Category Archives: Economics

Obamacare: kill it or fix it?

Bernard,

I’ve heard Republican candidates for president say again and again, Obamacare is a travesty and must be repealed immediately after a Republican president takes office.

I’ve also heard Obama administration staff say, no, the Affordable Care Act (ACA) is working, but we can’t solve everything in only three years, and we have to forge on with ACA as our best hope for containing health care costs while improving quality of care.

So who’s right?

This New York Times article brings the question into focus, at least for me. Like No Child Left Behind (NCLB), Boehner and Bush II’s creation 15 years ago, ACA was not engineered properly to take care of boundary conditions. Dartmouth has cut Medicare costs and now coordinates care more efficiently, but Dartmouth hasn’t yet met the Act’s rigid and punitive cost-control targets – therefore Dartmouth has to pay penalties, more than wiping out savings, and preventing them from going on with ACA. Similarly, my wife’s school district was penalized several years ago under NCLB because district standardized test outcomes hadn’t improved by the mandated annual percentages – but the district results were and are near the top in the nation, so there was basically no room to improve! A badly engineered law overlooks edge cases and fails unnecessarily. Just like badly engineered software.

So, should we give up on ACA? Or should we repair and tune ACA, learning from in-the-field outcomes, fostering maturity, gradually realizing its promise?

Given our massive investment in ACA, seems like we should fix it and move on. Same for NCLB.

But gridlock in our federal government will likely strangle ACA slowly, through inaction, leaving us with no plan at all to control healthcare costs while improving care levels. Thus we lay waste to our own nest, our own selves, our own children.  What an awful waste.

Wayne

 

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The Economic Conspiracy

Bernard, You mentioned Douthat’s Times op-ed on the just-ended Trump RNC convention. Douthat writes, “…the perpetual Beltway push for increased immigration … the entire elite vision of an increasingly borderless globe … 15 years of economic disappointment.” I see these matters as politicians paving the way for corporations to increase stockholder profits by offshoring production and parking profits overseas, untaxed. The corporations (who lately have become “people”) and their stockholders respond by funding the politicians in various ways, for example paying politicians large sums just to speak to employees and stockholders. Trump and Bernie are right that the system is rigged, and that Hillary is as corrupt in this sense as anyone could be. Or is it really corruption? I believe the Clinton undoing of Glass-Steagall and the conservative Supreme Court’s decision in Citizens United are two signal events involving BOTH parties equally in the conspiracy. These acts, along with trade agreements, made it perfectly legal to take jobs and profits offshore, to globalize economically. Unfortunately we haven’t correspondingly globalized politically, we (the world) haven’t established one set of international laws for how commerce can move money among sovereign nations to avoid taxes and to arbitrage currency differences. The “economic disappointment” of the quote above applies only to the middle and lower classes, not to the elite, who have done extraordinarily well in the past 15 years, even the past 30 or so years. Do I make sense? I’m certainly no economist… Wayne

Wayne,

Not being experts has not stopped us from expressing our opinions in the past. Indeed, as far as opinions go, ours are at least as good as the next guys’. Continue reading

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More remarks on Brexit

Wayne,

Many knowledgeable experts, academics, journalists, and others, have commented about the causes and consequences of the British vote to leave the European Union. As in my previous essay on the subject, I confess that I am merely someone oddly wearing his amateur economist and his amateur historian hat, one on top of the other. Possessing only these hats rather than expert knowledge has not stopped me from expressing my opinions before, and it does not today.

While each expert generally comments upon the causes or effects in his or her area of expertise, I have been gratified to see that some mentioned what I said was the overarching reason for the decades long project of European integration and union: the reduction in the centuries of nationalist and racist or ethnic, conflicts that have blighted Europe’s, and Western civilization’s, history and even its claim to be civilized. During the twentieth century, Europe visited upon itself, and upon the entire world, two of the worst catastrophes in all of human history. These calamities destroyed a hundred million people: tens of millions of combatants, tens of millions of civilians including millions of victims of outright genocide. Continue reading

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Brexit

Wayne,

The blogosphere and the media are filled with commentary and reporting about the Brexit vote. There is a lot commentary by economists, political science people, diplomats, and the British. While I don’t have much to add to the remarks of these experts and locals about the immediate effects, I have some thoughts, wearing my amateur-student-of-history hat.

That hat’s brim shades my eyes and allows me to see into the future and the past. It is my view, by the way, that hindsight is not 20/20. Looking into and understanding the past is almost, but not quite, as difficult as seeing the future.

A long view of European history, I think, shows that Europeans have trouble getting along with each other. From the distant past until World War I, dynastic squabbles provided plenty of excuses for soldiers to march about, stabbing, bludgeoning, blowing up and shooting one another and bystanders too. Consider, just to pick one example among many: The War of Spanish Succession, a major international conflict that lasted from 1701 to 1714. The belligerents included, on one side, Spaniards loyal to Charles of Aragon, the Holy Roman Empire including Austria, Prussia, and Hanover, England and Scotland, the Dutch Republic, the Duchy of Savoy, and the Kingdom of Portugal, and on the other side, Spaniards loyal to Philip of Castile, the Kingdom of Naples, the Kingdom of Sicily, France, and Bavaria. I’ll go out on a limb to suggest that few residents in Hanover had any issues with the residents of Naples, or even felt threatened by them. They may not have even had a clear idea where the south of Italy might be. Yet the rulers of these monarchies (except for the Dutch) brought the European continent to war to decide who would rule Spain.

As these dynastic struggles tended to recede, as absolute monarchy gradually passed from the scene and nationalism rose as a powerful European force, wars’ causes and purposes changed to. The vast struggles of the Napoleonic era, fought between immense armies of tens of thousands and even hundreds of thousands of men, had to do with French nationalism mixed with typical dynastic struggles. I might say that World War I was the last major fight that involved powerful or absolute monarchs: Tsar Nicholas II, Kaiser Wilhelm II, Emperor Franz-Joseph, and Mehmed V. The French and British at that time were a republic and a constitutional parliamentary monarchy. That terrible war ended with the destruction of the Russian, German, Austro-Hungarian, and Ottoman Empires, putting an end to the major monarchies and to their dynastic struggles. Various governments, many of them democratic, replaced them as an outcome of the Versailles Treaty and other treaties, but over the next two decades most of them fell into authoritarianism or worse.

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Troubles in virtual currencies = troubles producing error-free code

Wayne,

I read this alarming account, A Hacking of More Than $50 Million Dashes Hopes in the World of Virtual Currency, in the New York Times, published on June 17, 2016. Here are three excerpts from the longer article that is well worth reading:

A hacker on Friday siphoned more than $50 million of digital money away from an experimental virtual currency project that had been billed as the most successful crowdfunding venture ever — taking with him not just a third of the venture’s money but also the hopes and dreams of thousands of participants who wanted to prove the safety and security of digital currency. …

But just before the project stopped raising money in late May, computer scientists pointed out several vulnerabilities in its underlying code — effectively warning that what happened to the experimental consortium would be possible or even likely. 

The specific mechanism the hackers used is known as a recursive call vulnerability, — essentially a malicious transaction that moves money away from the D.A.O. into a side fund in an endlessly repeating loop.

I followed a link in the New York Times account, Flaws in Venture Fund Based On Virtual Money, which is also worth reading.

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Filed under Economics, Provably correct code, Software

Whoa! What’s All That Turmoil in China Doing to My Investments?

Wayne,

One of my friends noticed that the recent stock market turmoil in China had apparently caused her retirement investments to decline in value, and she wondered what she ought to do to protect her assets. Here’s my answer to her.

In capitalism, the value of assets (or anything else for that matter) is a psychological property. It exists in people’s minds and is not intrinsic to the assets themselves. You and your Dad noted the recent turmoil in Chinese stock markets that appeared to be influencing US, European, and Japanese markets and were concerned about the effects of this on your investments. Continue reading

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We Are Chimps

Wayne,

As you say, we are hairless chimps, and this fact, our common ancestry with chimps, bonobos, and gorillas, has a lot to do with the core of our behavior and feelings. You are impressed with the power of this idea to explain our aggression and violence.

See this, however. I’m an East-African Plains-Ape Cooperator… The link is to a blog post by U C Berkeley Economics Prof. Brad DeLong. Among other things, he is an economic historian, and economists, indeed thinkers since before economics existed such as Hobbes, Locke, and Rousseau, have wondered where our social arrangements come from. Prof. DeLong, in this link, is discussing a new book, The Economics of Star Trek, with its author. He has a series of these video interviews with him. The title of this particular post points out another factor of today’s human behavior that, likely, arises in the distant past of our species.

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