned to individual needs (individuals can allocate spending in different ways) rather than to whatever limits the legislators deemed appropriate. Finally, $8,000 is more than enough for subsistence (I’ve lived on less) and a few creature comforts. If individuals want to better their material existence or find fulfillment in some endeavour, they can work and earn money on top of that basic guarantee. That is a positive and powerful incentive.

I’m also in favour of an overhaul of the current tax system. First to go is the income tax. It is one of the worst taxes out there because it counters productivity and reduces incentives to work. Next are taxes associated with investment, such as dividends and capital gains taxes. Again, investment is a net positive for society, so why should we put roadblocks against it? What kind of tax would I replace them with? A single VAT tax levied federally. VAT is done for efficiency reasons; it’s harder to dodge a tax collected at each stage of the product lifecycle. It also discourages consumption, which Americans do far too much of. Finally, it’s just more convenient when the sticker price is the price individuals actually pay.

News Roundup

More on the 70% marginal tax rate

The question is if the penalties for higher income are much reduced benefits, is it even worth it to work harder/longer/more productively? It used to be that this only applied to really high income earners, but due to a component of the health care plan, this becomes the case for people around the average income level.

Prostitution in all but name

The phenomenon started in Japan as enjo kosai. It has since spread to Hong Kong where young girls sell their bodies to earn clothes money. To me, this is a sign of two things. First, the market for sex is quite a profitable transition for both parties, so why do government need to regulate it? Put up an age limit and make it legal and safe, a la Amsterdam. Second, Hong Kong society puts a high value on material goods, more so than in many other capitalist countries. My Hong Kong friends tell me that a teenage girl wouldn’t think to leave the house without a designer purse. Then, they bug their boyfriends to buy expensive clothes, cars, and gifts for them. No wonder the men are under such pressure to become big earners. I guess the single girls resort to prostitution to keep up with everyone else.

Futurama is now reality

Want to be Fry and see what life is like in the year 3000? We’re now one step closer to that goal with this potential breakthrough in using poison gas (of all things) to freeze tissue. I’m just waiting for someone to write a historical fiction on Hitler being frozen with the same gas the Nazis used in the camps only to emerge in the next millennium.

Obama wins Nobel Peace Prize, before doing anything

Imagine my surprise when I wake up one morning and read that Obama had won the Nobel Peace Prize. I thought it was some kind of sick joke at first. Really now, even the presenters noted that Obama won for his “potential” rather than for any accomplishments. Ostensibly, he has led the world on climate change, Israel/Palestine, and… what else? Even those two issues are noted more for hot air than anything of substance.

Why marriage is a raw deal for men

As I’ve told Willa, marriage in its current form is just not a logical decision for men. Given current divorce rates, disparity in partners’ earnings, and the proclivity of divorce judgments to favour the woman, the cost-benefit analysis concludes that marriage is just too much of a raw deal for rational men. Still, people are irrational about most things, including love, and I don’t expect this to ever change. Golddiggers have been around since forever, and prenups don’t seem to have slowed them down at all.

An answer for marriage: PACS

Why am I not more despondent about the state of the institution of marriage? I look at France and the excellent alternative to marriage that they have created. There, the system is a civil union called the pacte civil de solidarité. The ideal replacement for marriage would be to transition the term to purely a religious ceremony devoid of any societal benefits or meaning. The state would then only recognize civil unions for all individuals. The rules would be similar. Only one civil union may be in place at a time for any individual. Leaving a union can be done by either partner. Spousal benefits would apply. Finally, the most crucial component is a plan for property division drawn up at the time of formation of the union.

Unbalancing the dollar

The dollar’s fall in recent years has been precipitous. I’ve no doubt that it’s a deliberate unannounced policy of treasury to weaken the dollar, boosting exports and increasing consumption of domestic rather than foreign goods. This is a good policy because the US is a debtor country and inflation is currently low. However, for those of us who travel overseas frequently and who are profligate savers, this policy is just another example of the kind of punishment savers endure. There are consequences, however. Trade partners will not look kindly at this beggar-thy-neighbour policy. China has already started retaliating. Worst of all, foreigners may stop buying US debt. That day of reckoning may not be too far away.

Bill Gates exits health care

The Gates Foundation has historically given money to fund health care and education causes, especially when they intersect with poverty. Now it appears that it is shifting gears and transitioning to addressing a more basic problem – global hunger. I applaud the shift, as food is one of the most basic necessities that has been ignored for far too long. I pose the question of how to create a sustainable system of elevating poor countries out of the hunger crisis without making them dependents on rich countries or foundations.

News Roundup (Econ Edition)

America at work, Europe at play

The heading may not be strictly true, but Americans do tend to work more (25.1 hours per week for 46.2 weeks per year). I agree with the blog post, but with not the original post. The difference here is cultural. Without making any value judgments, Americans just seem to prize wealth accumulation more than social interactions and overall well-being. This has been my experience from living on both sides of the Atlantic.

This has gotta be the absolute worst-case scenario, right?

A depressing read, predicting a depression no less. The author believes that current high levels of private sector debt are unsustainable. Therefore, as soon as government withdraws its prop, the economy will tank again. Government cannot lower interest rates or print money anymore, and a tanking dollar will drastically escalate prices. Consumer spending won’t ever recover with a double punch of inflation and unemployment. I wonder if the writer also believes in a debt jubilee.

Summers to the rescue again

Larry, as he always seems to do, rides in at the time of trouble to dazzle everyone with his genius. This was the case in the Asian financial crisis of 1997, and is so again today. My personal belief is that intelligent people like Summers and Greenspan (already accomplished) are going to be surprised that the fundamentals here are so bad that straight Keynesian stimulus and easy money will not set the country on the road of stable growth. Those men have rather firm beliefs about how the world works, and are loathe to change for a fear of the unknown, embarrassment of being mistaken, or just plain denial. Regardless, this article is an excellent and unbiased narrative of Larry’s life, how he rose to fame, and how he thinks.

Jobs report: the subtext behind the headline

Headline unemployment is at 9.8% right now, and that number may not fall any time soon. This is because the laid off workers are (stop me if you’ve heard this before) in unskilled labour sectors such as manufacturing or low-skill jobs in hospitality, restaurant, and retail. Job openings are primarily concentrated in the skilled service sectors such as education, health care, and engineering. Workers are slowly transitioning by going back to school, but it will be a rough ride in the meantime.

Consequences of unemployment

It’s easy to look at the headline figures, but there are long-term implications of unemployment. Not only is the work force unsuited for the kinds of jobs created, but the risk propagates to future generations. Unemployed families usually cannot provide a stable environment for children to become educated. Also, crime and depression usually rise with high unemployment. This article delves into data to discover which population segments are suffering the most and what impact that may have long-term.

China comes calling

America got into the crisis by borrowing too much money and using it to consume. As a result, public and private debt totals have soared to historic levels. Note that this is in raw numbers, not as a % of GDP. As a result, people like Krugman suggest that we can afford to borrow more. Winkler believes that this is not tenable and that Argentina and California (default) are examples of the endgame. Chinese calls for a new global reserve currency in light of the plummeting dollar are only the start of the decline.

Reagan’s greatest sin

Staying on the subject of deficits, prophets of doom proclaim drastic inflation down the road. Liberal economists acknowledge that this is possible, but that getting the economy growing is the top priority. Sadly, they just want to inflate another bubble instead of buckling down and rebuilding economic fundamentals. When the bubble does start up again, there will be calls for more spending or tax cuts. The last president (Clinton) to attempt deficit reduction did so on the slimmest of margins. For all of Reagan’s sins, his worst may have been, in Cheney’s words: “Reagan proved that deficits don’t matter.” Because of Reagan, there’s absolutely no political will to cut the deficit.

HSBC returns to its roots

How the mighty have fallen. Britain and America were the two centers of finance in the world. HSBC, my personal bank, is based on London but has decided to shift its corporate HQ to Hong Kong, citing Asia’s rise as a global power. I’m not surprised. Look for BRIC countries’ growth to outpace the west in the future.

Thorough rebuke to Keynesianism

Robert Barro, a perennial favourite for the Nobel Prize, wrote this article contrasting tax cuts with stimulus spending (deficit-driven or not). He finds that tax cuts have a higher multiplier than stimulus spending in general cases. I’m not a fan of Keynesianism, but I take issue with this study in that it looks at historic events in isolation. The spending events being tracked are all military spending, which I doubt has a high multiplier in contrast with infrastructure spending. The author admits this and uses the excuse that nonmilitary spending is difficult to track and isolate. Another problem I have is that the results of tax cuts are measured in terms of GDP. As we’ve seen in the last recovery, GDP does not equate to many factors of well-being, such as employment, fulfillment, happiness, average income, and income disparity.

A sad end to free trade

If China and America’s recent spat over tire tariffs isn’t enough, overall global trade has absolutely collapsed. This article takes a depressing look at the other ways that protectionism is rearing its ugly ear. Bailouts and subsidies protect domestic industry in an attempt to win political points with labour by propping up employment in dying industries. Truly this is a sad time for free-traders everywhere.

Applying Math to Romance

I’m taking a break from studying anatomy to present you with a trifecta of math papers to brighten up your day!

The first deals with “The Carol Syndrome”, a common experience to many single women. You’re smart, attractive, and available (or at least you think you are). So, why are so few men willing to approach you? José-Manuel Rey believes that it’s actually the rational thing for men to do. I’ll summarize here without going into the mathy details, but feel free to click through to the paper. Imagine the payoff as 1 if the woman accepts the man’s overtures and 0 if she rejects him. If the man chooses not to approach, he can do something else with his time and receive payoff somewhere between 0 and 1. The only reason he would have to approach is if he feels the probability of acceptance is greater than his payoff if he doesn’t accept (based on expected utility). Now, how would you calculate that probability? The article goes into depth, but in short, if you as a man are blind to how many competitors there are, it’s most likely that an attractive woman is not available. Even if she is, the number of competitors ensures that there her choosing your candidacy is slim. The only rational thing to do is to ignore her.

The second is about information overload, the Nash Equilibrium, and flirtatious men. This time, men are not behaving rationally by approaching multiple women in the course of an evening, as common sense would dictate. The ideal would be to have a strategy in place with optimal success given the available information. Then, over the course of the evening, only change strategies (hitting on someone else) if there is a shift in information (people pairing up, getting rejected). Even then, it is only wise to do so when the expected rewards are greater than the upheaval cost of changing strategies (women notice that you’re changing your target). Because of imperfect information, men in real life are quite skittish and, fearing the worst, are quite liable to change strategies more than they should.

The third article describes how to decide on an optimal strategy of mate selection with one’s given standards. This seems to be an extension of the stable marriage problem but takes into account reality (you can’t meet everyone) and incomplete information (how can you rank someone instantly?). The models of players in this game interact and again, the plight of imperfect information strikes. Given the situation, the article describes some of the expected outcomes and how each strategy will pan out given a healthy dose of reality. Sorry for giving a vague description, but you really have to click through to sample the delicious content and witty presentation.

News Roundup

So are geeks cool now?

With all the shoddy research going on, it’s no wonder something like this slipped through the cracks. Research on romance and attraction have been going on for some time, with wildly divergent but hilarious results. In the end, it seems that no one, not even women, know what they want.

The new Reich?

Germany’s new right front is shaping up to be a lot more appealing than the last, or maybe they’re just marketing it better. With classical liberal beliefs, new-found social tolerance, and multicultural booth babes, who can resist?

Roll over Da Vinci

The polymath has always been an aspiration of mine, in part because my childhood heroes were all men who aspired to at least mediocrity in multiple subjects.

A future I can get behind

NHS predicts that female docs will dominate the future landscape in the UK. I can’t wait for the next time I go in for a hernia exam. In all seriousness, this future might be distressing to some because females overwhelmingly prefer lifestyle specialties. Looks like there will be a shortage of surgeons in the future as well.

The trials women face every day

Deborah Tannen provides a fascinating perspective on women’s lives that most of us menfolk never have to experience. Get the inside scoop on the tough choices women have to make to avoid ridicule in society and see how men remain obliviously unaware of male privilege. It’s a humbling article to be sure, and one that remains relevant in spite of its publication date.

Players the San Jose Sharks like

There’s a consensus that the Sharks tend to draft Germans, goalies, and former Ottawa 67ers players. idunno723 takes the cake with the comment “when will the Sharks hit the jackpot with a German goaltender who plays on the Ottawa 67’s?” Even this summer’s blockbuster addition, Dany Heatley, was born in Germany.

Why the poor stay poor

Admittedly, this is a bit of a twist on the words of the group Innovations for Poverty Action. What the article suggests is that the rich have more of an incentive to save because they expect to be wealthy. I don’t buy it though, as I find the previous reasons for poverty rather convincing. In other words, I take issue with the author’s challenge of the premise that the poor are not naturally more impatient or inconsistent than the rich.

News Roundup

The best of the last week:

Sci-fi tearjerkers

My personal #1 would be Buffy’s “The Gift”, which makes the list at #5. Many of the other choices should be recognizable by avid sci-fi fans, and if not, should serve notice for you to start watching those. Revisiting this list at times brings back tragic memories of tears shed.

Reality district

On the same vein, District 9 is not just a successful indie sci-fi flick; it’s an allegory for the violence against immigrants in South Africa. It’s somewhat tragic as South Africa has had opportunities to reinvent itself as the Costa Rica of Africa, becoming a beacon of hope and example of successful governance in a continent of poverty and suffering. Corruption and tribal politics have ended Thabo Mbeki’s vision of an African Renaissance.

Dollhouse becomes reality

Sometimes, I don’t what is more strange, sci-fi or Japan. This post sheds light on what has been happening in Japan for some time, and it is not unexpected for what Wayne has termed a “repressed society”. Still, paying for companionship may soon become more popular throughout the world, starting with the US.

Karlovic outdoes himself

Moving on to sports now, Ivo Karlovic serves 78 aces in a 5 set match against Radek Stepanek in the Davis Cup, and loses. He served 55 against Lleyton Hewitt (my fav. tennis player) and lost. Sometimes, you just don’t get into a rhythm when you aren’t involved in sustained rallies. Regardless, serving 78 aces is an incredible accomplishment, almost ensuring that you never lose serve.

What’s in Intel’s closet?

I feel conflicted about this. On one hand, Intel is a leader in technology and is on the forefront of innovation in many areas (compilers, CPUs, GPUs, chipset, IEEE standards, and many others). The company is a heavy contributor to open-source initiatives and has one of the finest Linux graphics drivers excluding Poulsbo. However, I’ve always had this nagging suspicion in the back of my calvarium that they’ve been artificially excluding competition with AMD by paying off OEMs (Dell, HP, Lenovo, etc.) to not build AMD-based computers. Check out what the EU dug up on Intel and the phrases executives used when discussing their payoff.

RMS vs MDI

In the open-source world, Miguel de Icaza has often been castigated, but none more harshly than this remark by Richard Stallman, calling him a traitor to the movement. Most reactions have been critical of Stallman for his harsh language and attempts to purify the community with an absurd witch-hunt. I’ve met de Icaza in person in 2006 at Microsoft’s .NET conference when I worked as an intern there (the same summer that I met Bill Gates, Anders Heljsberg, and Jim Hugunin). He was amazingly focused, energetic, and passionate about certain technologies, not all of which I found to be technically sound. His actions and words were certainly colourful, and often talked trash about competing technologies (XGL vs AIGLX: “How do you pronounce AIGLX?”, .NET vs Java: “No one uses Java anymore.”). Some of that is certainly due to his involvement in a commercial company (Novell) that is carving out a niche marketplace by collaborating with and being friendly to proprietary companies. Despite those issues, I saw nothing disingenuous about his dedication to the open-source community. His brainchild, Mono, is an amazing technical piece of work that should be embraced by the community as bringing more languages and software to our existing pool.

Deficit doomsday prophet

Previously, I’ve expressed disappointment at Obama’s deficit-happy policies. I’m not alone in that worry. This article describes the activities of David Walker in educating the public about the dangers of high and sustained deficits. He wages a lonely crusade against politicians who kick problems down to future generations and against naive voters who demand more benefits and less taxes at the same time.

Banana republic watch

It’s quite the season for doom-and-gloom prophets to emerge from the woodworks. In terms of wealth, Europe has just surpassed North America in terms of assets under wealth management. Sure, it’s not a precise measurement, but it’s worrisome for some seeing that Europe already leads in other categories, such as leisure time, happiness, and HDI.

Speaking of measurements of development, Joseph Stiglitz takes issue with GDP as the preferred measurement of progress. This comes in the wake of (or maybe inspired) Sarkozy’s determined effort to find a new indicator of growth.

Health care addendum (and here)

Here are some articles following up on my earlier post on health care in the US. Greg Mankiw shares the economic basis behind rationing care with a realistic example of what might happen. He lays out rather clearly why we can’t have equal health care for everyone. The other article is by John Tierney and dispels myths of US health care being behind that of other nations in terms of outcomes.

The End of an Era

This sombre note marks the passing of several fixtures in my life, some important and some seemingly insignificant to those not privy to the inner workings of my mind.

On a macroscopic level, George W. Bush is no longer the president. President Obama has not been president for long, but he is already making some yearn for the “good old” days under Bush, when budget deficits were reasonable. Though, Bush’s deficits were seen as atrocities at the time, but they pale in comparison to what Obama has racked up in his first few months. Sure, Obama promised change, but being vague on that actual change being implemented allowed him to woo hesitant moderates. His policy proposals have been hastily sketched by insider, and he hasn’t demonstrated the courage to resolve important issues such as Guantanamo, Iraq, Afghanistan, Russia, Iran, North Korea, climate change, unemployment, financial reform, and health care. There are too many platitudes and too little action coming from the White House.

For me personally, it’s the end of my time at Berkeley and the start of graduate education, most likely in medical school. While some would be ecstatic at such a chance, it’s really more of the same bore that I endured in undergrad. I’ve always felt that I can make a much bigger difference and definitely be much happier in the real world rather than being stuck in academia.

Locally, Cody’s Books has ceased to exist. I know, it’s old news, but it reflects the growing demise of small businesses in the Berkeley area. It pains me each time I walk around on Solano, Telegraph, or Shattuck to see large franchises take over. Amanda’s restaurant is titled Feel Good because it sure does feel good to patronise a local establishment. Hopefully it can survive for a while and represent the true spirit of Berkeley’s iconoclasm.

The recession has also sadly brought an end to Elephant Pharmacy, a local fixture for six years. Although their prices were high, they offered excellent customer service and a friendly atmosphere.

Thoughts on Health Care Reform

With President Obama resetting the dialogue on health care reform with a major policy speech this Wednesday, I thought it would be a good time to share my thoughts on a matter very dear to my own heart (and career). For starters, I must express my disapproval at the way that Obama has gone about the policy revamp. Drawing upon Clinton’s mistakes in 1993, the White House approached Congress with a vague set of guidelines instead of slamming a grimoire of arcane policy down on the negotiation table. However, this was done to almost a fault. Even as congressional Democrats cried out for guidance, the White House let negotiations with Grassley and Enzi drag on, even when it became clear that the Gang of Six was just stalling. The gameplan for defeating reform is the same as it was in 1993; drag out discussion and bombard the public with twisted and unsavory aspects of hypotheticals. Obama’s approval ratings subsequently dropped to record lows for him and he is now facing rebellion from the left and the right. This has led to the upcoming policy address to rebut charges in hopes of swaying the public back.

Forewarning: The following essay is quite long, so if you’re looking for a summary, Greg Mankiw has an excellent article capturing the gist of my arguments.

The main problems with the current system of care are:

1) Health care is too costly (macro-scale). This is a loaded issue. Although the latest figures show that 17.6% of GDP is devoted to health care, this is not a problem in itself. Health care and education are the two only growing sectors in the current recession, so shouldn’t we continue to invest in it and become a global leader? After all, much of the medical research leading to better treatment and new drugs happens in the US. Others are worried that the country is becoming too angular by losing its diversity, such as its manufacturing base, IT industry, and finance sector. Again, this is not a serious issue. The theory of competitive advantages states that in the absence of protectionism, companies will shift production to countries that allow them to produce the best products (defined by quality and cost). If another country can make cars and push currency better than the US can, that’s not a problem. Workers who desire jobs in those fields can move to Japan, China, India, Brazil, and Switzerland. Of course, that’s a pipe dream in that there are structural barriers to free movement called immigration laws and cultural/linguistic issues. Also, individuals may develop attachment to a certain country that goes beyond practical considerations and into the realm of sentimentality.

If we change metrics and use per capita GDP spending on health care, the US does indeed rank #1. Here, I take issue with how the numbers are measured. Are we taking the 17.6% of GDP and dividing by population? In that case, we include things like advanced medical research that the US conducts that the rest of the world largely benefits from for free. A better measurement is the total cost of procedures divided by population.

Anyway, the topic of health spending being excessive reminds me of an excellent post by Tangoman on OTB. He claims that medicine is a superior good and if people are willing to spend more on it, why should we impede that? The post also claims that “[w]hen faced between measures to increase the quality of care, which increases costs, or reducing the quality of care, which decreases costs, we grumble but we invariably choose to bear the costs so that we can enjoy the quality of care.” I argue that this is not true for the following reasons regarding efficiency:

Consumers right now are not exposed to the cost of their operation. Therefore, we see cases in which the patient walks into a physician’s office and demands to have a knee MRI for an injury when a physical exam can be 95% correct at 1/50 the cost. The physician is not affected by the cost, so he or she is happy to oblige. This can be easily solved by making patients personally responsible for the costs of health care, with some degree of subsidization by governments. One idea I had is to set up health savings accounts, similar to retirement accounts in a way, into which individuals can siphon up to $10,000 of their pre-tax salary each year with matching government contributions. The individual will then be responsible for choosing providers and deciding treatment options. Naturally, hospitals and private practices will be forced to list their prices for each procedure, just as any other service provider currently does.

Another issue with respect to efficiency is colloquially referred to as “cover-your-ass medicine”. Physicians are eternally afraid of lawsuits for the most outrageous issues, so they order a battery of tests and images to rule out the 1/1000 chance of an obscure cancer. Not only does this take up time and money, but it can be harmful to the patient in some cases, such as repeated CT imaging. Tort reform is desperately needed to bring some sanity into malpractice, both by capping maximum awards and by ruling out frivolous lawsuits.

2) Reimbursement rates are not keeping up with costs. Speaking now from a health-care provider’s perspective, I’m constantly reminded that the hospital or practice loses money each time it treats a Medicare patient. This causes the problem of higher rates for private insurance and low physician morale. Low morale is probably the most underreported issue in health care, and it is serious in that it causes long lines and a deterioration in outcomes. There is a critical shortage of primary care physicians, and even many specialists are leaving the field for greener pastures. After all, if you can make it in medicine, you are probably smart enough to make it with more success and less work as a management consultant.

The solution to this is quite simple: move physicians to salary models. Granted, this is only possible for large firms that employ physicians, like HMOs and hospitals. Private practices, which I’m opposed to for efficiency’s sake, will merge or disband into regional care centers. Such a drastic move will only be possible if we consolidate all the options available for insurance. To this end, I have two ideas (independent of the other ideas I’ve presented):

The first is to move swiftly and destructively to a single-payer nationalized health system. This means UK-style NHS with the government owning hospitals and paying physicians salaries. If we take out insurance company profits, the government saves money; alternatively, we can provide more care that would otherwise be rejected by insurance companies. Some will worry that that this move will reduce physician salaries. I don’t think that it will happen because the amount of training required to be a qualified physician is so rigourous that it demands an appropriate degree of compensation to entice anyone to enter the field (hat tip: Greg Mankiw). Think of physician salaries as being indexed to the salaries of other professionals (I’m thinking investment bankers and corporate lawyers); if you lower the pay of one profession enough to overcome the hassle of and barriers intrinsic to switching to a comparable field, you’ll see a dramatic exodus of people willing to be in that field. The mistake that many people make is in comparing physician compensation in the US to that of other developed countries such as Australia, Canada, and the UK. Instead, we see that physician salaries in those countries are comparable to that of other professionals; the discrepancy is due to the average salary level of all indexed professions being lower). Another reason is that medical education is much cheaper outside the US, so practitioners have already been partially subsidized. So, if the US ever does try to reduce physician salaries, it had better do the same for bankers, lawyers, entrepreneurs, accountants, nurses, teachers, and professors. In fact, I would argue that the current shortage [especially] in [primary care] practitioners is partially due to low salaries. The other reason is that a shortage of medicals schools limit the number of people entering the profession (about a 50% acceptance rate) when the demand for the profession (due to high salary) is substantial.

Moving to a single-payer system does have the downside of overwhelming the current system’s ability to treat everyone. Massachusetts is now facing this problem after it implemented universal care (Mass-care). Naturally, if you can get unlimited care for free, wouldn’t you want to take advantage of it by upping the amount of care you receive as opposed to even the current situation of negligible deductibles? Introducing my earlier idea of health savings accounts and exposing patients to the cost of their care is an efficient form of rationing that minimizes pain. The word “rationing” is so loaded in today’s political world that it will instantly topple any politician who utters it. However, the reality is that rationing is a daily occurrence in any area where there is a shortage. More people demand access to a DMV service rep than is available at a given time (Have you seen the lines in California?), so we have a first-come-first-serve method of rationing. Britain offers a certain level of unlimited care for free but relies on individuals paying out-of-pocket or buying premium insurance from private companies for supplemental treatments. Of the two options, the first would be more egalitarian but the second would be more efficient and thus preferable, not to mention more easy to enforce (Steve Jobs transplant, anyone?).

If on the other hand the US wants to preserve elements of the current system, my advice would be to adopt a form of “controlled chaos”. This is a hodgepodge of conservative stepwise reforms nicely summarized by E.D. Kain and John Mackey. These include:

• Individual freedom to select insurance providers and have the premiums paid out of pocket or partially by the government (Medicare, Medicaid)
• Transition Medicare into a subsidy on individually chosen insurance instead of its own insurance program
• Deregulate and facilitate interstate competition among insurance providers
• Standardize billing forms and prohibit denial of reimbursement
• Tort reform
• Individual mandate

3) Medical outcomes are poor. Another common complaint targeted at the health care system is that the US does not have better outcomes (commonly measured in life expectancy and infant mortality) than other nations, despite spending more. The cost aspect I have addressed earlier. As for outcomes, I suspect that given the obesity epidemic, the current longevity estimates are outstanding. Compare the US with Japan, where obesity is much less prevalent, and you can explain much of the difference in life expectancy. Another aspect of life expectancy is societal contributions from things like poverty and crime, both of which put pressure on the medical system to treat a sicker population. On infant mortality, my understanding is that different methods are used to calculate the figure; the US attempts to save many babies with slim chances of survival while other countries do not even categorize them as births. Also, on some measurements, the US is far better at early detection of diseases such as prostate cancer and breast cancer.

4) Health care costs bankrupts the individual (micro-scale). This statement can be read in two ways. One is that the cost of health care for uninsured individuals paying out of pocket is more than they can reasonably afford. The other is that health care premiums are too costly for individuals to bear. The first matter definitely needs to be addressed, regardless of whether we move to a single-payer system or a more competitive private marketplace, individual bravado in “going it” on health care is foolhardy. I have no sympathy for those who decide not to procure insurance because they think they won’t get sick and then complain about high medical bills. It’s up to the individual in that case to live with the consequences.

Likewise, I have no sympathy for those who complain that premiums are unaffordable. Blue Cross’s individual plan is $451.75 a month, which becomes $5421 every year. Any individual earning less than $10,830 a year is in the poverty level and is eligible for Medicaid, so for the most part, everyone can afford to pay for medical insurance. Some choose not to because they feel that the risk doesn’t outweigh other expenses, such as food or entertainment. Therefore, the responsibility is again on the individual for not valuing health insurance enough among a myriad of possible purchases.