Archive for the ‘Economics’ Category

An evening with Steven Levitt, the “Freakonomics” guy

September 17, 2009 Comments off

Illinois State University had a talk with Steven Levitt this evening.

Levitt is a microeconomics guy, hugely popular and controversial.  The Wall Street Journal describes him as “the Indiana Jones of economics”.  It’s not necessarily a compliment: Indy’s a lousy scientist, and Levitt spent the first ten minutes trying to impress us with how bad he is at math. 

But he is a very funny guy.  His tales of crack-gang and prostitute research make for excellent stand-up comedy.  And you just had to be there for the part about the Chicago police.  Humor may be the best approach to questions of human microeconomics anyway.

While I’m laughing, though, I also feel uncomfortable that such comedy derives from crack dealers who have a 7% fatality rate per year, while making less than they would make at McDonalds.  Human life is capable of getting caught in tragedy with no apparent escape.

I also take issue with his apparent conviction that the his altruism experiments say anything about human nature.  Possibly they say something about college students’ willingness to donate to other college students who are no worse off than they are, and who surely know the IRB committee wouldn’t really let any participants get ripped off even if they did “steal” the other participants’ money.  We have, after all, heard of the infamous Stanford prison experiment, and of Stanley Milgram at Yale.

In the Q&A period, many people asked macroeconomic questions like “How likely is it that the recession is over?”  Did they just not understand that he doesn’t study questions like that?  His answer consisted of first disclaiming any authority to speak on such large-scale issues, and then disagreeing strongly with Ben Bernanke on the recession.

He also felt that “Cash for clunkers” was a stupid program and a waste of money, which is certainly an arguable point of view.

We’ve heard some really interesting people at ISU, some of them also very insightful. 

Categories: Economics, Politics

National health care insurance option NOW

June 8, 2009 Comments off

President Obama is pushing health care reform, because it’s gotten to the level of a major economic problem in addition to the humanitarian one it’s been all along.  I’ve had more exposure to our health care system lately than I ever thought possible, but thanks to excellent health insurance it isn’t likely to ruin me financially.  I’m in an extremely fortunate category in that respect. 

Many people have health insurance that isn’t worth a damn.  A recent Harvard study concluded that more than half of the bankruptcies in this country are caused by medical debt of people who have health insurance.  Seriously!  The big companies have entire divisions full of people in rooms without windows, pushing around data forms with your name on them, whose only job is to deny care wherever they can.

Another terrible scenario: no health insurance at all, which is truly walking a high wire without a net.  It’s easy to criticize the foolhardiness of the tightrope walker as long as you keep yourself from knowing how they were pushed out onto the wire in the first place.  Which leads to a very telling comment that MrsDoF received at her mammogram appointment today:

“I’m glad you’re here!” said the technician.  “I’ve been bored out of my tree.  People are losing their health insurance and canceling their mammograms.”

Stop right there: I don’t want to hear one damn word from anyone about “health care rationing” in those eeeevil Socialist countries with single-payer insurance.  I personally know plenty of people who are walking-wounded because they can’t afford health insurance that actually works. In previous years, I’ve been there myself.  If someone insists on living in a Ryandian bubble, that is their privilege but the rest of us would prefer that policies be informed by experimental results.  For example, if you need health care, what IS it really like in those other countries?  The Denialism blog has been doing a nifty series on it: What’s it like in Canada, the UK, and New Zealand?  Or France or GermanyAustralia or The Netherlands?

What does Obama’s plan look like? What should a national health care system look likeWhat’s the cause of excess cost in US health care? Are patients in universal health care countries less satisfied? 

Taken together these posts paint a picture of several ways it can be done, by pretty much any modern industrialized country except, apparently, ours.  They’re spending less per person than we do and getting better results.  Maybe it’s because people go to the doctor when they’re sick, instead of holding out until it becomes an emergency room visit.  Maybe it’s because companies in those countries aren’t crippled by health insurance costs; the society as a whole bears it more gracefully.  Maybe their medical communities are less concerned with defensive medicine and covering their asses.  But the point is, even if their systems aren’t perfect, they work, for a much wider swath of society.

It’s painfully clear to me that the Republicans are going to dig in their heels on health care reform, and preserve every inch of the status quo that they possibly can.  There’s no bipartisanship to it.  So we’re not going to get single-payer in this country, at least not as long as the really big money is against it.  But we need a government insurance option for the uninsured, and we need it NOW.  It’s been a darned sweet ride for the private health insurance companies, and that’ll continue on some level for sure.  But let’s try to get this one thing right, while the issue is on the table.


Categories: Economics, Politics

Struggling to survive

August 14, 2008 4 comments

BBC Photographer Jake Price spent a day at the tracks in Lecheria, Mexico, learning about the lives of those passing through.  He produced an excellent slideshow with audio narration.  Something’s got to be done about conditions in Mexico, but I’m damned if I know what.

Before anyone thinks getting tougher on illegals will stop the inflow to our country, consider that even China has an illegal immigration problem, from North Korea. They’re even building a wall to try and stop it. 

Categories: Economics, Politics

Fiscal Conservative

August 8, 2008 10 comments

When you invest in America, you get a return.

By Steve Greenberg, from Stranger Fruit, who got it from Crooks And Liars.

Categories: Economics, Politics

Fiscal responsibility

July 6, 2008 1 comment

It always fascinates me to see “Borrow and spend” Republicans try to say this is the Democrats’ fault.  That big dip in the middle there?  It’s the effect of Bill Clinton’s 63 spending vetoes and his advocacy for “PayGo”.  Anyone remember “PayGo” and which administration allowed it to lapse?

The worst part of this is that paying for a war with borrowed money makes it seem unreal.  If we had to pay for wars as we go, it would have a much more immediate effect than a draft.  Or maybe the worst part isn’t the war.  Maybe it’s that massive debt creates the illusion of prosperity along with the certainty of recession.  I dunno, there’s lots of downsides to national debt – which is the biggest?

(Hat tip to Ed at Dispatches From The Culture Wars)

Categories: Economics, Politics

A modest proposal to control Civic Boosterism

April 20, 2008 12 comments

Civic Boosterism (CB) is a pernicious disease that afflicts city councils and mayors in mid-sized cities.  Call it “Chicago Envy” if you like.  In its early stages it’s fairly harmless or even beneficial; hanging potted plants from signposts downtown, commissioning artists to do murals on the side of buildings, and promoting rehabilitation of 1800’s buildings.

Late-stage CB is another matter.  The victims begin to suffer delusions of grandeur and they hear voices… of highly-paid consultants.  “Growth!” whispers the consultant.  “If you’re not growing, you’re dying!”  (Precisely the philosophy of a cancer cell, as Edward Abbey famously observed.)

“Oh no”, thinks the council person or mayor.  “I don’t want to die!  But the consultant says; “For just a medium-sized wad of taxpayer’s money, I can save you.  I can tell you how to grow…”

Our own city council of Normal, IL fell victim to this disorder some years ago when it decided to provide tax-relief subsidy for an “Outlet Mall” to the West of town.  It was going to be a tourist destination!  It was going to increase the tax base!  We should have done this years ago!

It’s almost completely empty, a vast white elephant wrapped around a gigantic empty parking lot in what used to be a productive corn field.  It reminds me of the “Monorail!” episode of The Simpsons

But apparently CB suppresses the learning centers of the brain.  Our twin city of Bloomington, IL decided they’d give end-stage CB a try and build a $30m arena.  Their consultants said it would revitalize the downtown!  It would turn $2m profit a year right from the start!  Why didn’t we do this years ago!?

Never mind that the arena in nearby Peoria took 20 years to turn its first profit, and as soon as it did the city sunk another $55m into it.

Bloomington voters smelled a rat and forced a referendum, in which they answered with a resounding “NO”.  But the mayor was determined to leave a legacy and the thing was built anyway, right downtown.

Today’s headline in the print edition of the Bloomington Pantagraph reads: Is it worth the price of admission? Long-term profitability of arena still unclear.  The headline pretty much sums up the article that follows.  Of course the profitability of the arena was never unclear to the voters.

OK, so here’s my modest proposal:  big-ticket civic projects must include punishment clauses for the consultants and the city council and mayor who voted for them if it doesn’t turn out like they said.  And by “punishment” I don’t mean censure.  I mean the consultant is publically flogged, and the local pols who voted for it must agree to march naked in a parade in which townspeople throw eggs and tomatos at them.

Hey, if you’re so damn sure this will work…

Of course, my own town of Normal is currently building a hotel and convention center right downtown.  The cost is murky – what’s a subsidy, what’s just urban repair, but it’s in the tens of millions of dollars.  That’s the next chapter in our story.

Categories: Economics, Politics

Oh goodie.  $800 will fix everything.

January 19, 2008 7 comments

BBC reports Bush calls for economy kick-start, a bold and insightful move of which the centerpiece is to send us all checks for $800.  In biological terms, this is like a line of cocaine.  Yes, it will make the patient feel great for a while but it shouldn’t be confused with health.

President Bush said the package should be “a shot in the arm to keep a fundamentally strong economy healthy”.

Oh wait, I guess he does confuse it with health.  He should have said “a snort in the nostrils”. 

In economic terms this is analogous to telling every American “We have raised the credit limit on your Visa card by $800.”  Why?  Because thanks to the Republicans we are in deficit spending, and every one of those eight hundred dollars is borrowed money that we will have to pay back with compound interest.

Our economy has to last a long time.  That takes healthy, educated people, living in a healthy environment, safe streets, good transportation, support for basic research, stable relationships with trading partners, less public debt, and a diverse energy infrastructure.  None of those things happen overnight.  No amount of economic hocus-pocus will make them happen – they’re maintenance issues.  But how do you run a campaign on “No quick fix”?

Categories: Economics, Politics

Economic consequences of the Bush Administration

December 17, 2007 8 comments

Shows how much I know… when I saw this article was written by Joseph Stiglitz, I thought of the American Place photographer and was puzzled by the fact that he’s no longer among the living.  But when I looked him up it turned out it was just some other Joseph Stiglitz, a Nobel-Prize winning economist at Columbia.  Well that’s even better, I guess.

The economic consequences of the Bush administration.

Short version: he’s not a fan.

Categories: Economics, Politics

What Capitalism and Communism have in common

October 15, 2007 8 comments

In What they’re not telling us, Rachel at Mahablog raises the possibility that modern capitalism is making a similar fundamental mistake to that of communism; lousy incentive.

While addressing our declining productivity, she asks, “But at least we’re doing better than lazy ol’ socialist Europe, right?…”

Categories: Economics, Politics

Look out, China!

March 14, 2007 3 comments

This is great stuff.  The cover of the little red book held aloft by the heroic worker reads “Property Deed”.

Living up to one’s name poses something of a problem for the Chinese Communist Party, which dictates the laws the NPC will pass, and whose name in Chinese literally means “the public-property party”.

To such a party it must be an ideological embarrassment that China has such a large and flourishing private sector, accounting for some two-thirds of GDP. So one law due to receive the NPC’s rubber stamp this month, giving individuals the same legal protection for their property as the state, has proved unusually contentious. It was to be passed a year ago, but was delayed after howls of protest from leftists, who see it as among the final of many sell-outs of the ideas of Marx, Lenin and Mao Zedong, to which the party pretends fealty.

The party’s decision to enact the law in spite of that resistance is a great symbolic victory for economic reform and the rule of law. Clearer, enforceable property rights are essential if China’s fantastic 30-year boom is to continue and if the tensions it has generated are to be managed without widespread violence. (Emphasis mine)

Take your time, China.  Really I don’t care if it takes 100 years for a full turnaround if it can be done nonviolently, and China is on track to do it a lot faster than that.  This is a pretty good example that there are better ways to overcome destructive ideologies.  It is exposure to market economies that has undermined communism more than any military threat ever could have.  For an example closer to home, if we’d been trading with Cuba all these years, communism would long since have eroded away to “in-name-only” there.  (Plus, I could get really great cigars)

Categories: Economics, Politics