Basic Logic Fail

Okay, let's review.

This guy, Dr. D.M. Berwick, was appointed to head the US gov't office of Medicaid/Medicare.

He had a history of saying that we needed a health care system more like the Brit system, run by the government, and with rationing decisions made by bureaucrats. (Note: At KPC we understand health care has to be rationed. I just don't want it done by some person who got fired at the DMV).

Now, he says 30% of the US health care expenditures on Medicare/aid are pure waste, and doctors all know it.

He continues (I quote the NYTimes reporter's set-up)

If his estimate is right, Medicare and Medicaid could save $150 billion to $250 billion a year by eliminating waste, which he defines as “activities that don’t have any value.”

Dr. Berwick sounded like a professor of political science or a visitor from a foreign country when he recounted his efforts to fathom Washington’s ways.

“Government is more complex than I had realized,” he said in an understatement. “Government decisions result from the interactions of many internal stakeholders — different agencies and parts of government that, in many cases, have their own world views.”

Um.... so, I have a question. This guy was a big fan of government-run health care. He took a government job, and now he thinks 30% of the money we spend is wasted. He thinks government is "more complex" than he realized, and...well, the article continues:

Before coming here, Dr. Berwick was president of the Institute for Healthcare Improvement, a nonprofit group in Cambridge, Mass., that trains medical professionals. “I was used to moving very, very fast,” he said. “We could decide on Monday to start a program and have it in existence on Wednesday.”

As a federal official, Dr. Berwick was sometimes impatient with colleagues in the government and with the health care industry.

So, in this gentleman's OWN EXPERIENCE, private nonprofits are relatively fast and much more efficient and government sucks. Medicare/aid in particular is a disaster, as he knows from trying to fix it.

His solution: Let's expand Medicare until it's the entire health care system! He continues to love Obama-care like it's a religious pilgrimage.

Asked why Americans were still deeply divided over the new health care law, signed 20 months ago, Dr. Berwick said: “It’s a complex, complicated law. To explain it takes a while. To understand it takes an investment that I’m not sure the man or woman in the street wants to make or ought to make.”

But, Dr. Berwick said, just as Americans supported manned missions to the moon without knowing the details of rocket science, they ought to support the new law because of its ultimate destination.

A religious belief is one that you cling to in spite of all empirical evidence to the contrary. This guy saw, with his own expert eyes, the gigantic waste of time and money that is government-run, government-provided health care. He gave specifics, showed that he is actually a smart and honest guy.

And then reverts to his religious belief: worship the state, and the state will do the right thing. These little glitches....just aberrations. Eventually, he says:

“We are a nation headed for justice, for fairness and justice in access to care,” Dr. Berwick said. “We are a nation headed for much more healing and much safer care. There is a moon shot here. But somehow we have not put together that story in a way that’s compelling.”

No, doctor, there is a big difference between going to moon, and going to justice. When you get to the moon, you can come back. When you get to "justice," which you appear to be believe to be the absence of any private enterprise, you turn into Cuba. There is no coming back from that.

Phone call for Dr. Bernanke

In the 1970s, in response to a real shock (the oil crisis), the Fed poured money into the economy.

What did we get? Stagflation. No growth and high inflation.

Paul Volcker (with support from President Reagan and the newly Republican controlled Senate) dramatically reduced money growth, ratcheting interest rates skyward, and creating a sharp recession.

But inflation fell and has stayed under control ever since.

Now, in response to a real shock, the Fed has been pouring money into the economy and we are not getting any growth. At least this time we are not getting inflation either.

What is Christina Romer's takeaway from the historical episode I describe above? That Bernanke needs to "steal a page from the Volcker playbook" and ....... pour even more money into the economy!

WTF??

People, I am not making this up.

Look, the Fed did a great job as lender of last resort in the 2008 crisis. Without their actions, I believe things would have been very much worse.

But beyond the financial panic, we have had a very adverse real shock to the economy (housing price collapse). People are not as wealthy as they thought they were by a long shot. Households are trying to de-leverage and rebuild their balance sheets. The Federal government is making it hard for them to do that by taking on ever more debt on their behalf. This isn't a nominal shock, it's a real shock.

We have no evidence that monetary policy can or should be used to attempt to offset real shocks. The Fed absolutely did their job in the crisis. They should stand ready to guard against potential deflation. But the Fed simply does not have a magic wand to "heal the economy". It's not a patient, Bernanke is not a doctor, and monetary expansion is not medicine.

Nero and Caligula are a' feudin'!

Well, OK, it's actually Sarkozy and Berlusconi, but that's more than close enough. Sarky is really worked up about the ECB, which is good, except what he's worked up about is that there might be two Italians and (gasp) no Frenchmen on its board come November.

Really.

Yeah, Nicky, that's really the problem that you should be focussed on. Well done. At least you are proving that you play a mean fiddle.

At the latest rescue summit, these two giants of statecraft managed to feud over the future of one, Lorenzo Bini Smagi (aka the Lusitania?):

Sarkozy has made clear that France wouldn't accept a situation under which Italy would have two of its nationals on the board and France none, when Frenchman Jean-Claude Trichet is replaced at the helm of the Frankfurt-based bank by Draghi in November.

After repeating in piqued diplomatic language Friday that it expected Bini to quit the ECB board to honor a commitment he made this summer to step down by year-end and clear the way for a French official to join the ECB board, the French government appeared to be losing its patience.

But Berlusconi argued it was none of its responsibility. "We offered him prestigious posts, but Bini Smaghi declined them all," Berlusconi said, adding that he bore no responsibility in the spat. "At a certain point, I asked [ Sarkozy]: What should I do? Kill him?"

The Grand Game: Farmer Bob Edition

In the contest for worst analogy ever, "The economy is like a farm" has GOT to be a serious contender. In today's NY Times, Bob Shiller trots it out for a spin.

Let's start at the beginning. I grew up in a rural setting and have worked on farms. Farmers don't wait until winter to fix their fences. If there is a break in the fence and the cows are loose, you fix the damn fence then and there. Same with your barn. If there's a hole in the barn roof in June, you don't wait until January to patch it.

Then there's what I think is the weirdest part of the analogy:

The farm needn’t go into debt to do this. All able-bodied people on the farm are expected to contribute their labor, an imposition we can view as an informal tax.

In my experience, farmers laid off many of their seasonal workers after the harvest. Those that were kept on, to deal with animals or to do projects were paid hourly wages. They weren't "expected to contribute their labor".

The farmer had to save part of the farm's income to pay for what workers were needed in periods when the farm wasn't making a lot of income.

(A lot of the kids I knew that lived on farms were expected to make this "contribution" year round and they really really hated it. Winter was their favorite time of year because they didn't have to work nearly as hard)

I acknowledge that in some areas of the country and for some types of farms, business is seasonal. However, farmers mostly deal with that seasonality by laying off workers!

P.S.

The funniest thing of all about this is probably the title of the HTML link for the article which I reproduce here for your enjoyment (I am NOT making this up):

http://www.nytimes.com/2011/10/16/business/a-proven-principle-behind-obamas-jobs-plan.html

Gumby Fail

You have likely seen the Gumby Fail robbery. The news story.

But there is more. The cops said, "You are Gumby, dammit!" and arrested him.

Umm, your pessimistic forecast is way too optomistic

and just plain wrong!

There's an awesome AP article this morning with the headline "Social Security Fund Now Seen To Be Empty by 2037"

People, I've got news for the AP: That sumbich is empty now!

Ahorita mismo!

Every penny of payroll tax revenue is spent to help cover current general expenditures. We can't even really say which general expenditures because money is fungible.

Payroll tax revenue is not being saved or invested.

If payroll tax revenue was really in a "lockbox", then it wouldn't count in figuring out the current deficit would it? Well it certainly is counted as general revenue when the government calculates its deficit.

Your payroll taxes do NOT fund your personal social security retirement benefits. Future social security benefits are unfunded liabilities of the federal government, payable out of future tax revenues.

when people were shorter and lived by the water

I was browsing through Econlog this morning and found just the most amazing bit of analysis ever. I just had to share it with you all:


I focus a lot of my historical reading on the first World War and on the 1930s. I think that people were really stupid back then. I take the Flynn Effect seriously, which suggests that the average IQ several generations back was what today would be considered to be mentally retarded. In my view, this helps to explain how cheerfully the nations went to war in1914. Yes, the war turned out to be worse than what they expected. But how were their expectations not influenced by the Civil War or the Franco-Prussian war?

--Arnold Kling

OMFG, people. World War I happened because world leaders 100 years or so ago were "mentally retarded"? Really?

REALLY?????

So going back another 50 years or so, Abraham Lincoln must have been the intellectual equivalent of a spider monkey?

Go another 100 years back from that. The founding fathers were the mental equivalents of dung beatles?

Adam Smith had an IQ of 13?

Blogger, please.

Thomas Friedman finds a friend in politics

I can only hope PA governor Ed Rendell was trying to be funny when he had the following reaction to the postponement of an Eagles game (but I fear that he was serious):

"We've become a nation of wusses. The Chinese are kicking our butt in everything. If this was in China do you think the Chinese would have called off the game? People would have been marching down to the stadium, they would have walked and they would have been doing calculus on the way down."

Holy Moly!

I will say this though. If the Communist party wanted the game to go on, it would go on and the people would walk there if ordered to and would do calculus, or even the hokey pokey on the way if ordered to.

KPC is officially "short" on Ed Rendell AND China for 2011.

What is going on in North Carolina?

The locals here in Angusland are buzzing over how Portfolio.com has ranked OKC as the 7th best area in some index of income growth out of 100 ranked areas.

Me being me, I was immediately attracted to the bottom 10.

Grand Rapids MI, Phoenix AZ, Toledo OH, Detroit MI, Riverside CA, sure they make sense.

But then there's Raleigh, Greensboro, & Charlotte. Three NC cities in the bottom 10?

Ouch.

Y'all really should have elected Mungowitz!

Flight of the Bumblebee

DC police cordoned off a street so that "Transformers 3" could be filmed. LOTS of cash paid for this service.

But then DC police let a DC police car come through the set, during filming. And the cop car causes Bumblebee to have an accident.

They cover the Bumblebee to keep people from taking pix. But, too late.

Thank goodness the DC police are around to protect us all. Idiots.

(Nod to Anonyman)

Dems punt on tax vote

Maybe it's just me, but these guys (and gals) are really bad at their jobs. "Middle-class tax relief" (which in bizarre Dem-speak means continuation of the status quo for all but the top earners) was supposed to be a campaign plus for them, right? The president is still a Dem, right? Both houses are Dem right? Inaction raises taxes on everyone and they get to write the bill, so they have the Repubs by the proverbial S&Cs, right?

And they punt?

The only explanation I can think of is that the Dem leadership absolutely refuses to not raise taxes on the rich and they don't think they can get their rank and file to go for that before the election.

I guess they think that a bunch of lame ducks will be more likely to do the leaders that cost them their jobs one more favor in December before heading back home for good?

hot links

1. Pot, meet kettle. Mexico is building a fence to keep Guatemalans out! Greg Weeks knocks this one out of the park.

2. Where was she when she needed her? Megan McArdle counsels the NY times lady who lost her job.

3. I think I forgot to mention this earlier, but Kevin Durant had a pretty good summer.

The (political) culture that is Haiti

"Haiti held its second presidential debate ever Saturday, a sparsely attended event that was short on detailed responses from the candidates and disrupted by multiple power blackouts.

During the two-hour televised debate held at a restaurant, only four of 19 candidates seeking to become president in the Nov. 28 election faced off in front of about 40 audience members."

The full story is here.

Writing

My piece on writing, in the Chronicle of Higher Ed. I really would say that writing often is the key difference between success and failure in Poli Sci.

Unfortunately in Econ you also have to be smart. So I can't help there.

Quality of Spam is Declining

Just got this email:

from: Pardo, Natalia
to: "info@helena.org"

date: Sun, Aug 29, 2010 at 3:01 PM
subject: Hello {Contact me via email:mrs-helena011@hotmail.com}‏‏‏‏‏‏‏‏‏‏‏‏‏‏‏
mailed-bymassey.ac.nz

I am Helena Ethan, a Christian. I have picked you for an inheritance of $8.4 million Dollar's. Please contact me for more details via this email: mrs-helena011@hotmail.com

These spammers today, I tell you. How lazy can you get? No Nigerian colonels, no secret lottery, nothing. And this bozo is from New Zealand. They speak English there (sort of). "$8.4 million Dollar's"?

I'll have what he's having

Man, NBA executives have got wicked good drugs. How else can one explain that Rudy F. Gay getting a max contract from Memphis wasn't even close to the worst deal done at the beginning of free agency.

Don't get me wrong, it's pretty bad. Rudy went for 17 points and 5 rebounds per game with more turnovers than assists last year and he's a max guy?

Really?

But you have to consider that the T-Wolves are signing Darko Milicic for $20 million and the Bucks are going to go for Drew "8 teams in 8 years" Gooden at $32 million.

Wow.

I know that's chump change compared to what will get thrown at LeBron et al, but you have to remember that Darko and Drew are completely and totally worthless! Seriously, they should be playing in a rec league somewhere.

As bad as those deals are though, they pale in comparison to the worst deal done so far, which is Atlanta signing Joe Johnson for 6 years at $119 million.

People, Joe Johnson is a ball-pounding machine who makes his teammates worse, not better! Plus he'll be 29 when next season starts. So the Hawks will be paying him over 20 million a year when he's 34 and 35 (i.e. unable to do even the crappy stuff he does now).

So far, Joe's career averages are 17 points, 4 boards and 4 assists per game.

This is a signing worthy of the Knicks. In fact, if they give a 5 year guaranteed max contract to Amar'e Stoudemire, that will be ultra dumb, but nowhere near as bad a move as what Atlanta has just done.

So whatever those NBA suits in Atlanta, Milwaukee, Minnesota and NYC are smoking, sign me up!

And thank goodness for Sam Presti.

Self-fulfilling prophecies or How to make it in America

"THIBODAUX, La. – A man who told police that God told him to walk the streets naked to save his soul has been arrested. Thibodaux police responded to an obscenity complaint around 2 a.m. Thursday and found Shafiq Mohamed walking nude down the street. When approached, Mohamed reportedly told officers that "America raped him" and added God told him to walk the streets naked to save his soul.

Mohamed was taken into custody and charged with obscenity. He was booked into the Lafourche Parish Detention Center where he awaited bail.

It was not immediately known whether Mohamed has an attorney."

Link is here. I believe I'll just let this one speak for its ownself.

The culture that is Oklahoma

People, you just can't make stuff like this up! enjoy.

No Way to Go

Man electrocuted urinating on live 2400V power line.

That's "no way to go."

Owie owie owie.

(Nod to Angry Alex)

Puzzlers

How in the world can it be that Canadians can't make ice??

I know economists can't make accurate predictions, but this is more basic than that. It's like a crew of economists not being able to draw and correctly label a supply and demand diagram.

Oh.Canada