Monday, August 31, 2009

if you were up in the mountains all weekend and need to catch up....

September is around the corner--like less than 24hrs--so things are likely to heat up on the health care front.  Two of the gang of six have started publicly talking about the death panels so any health care reform activists who think the finance committee is going to make a deal on this issue needs to get back into the real world.
Using reconciliation might have some interesting unexpecteds for liberals, I'm fuzzy on the details but Josh Marshall at TPM mentioned it recently:
Next, it's not a point that has been discussed much, but there are some extra complications or ironies involved if you go the budget reconciliation route. We're going to be discussing this in more detail later. But there are some technical particulars about the reconciliation process (particularly tied to the so-called Byrd Rule) which come into play. Specifically, to be allowed under budget reconciliation, bills need to meet certain standards about their effect on the federal budget. And because of that, it may be that to get a health care reform bill through reconciliation it would need to have a substantially more progressive budget option, because of its effect on the budget. I know that's a lot of gobbledygook to take in. But the upshot is that the decision to go through reconciliation may not just be a matter of how tough the Dems want to get. It may force them to beef up the public option, which in turn could affect the number of Democratic votes availability.

On the Republican gun crazy/flat earth society front we've got prayers that Obama will die
Dean Baker looks into the Japanese population crisis and laughs:
There is no evidence of that problem at present, when the unemployment is a historically high (for Japan) unemployment rate of 5.7 percent.

As a more general issue, a relative decline in the size of the labor force would simply mean that the least productive jobs go unfilled. This could mean, for example, that jobs held by the pushers who shove people into Tokyo's overcrowded subways may go unfilled. There may be fewer people working as parking lot attendants, custodians in office buildings and convenience store clerks. As an offset, this densely populated country, with very high land prices, will become less densely populated and have lower land prices. It will also be much easier for Japan to reduce its greenhouse gas emissions and other pollutants. It is difficult to see where the crisis lies.

Slates Glen Greenwald upon hearing that first daughter Jenna Hager is going to be a reporter for the today show, asks what happen to American meritocracy in the media? "We're obviously hungry to live with royal and aristocratic families so we should really just go ahead and formally declare it." 
One of the best recent health care articles has to be 5 Myths About Health Care Around the World as there is a whole lot of misinformation running around about other health care systems.
Brad Delong digs into his achieve to bring us a debate between Agathon and Glaukon on social welfare functions of a market system:

Agathon: "As I was saying, the market system chooses an allocation. That allocation can only be justified under the assumption that moves along the Pareto frontier in every direction--moves that transfer wealth from one member of society to another--are of no benefit to social welfare, while moves toward the Pareto frontier do benefit social welfare. If we restrict ourselves to social welfare functions that are weighted sums of individual utilities, that means that the market system's social welfare function gives each individual a weight inversely proportional to his or her marginal utility of wealth."

Glaukon: "Didn't somebody say about society that there was no such..."

Agathon: "Hush! If you want to quote Margaret Thatcher, you must introduce her as a speaking character in this dialogue and grant her some of her time..."

Glaukon: "I? You're the authorial stand-in in this dialogue, not me..."

Agathon: "That means that the market system, in weighting utilities and adding them up, gives you a much lower utility than it gives Richard Cheney. In fact, if marginal utility of wealth is inversely proportional to the square of lifetime wealth, the market system gives Richard Cheney about 400 times as big a weight as it gives you."

Glaukon: "That's sick."

Agathon: "And it gives Bill Gates a weight about 400,000,000 times as big a weight as it gives you."

Glaukon: "That's sicker."

Agathon: "But it gives you about 40,000 times the weight it gives your average Bengali peasant, who thus has about 1/16,000,000,000,000 the amount of the market system's concern as Bill Gates has. Will you teach that?"

Glaukon: "They'll call me a Communist!"

Agathon: "But it's true!"

Glaukon: "That I'm a Communist?"

Agathon: "No. That that's what the market system does!"

Glaukon: "We are value neutral economists! We don't care about distribution! We care about efficiency!"

Agathon: "But claiming that you don't care about distribution is implicitly saying that shifts in distribution are of no account--which can be true only if the social welfare function gives everybody a weight inversely proportional to their marginal utility of wealth."

Glaukon: "You're introducing politics into a value-neutral technocratic social science."

Agathon: "Politics?! Moi? I'm simply evaluating the derivatives of a social welfare function under the assumption that the market allocation is its ArgMax. What could be more technocratic than that? I'm just trying to attain a little clarity of thought."

Thrasymachus: "But where rule rests not--as somebody or other said at one of Old Joseph de Maistre's little soirees in St. Petersburg--on the hangman, but on misdirection and confusion, to strip away the veils of alienation and false consciousness that keep humans from perceiving their species-being, the act of unveiling is itself a powerfully political act."

Agathon: "Are you Thrasymachus or Karl Marx?"

Thrasymachus: "Ah. Marx thought unveiling was a good thing. I think it is neither good nor bad, for 'good' like 'justice' is really just another word for the interest of the stronger party."

Glaukon: "And we gave you tenure here at Berkeley?"

Thrasymachus: "Shhh! The humanities departments still think relativism is sexy. They haven't yet figured out that to assume a position of relativism--like the claim to be neutral on issues of distribution--is really a statement that you are on the side of the powerful."

Agathon: "And are you?"

Thrasymachus: "It is the just and the good--or, rather, the 'just' and the 'good'--thing to do.

Matthe Yglesias reminds us that its a minority that is blocking health care reform in the Senate....
But when it comes to the United States Senate it is always worth recalling that majority rule is a funny concept.

If you attribute to each Senator half the population of the state he or she represents, then the Democrats’ two Senators from California, two from New York, one from Florida, two from Illinois, two from Pennsylvania, one from Ohio, two from Michigan, one from North Carolina, two from New Jersey, two from Virginia, two from Washington, two from Massachusetts, one from Indiana, one from Missouri, and two from Maryland together represent 51.125 percent of the American people. That’s just 25 Senators. There are an additional 35 Democratic Party Senators. Legislation by “majority rule” would mean something less like “50 Senators get to make laws” than “the House of Representatives gets to make laws.” And keep in mind that for all the problems with Barack Obama’s strategy and all the perfidy of the right-wing and all the fecklessness of the media and all the ineffectualness of the Democratic Party leadership, if we operated on a majority rules system of government we’d be having a very different conversation. Absent the Senate, the American Climate and Energy Security Act would be law. And absent the Senate we would have a health care bill financed through taxes on the wealthy providing subsidies for families up to 400 percent of the poverty line, and creating a somewhat robust public option.

Now, obviously, that’s not the country we live in and everyone knew the Senate existed before we started down this road. But it’s absolutely crucial to understand that our political institutions are shaping these outcomes much more heavily than are individual tactical decisions.

Doug Henwood on Kennedy's passing:
According to just about everybody, Teddy Kennedy represented the “soul” of the Democratic party, which presumably refers to his long-professed concern the poor and the weak. Now that that soul is safely buried, the Dems can move on to the important stuff, like preserving Wall Street power and escalating the war in Afghanistan.
...because of the mistakes of his youth, Ted Kennedy felt he had something to prove in the Senate. And we're all better off as a result.... Sen. Kennedy built an entire career on perseverance. He struggled in the legislative trenches day in and day out. He stuck to his ideals when it came to unpopular votes. There's a chance that he never would have had something to prove, never would have been so committed to his truth, if he hadn't made such a fatal mistake in 1969. As he told 60 Minutes, "I think I've always wanted to try and be a better person." Of course we wish he could have manifested all of these qualities without the loss of a promising young woman's life.
Tim Fernholz reminds us that it is health care costs that are the bulk of the long term deficits and that the solution is health care reform....
health-care reform will have major effects on decreasing deficits over the long term, when spending discipline is actually important -- today's deficits are a necessary response to the recession.

The single major driver of growth in government spending is health care, which is increasing widely out of proportion to population growth and, if left unchecked, could make up 25 percent of the United States' gross domestic product by 2025. Proposals currently under discussion in Congress aim to slow the growth in health-care expenses with a variety of policy tools, including a public plan that could increase competition (and thus lower costs overall), cutting deals with various industry stakeholders to find savings, new studies to determine the most cost-effective ways to treat illness, and an independent board to study Medicare and Medicaid reimbursement and set more realistic prices.

Despite the president's focus on health care as deficit reduction and evidence that the Congressional Budget Office, charged with discovering the costs of these bills, chronically overestimates the costs and underestimates the savings of health-care bills, most experts think that no feasible bill will bend the curve as much as is necessary to directly slow the increase in spending -- ironically, the cheapest option, single-payer, is politically toxic. Savings that do result from reform will be required to subsidize health care for most of the 47 million Americans who have no health insurance. But even this kind of health-care reform is important for reducing the long-term deficit.

First of all, reform will provide more information to policy-makers. Studies of comparative effectiveness and data from a public insurance plan will provide a deeper understanding of inefficiencies in the system and the solutions to those inefficiencies. The White House Council of Economic Advisers has also estimated that health-care reform will lead to increases in GDP, reaching over 2 percent in 2020 that would lead to proportional increases in tax revenue and lower deficits. But most important, eliminating the "crazy system of cross-subsidies," as Center for Budget and Policy Priorities economist Jim Horney calls the complex interweaving of publicly and privately subsidized care for the under- and uninsured, would create a much simpler framework for future cost-reduction efforts.

"It really is important to get universal or near-universal coverage in order to help create a system that is more sensible," Horney explains. "That system will help us to design [more efficient] reimbursement systems."

The people standing directly in the way of health-care reform are conservative Democrats who claim to be deficit hawks, like Max Baucus and Kent Conrad in the Senate and the Blue Dogs caucus in the House. Of late, however, their interest in cutting the deficit has been eclipsed by political cowardice in the face of unified Republican obstruction to any and all reform efforts. The stumbling efforts of these supposed paragons of fiscal responsibility to maneuver the politics of health-care reform have decreased the chances of a bill that would reduce the deficit over the long term.

So get it straight: If the latest budget projections are keeping you up at night, the best way to ease your troubled mind is to support health-care reform. Otherwise, costs will keep rising, and deficits along with them. Opportunities to improve health care only come along once in a while -- the last major effort was 15 years ago. Fifteen years from now, it's possible that nearly one-quarter of every dollar spent in the U.S. will be spent on health care -- much of that coming, directly or indirectly, from the government. That sounds fiscally responsible, doesn't it?

In an effort to make sure America's students further their preparation for low wage low skilled jobs rather than jobs for a high tech high paying industrialized economy a Missouri school district bans t-shirts for acknowledging evolution.  
I wonder if there are plans to deny that gravity is 9.8 m/s ^2 as well?
Over 200 people in Texas attended a rally supporting succession from the Union where health care activists who want the United States to join the rest of the industrialized world were told by one speaker to ‘Go Back To The U.S. Where You Belong’
Catherine Rampell looks at recent the SAT numbers that were released and asks Why the Midwest Rules on the SAT?
Economist Uwe E. Reinhardt reflects on 2003 health care reform debates and notes that Democrats are much more fiscally responsible than Republicans in approaching reforms that american citizens are calling for, "American citizens — especially older ones — might keep this backdrop in mind as they behold and comment on the current administration’s and Congress’s travails to place the proposed health reforms of ’09 on a fiscally more responsible footing than was the M.M.A. ’03."  He digs into the options to fund health care and some of the hypocrisies of those who oppose funding health care reform:
President Obama has pledged many times not to sign a reform bill that will add to the federal deficit. It means that he will have to finance that $1 trillion with either
  1. additional federal tax revenue, or
  2. cuts in currently projected spending on federal programs — e.g. Medicare — that the Congressional Budget Office will recognize (the jargon is “score”) as a genuine reduction in projected federal spending relative to its baseline forecast of federal spending, or
  3. a combination of the two.

Additional federal revenue could be raised by

  1. increasing the income tax rate on some or all taxpayers — for example, on taxpayers with a taxable annual income above $250,000;
  2. taxing some or all of the health insurance premiums paid by companies and their employees
  3. imposing excise taxes (also called “sin taxes”) narrowly aimed at use of alcohol, sugar, fat, tobacco and other substances that can either cause ill health or impose spillover societal costs on through accidents, domestic violence or insurance premiums for illnesses caused by that consumption;
  4. collecting a simple, earmarked federal health care sales tax of, say, one-half of 1 percent or so on all retail sales to consumers, with perhaps a cap on large purchases like cars or high-cost households durables, like refrigerators or furniture.

Each of these measures — new taxes or spending cuts — will naturally elicit outrage from the groups affected by them. Naturally also, they will prompt feigned outrage from those who oppose health care reform this year for more political reasons.

Raising income-tax rates, especially on high-income Americans who think of themselves as the most creative and productive Americans, will give rise to prophesies of economic doom for America.

Taxing employment-based health benefits will lead to outrage not only from the left of the political spectrum, but also from employers and the right-of-center United States Chamber of Commerce. The argument will be that eliminating the annual tax preference of $250 billion or so accorded to job-based health insurance will spell its doom, thereby the doom of private health insurance, and thereby the doom of American health care as we know it.

Imposing “sin taxes” will be denounced as regressive by commentators all along the political spectrum, sometimes on the theory that low-income Americans are particularly prone to engage in “sinful” forms of consumption.

Earmarked sales taxes will be deplored as regressive as well, although such a tax strikes me as eminently worth considering. It would give all Americans some stake in health care cost containment. Annual consumption spending in the United States is now about $10 trillion. It will grow in the decade ahead. If even 80 percent of that total were subject to a small sales tax of, say, one half of 1 percent, it would yield well over $400 billion additional federal revenue over 10 years toward the required $1 trillion price tag of health reform.

Finally, cutting current federal health spending on, say, Medicare will be assailed as threatening (a) the health and even life of America’s elderly, (b) the closing of hospitals and (c) the impoverishment of doctors. Sometimes these outcries come from the very groups — e.g., the editorial page of The Wall Street Journal — that also assert that government spending on Medicare is out of control and wasteful.

Over at the Tax Policy Center  notes the hypocrisy of Republicans and irresponsibility of Democrats who support continuing the Bush Tax Cuts 

It is interesting, and perhaps worth noting, that while political opposition seems to be hardening against the $1 trillion, ten-year cost of the early versions of health reform, barely a peep of concern has been raised about the $3 trillion price tag for President Obama’s plan to extend most of the Bush-era tax cuts.

The message seems pretty clear: The President, congressional Democrats, and nearly all Republicans are fine with busting the budget to cut taxes for nearly everyone, notwithstanding a cumulative deficit over the next decade of $9 trillion. They are, by contrast, unwilling to spend one-third as much to provide medical insurance for those who cannot afford it. I’ve always felt that health reform is as much an ethical choice as an economic one. We appear to be making ours.   

 it makes no sense to let taxes go up until we are well into a strong, robust economic expansion--but it also makes no sense at all to permanently extend the Bush tax shifts of the burden from us to our children and grandchildren.I am most definitely not fine by extending the Bush-era--well, Howard could start by not calling them "tax cuts" because they are not: they are a tax shift from current taxpayers into the future.... My view is that we should (a) decide how much we want to spend, and then (b) balance the non-Social Security budget. And that is not at all consistent with extending the Bush tax cuts. But is there a chance that any number of Republican-leaning economists will join me? They are very scarce on the ground.

And Obama's senior economic advisers appear to be lobbying the president to choose differently than Gleckman assumes:

Obama officials: Taxes may rise: Geithner and Summers both sidestepped questions on Obama’s intentions about taxes. Geithner said the White House was not ready to rule out a tax hike to reduce the federal deficit; Summers said Obama’s proposed health care overhaul needs funding from somewhere. “There is a lot that can happen over time,” Summers said, adding that the administration believes “it is never a good idea to absolutely rule things out, no matter what.”...

“If we want an economy that’s going to grow in the future, people have to understand we have to bring those deficits down. And it’s going to be difficult, hard for us to do. And the path to that is through health care reform,” Geithner said. “We’re not at the point yet where we’re going to make a judgment about what it’s going to take.”

He then... in another post... gets a self congratulatory talking up the post Keynesian generation of macroeconomists with a resounding I told you so:

Back last fall, those of us who had sat at the feet of John Hicks and Charlie Kindleberger said two things that made many around us think that we are crazy:

  1. That the enormous debt quantities the federal government was about to start issuing were unlikely to significantly push up interest rates.

  2. That the federal government, if it managed the TARP money properly, might well wind up making a profit from it--buy low sell high after all.

The first of these has certainly come true. Now Dan Gross says that the second may as well:

How the Government Is Profiting From TARP.

On the double dip recession front... Calculated risks looks at Bankruptcy Filings and Mortgage Delinquencies by State

At one level, all policy analysis starts with benefit-cost analysis: on what basis could one choose among option except their advantages (benefits) and their disadvantages (costs)? That makes it puzzling, at first blush, that benefit-cost analysis should be controversial; when it comes to environmental and safety regulation, benefit-cost is beloved of industry lobbyists and loathed by activists. (Benefit-cost studies are rarely applied to questions such as going to war or extending prison sentences.)

But the puzzle has a solution: the benefit-cost analysis practiced in the regulatory process – what I teach my students to call “forensic” benefit-cost – differs in three ways from ideal, or armchair, benefit-cost, as practiced by someone trying to figure out what course of action will best serve the public interest, conceived as the sum of gains and losses to individuals. Each of those differences constitutes a frank error, and all are enforced by the courts and by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget.

and recommends that:
the Congress should order the administration to commission a study by the National Research Council to establish a set of standards for regulatory benefit-cost analysis, which can then be written into the statutes that require such analysis before a regulation can be issued, and adopted by OMB for benefit-cost analysis done in other administrative contexts. The legislation establishing the study should tell the NRC to develop rules that embody distributional adjustments, Bayesian weighting of uncertain gains and losses, and willingness-to-pay evaluation of gains and losses that do not come with market prices attached.

Their basis for ignoring the plain language of the Constitution is a statement by James Madison that federal spending is only really permitted when it advances one of Congress' other enumerated powers, such as by building a post office or funding a war. Since the words "health care" do not appear in the Constitution, there can't be any federal power to pay for health care, and the uninsured can eat cake.

Although tenthers are correct that Madison did make such a statement, his views hardly reflect the founding generation's consensus. Alexander Hamilton, the nation's first Treasury secretary and a co-author of Madison's Federalist Papers, emphatically rejected Madison's claim that the words "provide for the … general welfare of the United States" have any kind of secret meaning. Moreover, it is not even clear that Madison still believed that the Constitution requires a decoder ring when he was elected to the White House. Justice Joseph Story, whom President Madison appointed to the Supreme Court, was a Hamiltonian.

If anything, the tenthers' invocation of Madison reflects the danger inherent in any appeal to the founding generation. Early American politics were at least as contentious as our own, and the framers debated the Constitution's meaning with just as much zeal and uncertainty as we bring to such arguments today. Indeed, the framers' many conflicting statements offer such a rich menu of viewpoints that it is possible to find a quotation to support nearly any political agenda.

More important, there is something fundamentally authoritarian about the tenther constitution. Social Security, Medicare, and health-care reform are all wildly popular, yet the tenther constitution would shackle our democracy and forbid Congress from enacting the same policies that the American people elected them to advance. After years of raging against mythical judges who "legislate from the bench," tenther conservatives now demand a constitution that will not let anyone legislate at all.

Economic Principles gives some economic history 101, reflecting on when money was new:

Once the basic technological problems were solved, the use of coins spread rapidly. The whys and wherefores of how this happened are intricate and imperfectly understood. But the key to the transition from the use of relatively few coins made of the naturally-occurring but highly-variable gold/silver alloy of electrum to large numbers of coins of refined metal seems to have been the discovery stamped by governments to guarantee their value. Virtually always minted by the state, the new coins were counted, not weighed.

What’s really interesting is what happened next, as the Greeks began to grapple with the system they had invented. Money was homogeneous and impersonal, they discovered, abstract and concrete, an end in itself and a means to universal aims, different from everything else. The most unsettling thing about it was the recognition that its possessor could buy his way out of all other (pre-monetary) forms of social relationship, at least in principle: violence, reciprocity, redistribution, kinship, ritual, and so on. No wonder some people would do anything for money!

The recognition that money could dissolve these bonds worried the Greeks. “Hence the focus of much Athenian tragedy on the extreme isolation of the individual – from the gods and even (through killing) from his closest kin,” writes Seaford. “I know of no precedent for this in literature, certainly not in the pre-monetary society depicted in Homer.” The figure of the tyrant preoccupied Athenian society, he writes: absorbed by money as the means to power, violating the sacred and murdering his kin, never more memorably than in the dénouement of the Oedipus saga in Aeschylus’ Seven Against Thebes, in which the king’s sons kill each other battling over their inheritance. The words “hero” barely appears in Athenian tragedy, but “tyrant” (turranos) occurs more than 170 times.

The most peculiar novelty of money, Seaford says, was that it was unlimited. As a case in point, he cites Aristophanes’ last play, Wealth, almost certainly the earliest surviving text on economics. The whole play revolves the leveling powers of money, but Seaford describes the key exchange: “whereas one can have enough sex, or loaves or music, or honor, cakes or manliness and so on – money is different: if somebody obtains thirteen talents (a lot of money), he is eager for sixteen, and if he obtains sixteen he swears that life is unbearable unless he obtains forty.”

Hence the impact of the invention of money on pre-Socratic philosophy. The usual accounts of the emergence of philosophy and science that began in the sixth century B.C. center on politics, and the new-found conviction that that citizens in Greek city-states ought to be ruled, not by monarchy, but by impersonal law before which all were equal. That is part of the story of an intricate and mysterious change, Seaford acknowledges. But the appearance of a strange new technology facilitating the universal exchange of one thing for another – that is, money – may have supplied an even more fundamental metaphor to guide the philosophical cosmology. And in a series of highly-technical chapters on Anaximander and Xenophanes, Heraclitus and Parmenides, Pythagorus, Philolaus and Protagoras, he seeks to show how the early experience with the world’s first cash economy led to the “privileging of limit over the unlimited” that is so familiar a feature of the metaphysical and ethical writing of Plato and Aristotle.

A matter for specialists, clearly. Those ancient preoccupations with order seem so strange to us today – Aristotle’s conviction that the use of money to make money is wrong, Plato’s obsession with civil order, down to his war on music. But then we have only recently performed a massive deregulation of our own. Seaford describes the elimination round that began in the 1970s:

limits on the movement of capital (once controlled by nation-states); limits articulating cultural space, with the result that a Holiday Inn in Minneapolis is now exactly the same as a Holiday Inn in Mombasa (money homogenizes); limits on the salaries-cum-bonuses that money-controllers pay themselves; limits on the gap between rich and poor (an unlimitedness that makes common purpose impossible). It has also destroyed the limitation of speculative price by any internal relation to its financial or artistic product (investing in junk bonds is essentially the same as investing in junk art, and done by some of the same people.)

We have become blasé. Social science has replaced metaphysics. Instead of Aristophanes we have David Mamet, who gave a wonderful line to Danny DeVito when he played a crooked fence in the film Heist – “Of course you need money. Everybody needs money. That’s why they call it money – in which the very sound of the word has become its meaning. Yet many of us, perhaps most of us, haven’t given up thinking about how some degree of limitation might be re-imposed on what Seaford calls “our hyper-monetized, atomized and self-destructive culture of the unlimited.”

Industrial production is up but News and Economics says not so fast. Industrial production coming back, but....
Over at the Atlanta Fed David Altig questions if the output gap is showing:

A key observation to take away from this picture isn't the recent acceleration in core goods prices. The highly volatile behavior of goods prices tends to make them an unreliable guide to underlying inflation trends. Rather, it is noteworthy to consider the significant downward trek of core services price growth. Indeed, the 12-month trend in core services prices was a shade under 1.6 percent in July—its lowest reading in the post-WWII era and roughly 1¾ percentage points lower than this time last year.

Some of the downward pressure on core services prices is a direct reflection of the housing crisis; a little more than half the core services price components are computed from housing rents. But that's not the whole story as a rather sharp disinflation was evident in core services excluding rents....

Likewise, productivity-adjusted labor costs—so-called "unit labor costs"—have also recently turned negative. These aren't record declines, but they are well off their prerecession growth rates....

Is this a sign that economic slack has begun to show through to the retail price numbers? It could be a bit early to bet the ranch on that one. Nonetheless, the evidence seems to offer a pretty compelling story at this time.

For a little on Understanding the New Budget Deficit Updates go listen to the podcast Jim Horney of CBPP

Posted via email from Jim Nichols

Friday, August 28, 2009

The trucks won't load themselves: Headed to the mountains edition...

We're headed up to the mountains for the weekend.  A cabin up near Hiawassee.  So no posting for a bit.

I'm just going to do one quote this morning...

 "He [Philippines leader] must be in three places at the same time: In front of the people, so he can guide them and lead them onward to a greater destiny. Beside the people, so he can feel what they feel, suffer what they suffer and even laugh and cry with them. And … behind the people, to make sure that the weak and helpless, even critics and dissenters, are not left behind!”      --Salvador Laurel

Posted via web from Jim Nichols

Thursday, August 27, 2009

Are you spiritual?

So the reality is that many atheists are spiritual, at least as defined by these scales. Many aspects of spirituality don't require you to believe in magical forces

So, be aware of just how fuzzy is the psychological concept of 'spirituality'. Even if you are an atheist, when researchers are talking about the effects of spirituality, they may well be talking about you!

Posted via email from Jim Nichols

Tuesday, August 25, 2009

People ask me why i'm a Democrat...

People ask me why i'm a Democrat...


Short and sweet---Its generational... I came of age politically speaking during the Bush years when Bush Republicans got us into a war that undermined our national security and passed tax cuts that weren't paid for... bringing back deficits after Clinton had brought us surplus (after the Reagan/Bush deficits).

I came of age during the Bush years.  If you are looking for a short and sweet reason why--in the two party system world--where you have to choice a lesser of two evils--I choose to get involved in Democratic Party politics because Bush Conservatives have done a great deal of damage to our national and economic security.

This oped reminds us that Bush conservatives are still at it, and still control the Republican party agenda.  They promise more of the Bush years and refuse to come to the table on any issues facing this country--they've even made a mantra for their position against Obama, "Just say no."   

Read this, and never forget what Bush conservatives did when they had power...

The GOP's Top Chef Starves a Beast and Poisons a Debate

Michael Steele, chairman of the Republican National Committee, this week revealed a secret Republican plan that would end up eliminating all federal farm subsidies; closing down Yellowstone and Yosemite national parks; selling off the interstate highway system; and canceling Head Start, subsidized school lunches and the entire college loan program.

The plan came to light as a result of an op-ed piece this week in The Washington Post in which the party chairman committed the GOP to spending an ever-increasing share of the federal budget, and the national income, on Medicare. When combined with other Republican promises -- to balance the budget, protect defense spending and never, ever raise anyone's taxes -- the inescapable inference is that the government would run out of money for every other domestic program sometime around 2035.

Steele's stunning announcement brings the conservative strategy of "starving the beast" to a new level. Under the guise of protecting the elderly, Republicans hope to realize their dream of eliminating half a dozen Cabinet agencies, firing tens of thousands of government workers and ending government regulation as we know it.

Steele's op-ed was the latest salvo in his party's campaign to defeat President Obama's health-care reform effort at all costs and build public support for a Republican alternative that remains, to this day, a closely held secret. The new Seniors' Health Care Bill of Rights, however, hints at the outlines of the GOP domestic strategy.

Steele promised that under the Republican health plan, runaway Medicare spending would continue unabated. Not only would that mean no cuts in benefits, but it would ensure that reimbursement rates to doctors, hospitals and drugmakers would continue to rise faster than inflation, regardless of how much they earn or how unnecessary or wasteful the services they provide. Any effort to contain future spending growth, Republicans now believe, is nothing more than a "raid" on Medicare, the government-run health plan that Republicans were against before they were for it.

The country's top Republican official also vowed to cut off all federal funding for research to determine what are the most effective treatments for heart disease, cancer, diabetes and even that new scourge, restless leg syndrome. Left unclear was whether he prefers to have such research done by the pharmaceutical and medical-device industries, but one suspects that is the case.

On the issue of end-of-life care, Steele was uncompromising: In a Republican world, no government funds could be used to pay doctors to provide information about living wills, hospices or palliative care, whether seniors and their families ask for it or not.

"Government programs that seem benign at first can become anything but," Steele explained in articulating the new philosophy. Once back in power, look for Republicans to apply the same approach to issues such as flu vaccinations, disaster relief and air traffic control.

According to Steele, Republicans will also seek to outlaw "any effort to ration health care based on age." You don't have to be a lawyer like Steele to understand that would effectively make it a federal crime for any hospital to refuse a heart transplant to a 95-year-old, or for any doctor to refuse to prescribe Viagra to a sexually precocious seventh-grader. Although Steele did not indicate what the penalty would be, he did not rule out the death penalty.

Indeed, Republicans seem determined to preserve the uniquely American system under which health care is rationed today -- on the basis of employment status and ability to pay. According to the respected Institute of Medicine, this market-based approach to rationing has held the number of untimely deaths each year to a mere 18,000 uninsured souls. Thanks to Medicare, all of those victims are younger than 65, but apparently that is the kind of age-based rationing that real Republicans can embrace.

After reading his broadside, one is left wondering exactly what health reform plan Steele thought he was attacking. At one point, Steele claims that Democrats would prevent Americans from keeping their doctors or an insurance plan they like. Later, he warns that government will soon be setting caps on how many heart surgeries could be performed in the United States each year. Where is he getting this stuff? Has the chairman of the Republican Party somehow gotten hold of a top-secret plan for a government takeover of the health-care system that GOP operatives snatched during a break-in at Democratic National Committee headquarters?

If all that sounds spurious and unsubstantiated, it is. And like many of the overstated claims in this column, its purpose is to highlight the lies, distortions and political scare tactics that Steele and other Republicans have used to poison the national debate over health reform.

Have you no shame, sir? Have you no shame?

@JimN2010, I'm currently running for State House against a Bush conservative who has been doing his part to push these policies at the state level...  The business wing of the Republicans were fed up with Davis because of this and tried to get him out last year in the primary.  The conservative wing pulled it out even though many of us crossed over to vote for Trea.


Posted via web from Jim Nichols

We need a 2nd stimulus (that is not politically feasible)

The folks who said the first package should have been a lot bigger (I won't name names, but... ah hemm....) Obama's "political smarts" is coming back to haunt us all---for an I told you so...
 Mounting concern over the economic – and even national security – implications of exploding US national debt is also likely to complicate any attempts by the Obama administration to embark on a second fiscal stimulus, which many economists say may prove necessary by 2011 as the effects of this year’s $787bn stimulus begin to wane.

According to Goldman Sachs, the need for a new stim­ulus will be most acutely felt in 2011 when the combination of the expiration of the tax cuts George W. Bush enacted in 2001 and 2003 and the withdrawal of the stimulus will reduce GDP growth by 1.6 per cent.

But economists worry that political concerns about the deficits will make this impossible. Others worry about crowding out and the risk of a back-up in real interest rates. For the time being, there is still little private sector debt issuance, so the US government faces little competition for global savings other than from other countries with large deficits. But many fear sustained large deficits will eventually push up real interest rates, crowding out private activity. If this happened too soon, it could undermine recovery; even if it came later it could undermine long-term growth prospects.

Last December I said that a $1 trillion stimulus looked appropriate but that the incoming administration should get a second stimulus into the budget resolution, with appropriate triggers so that it would be sprung if things turned out to be worse than we then expected.

If the Obama administration had done so, right now we wouldn't be trying to persuade a political system that a stimulus designed for an 8% peak unemployent recession is too small for the 10% unemployment recession we have--let alone the 12% peak unemployment recession we fear.

Even if the economy is improving, it is still very weak. Another quarter-million jobs were lost last month, and even the most optimistic economists predict that it will be many more months, if not years, before robust employment growth resumes. Now we face an ominous new threat to recovery from sharp cuts in state and local government spending.

The more than $15 billion excised from California’s budget last month was just a small fraction of recently announced cuts. Although some people object to the federal stimulus program on grounds that government spending is inherently inefficient, most recent state cuts have been for services widely viewed as essential. These cuts were mandated by laws meant to stop politicians from spending beyond their means. While such measures may be beneficial on balance, sharply reduced government spending is exactly what the economy doesn’t need right now.

Through its legal authority to run deficits to stabilize the economy, the federal government can keep recovery on track by transferring revenue to states and cities. Of course, opponents of the original economic stimulus program have no desire to see it extended this way. Yet they haven’t made a persuasive case. The flaws in their arguments don’t rise to the absurd heights seen in recent town hall meetings on health care reform. But it is a difference in degree, not kind.

Both proponents and opponents of the stimulus program agree that unemployment is high because aggregate spending levels are too low to create jobs for everyone. Where they disagree is about the remedy. Proponents believe that sharply higher government spending will hasten the downturn’s end. Opponents say no.

Stimulus proponents begin with the observation that before late 2007, total spending was enough to support full employment. But then consumption, which had been inflated by home equity loans based on illusory housing prices, fell sharply, and it is likely to remain below 2007 levels indefinitely.

That decline caused a parallel fall in investment, because most businesses already had the capacity to produce more than people wanted to buy. Here, too, spending is likely to remain depressed for many months. And with the economies of many other countries also in the doldrums, demand for American exports is unlikely to pick up the slack.

The only remaining major component of aggregate demand is government spending. Stimulus proponents, following John Maynard Keynes, believe that increased government spending — financed by borrowed funds or printing new money — is the only way to bolster aggregate demand and end the downturn quickly. Recent results suggest that this strategy is working.

In a recent column in Forbes magazine, the economist Lee Ohanian of the University of California, Los Angeles, a stimulus opponent, explained why he believes that increased government spending wouldn’t help the situation. The problem, he says, is that “the higher taxes on incomes or expenditures that ultimately accompany higher spending depress economic activity.” Because the short-run stimulus program has been financed with borrowed money, not higher taxes, Mr. Ohanian must have in mind future taxes needed to pay off stimulus-related debt.

His argument, and that of stimulus opponents generally, thus boils down to this striking contention: As the government spends borrowed funds, consumers will start to realize that the resulting debt spells higher taxes in the future, which will lead them to curtail their current spending. Those cuts will offset increased government spending, leaving no net stimulus.

Although there may be people who would actually spend less now to hedge against uncertain future tax bills, it’s unlikely that you know any of them. As behavioral economists have been saying for decades, that’s just not the way most people act. Hardly any consumers even know how big the national debt is, much less how it will affect future taxes.

MORE important, there are good reasons for believing that stimulus spending will make people’s future tax payments lower, not higher. Yes, government borrowing adds to the national debt. But if the stimulus also hastens the downturn’s end, it will accelerate the growth of future incomes and tax revenue. In that case, the net effect would be to reduce future taxes, compared with what they would have been without the stimulus.

And even if we run with the notion that stimulus spending will increase future taxes, it doesn’t follow that consumers will cut back on spending now. After all, we know that most people already fail to save enough for their retirement. Why would they alter their behavior to hedge against uncertain future taxes?

The recent state and local spending cuts are a major setback to the stimulus program, which many economists have argued was much too small to begin with. A small minority disagrees but has not offered persuasive arguments.

The downturn threatens every goal we care about. Doing everything possible to limit state and local spending cuts will help end it faster.

Posted via email from Jim Nichols

Report cites Honduras abuses

An alarming pattern of widespread abuses and restrictions of civil liberties has emerged in Honduras since the June 28 coup, a leading human rights organisation reported on the weekend.

Preliminary findings by the Inter-American Commission on Human Rights (IACHR) following a five-day visit last week uncovered “disproportionate use of public force, arbitrary detentions, and the control of information aimed at limiting political participation by a sector of the citizenry”.

The report comes just a few days after Amnesty International, the UK-based human rights organisation, published a damning report documenting repression and physical beatings carried out by Honduran security forces on supporters of President Manuel Zelaya, who was forcibly removed from power by soldiers on June 28.  

The IACHR, an autonomous body of the Washington-based Organisation of American States (OAS), has confirmed the arrest of thousands of people since the coup.  

Posted via email from Jim Nichols

Panic of 1857

On this day in 1857, the New York Branch of the Ohio Life Insurance and Trust Company (OLITC) failed, an event often (dis)credited with starting the Panic of 1857. But of course the Panic didn’t really begin there; as with all major financial catastrophes the story is more complicated than it initially appears.

For the origins of the 1857 meltdown, one might look abroad, to the Crimean War, which, starting in 1854, cut the European market off from Russian grain. American exporters rushed to fill the gap, leading to a speculative frenzy in Western lands. By 1856, a brewing specie crisis began causing profound unease in American markets. Summing up the mood of the day, a writer at the New York Tribune asked, “What can be the end of all this but another general collapse like that of 1837?”

Against that backdrop, on August 24, 1857 word spread that a cashier had embezzled money from the OLITC, and that the investment house, lacking funds, would have to suspend payments. With telegraph wires crisscrossing the United States, panic soon gripped the nation, and depositors made runs on banks throughout the country. Those banks had to call in loans to obtain hard currency. Then, shortly after a sell-off devastated Wall Street in September, a ship carrying $2 million from the California gold fields sank in a storm. By October, banks nationwide had suspended specie payments. Commodity prices plummeted, factories shut their doors, railroads declared bankruptcy, hundreds of thousands of people lost their jobs, and land prices deflated. As the economy ground to a halt, immigration dropped in 1858 to its lowest level in more than a decade.

In the end, the Panic of 1857 didn’t last long. By early 1858, the economy had begun to recover. But the political implications of the downturn endured. Republicans tarred Democratic opponents with the Panic brush. It seemed like an odd charge. Democrats, historically, had opposed banking interests — most notably during Andrew Jackson’s assault on the Bank of the United States. But Republicans turned the tables, arguing that a central bank would have kept local banks on a shorter leash, cooling speculative fires in the West. Republicans also insisted that Democrats opposed a variety of policies that would have either helped avoid the Panic or aided its victims — higher tariffs, a homestead act, a Pacific railroad act, and land grants to states that hoped to establish public universities — because they were beholden to the Slave Power. In the conspiratorial political culture of the day, the Panic of 1857 thus moved the nation one step closer to civil war.

Posted via email from Jim Nichols

When choosing a pet, do you prefer unicorns or bunnies?

This is something like what the healthcare debate is about.  It’s not about real alternatives.  Rather, it’s about the choice between a realistic alternative that can actually extend coverage while lowering costs — the public option — and a fantasy: the “free market” option.

And health care is only the most readily available of industries that illustrate our fatal fetishistic fixation with the “free market” myth.  Our thrall to that myth makes it impossible to have a rational debate about almost any economic issue.  For vast swaths of the U.S. and global economies bear as much resemblance to “free markets” as do unicorns to real pets.

There is, for example, no free market in health care.  Most markets for health insurance in the U.S. are dominated by one or two players.  They easily collude to keep prices high, choices low, payouts at a minimum, and new competitors from entering.  This is exactly what both common sense and economic theory would predict when few firms dominate a market.  Economists call it “oligopoly.”

Hospitals operate as oligopolists as well.  I live in a small town in California.  It doesn’t matter to me that there are many thousands of hospitals across the country.  The “relevant” market for my health care needs extends only a few miles.  For most people in America, there are at most two “competitors” in the hospital delivery business, if that.  This is not a competitive market.  The lack of true choice and the vendors’ incentives and ability to collude, make a mockery of the idea of “free markets.”

Or consider the pharmaceutical industry.  Though there are many firms, the vast majority of the prescriptions, sales, R&D, and profits are controlled by very few companies.  In many critical drugs, because of our patent laws, there is only one provider.  And George W. Bush passed a $700 billion health care law that specifically forbade the U.S. government from using its buying power to secure lower drugs prices for government purchases.  So much for the rigor of competition.

There is simply no effective competition in these markets and the results show it.  The U.S. spends twice per capita what other industrial nations spend on health care with inferior outcomes.  Adam Smith, the founder of modern economics, foretold this when, in 1776, he wrote in The Wealth of Nations, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Posted via email from Jim Nichols

And now we have death books?

Fox News, NRO, Limbaugh run with "death book" smears

Following false accusations that Democrats' health care reform legislation would institute "death panels" for the elderly, H. James Towey claimed in a Wall Street Journal op-ed that the Obama administration revived a Veterans Health Administration (VHA) booklet on advanced planning directives that would "steer vulnerable individuals to conclude for themselves that life is not worth living," calling the booklet a "death book." As with the death panel smear, conservative media -- particularly Fox News -- have promoted Towey's false "death book" claim, ignoring facts that undermine Towey's rhetoric.

Fox News freak-out: Guests make extreme claims and accusations about health care

In recent weeks, Fox News has hosted numerous individuals who advanced extreme, outrageous claims about health care reform at prior congressional town hall meetings, during their interviews, or both. For example, on Fox, one guest claimed that under health reform, he might have to "let" his wife "suffer until she passes on," while another claimed of Democratic leaders, "[Y]our thugs already know where we live. We've had a visit from them in the middle of the night."

Fox News uses "death book" lie to revive "death panels" lie

Following several days in which Fox News promoted the smear that an educational booklet on end-of-life decisions used by the Veterans Health Administration is a "death book," Fox News host Megyn Kelly and Fox News contributor Jonah Goldberg used a discussion about the booklet to revive the falsehood that Democratic health care reform legislation would institute "death panels." Kelly also falsely claimed that the booklet encourages veterans to "hurry up and die" and that VHA officials are "required" to refer patients to it.

Yes Virgina, some people think Republicans are a viable party...

Posted via web from Jim Nichols

reconcile... with the past...

Schieffer allows Grassley to criticize reconciliation without noting his past support of process

CBS Face the Nation host Bob Schieffer allowed Sen. Charles Grassley (R-IA) to criticize Democrats for reportedly considering using the budget reconciliation process to pass health-care reform with a simple majority of 51 votes in the Senate by claiming that "reconciliation was put in place to get deficits down." Schieffer did not note that Grassley has previously voted to use reconciliation for the Bush administration tax cuts, which the Congressional Budget Office indicated at the time would not "get deficits down."

Posted via web from Jim Nichols

Monday, August 24, 2009

DFA on the move... 5 to go...

From the Inbox:

Last week was incredible, but we're not done.

We've proved that a bill without a public option can't pass the House of Representatives, but we are five commitments short of proving that a bill with a public option can pass the Senate. Once we have 50 Senators who clearly state they will vote for a public option, then we have the votes to win and Congress will see that inclusion of a public option is the only way to pass healthcare reform this year.

Right now, our Senate Whip Count Campaign with OpenLeft and Healthcare for America Now has gotten 45 senators on record in support. We need at least 5 more senators to make a public option bill unstoppable.

We're not leaving victory up to chance. Thanks to the support of DFA members nationwide, we're putting extra staff and resources on the ground in at least 5 states starting in September and lasting until we win. But 5 states may not be enough. If we can reach $350,000 by the end of today, we can expand it to as many as 10 states.


While 45 senators have stood up to be counted, Senators Baucus (MT), Conrad (ND), Wyden (OR), Carper (DE), Tester (MT), Lincoln (AR), Nelson (FL) and Warner (VA) have not. It's time to get them and other Senate hold outs on the record that they'll vote for a public option in the final bill.

After Labor Day, Congress returns from the August break and the sprint to victory begins. We must have the resources to hit the ground running.

Thank you for everything you're doing to win.


Charles Chamberlain, Political Director
Democracy for America

Posted via email from Jim Nichols


Only you can end broken government...

Posted via email from Jim Nichols

Sunday, August 23, 2009

"There is probably no better way to rebuild household wealth... than to sustain moderate rates of inflation"

Inflation, Warren Buffet, and You

Warren Buffet is a very shrew investor. His oped in the New York Times today warning of the evils of inflation was likely one of his best. Mr. Buffet tells readers that we must quickly get the budget deficit down or risk becoming a "banana-republic economy."

To help make his case on inflation, Buffet quotes Keynes, the great guru of all depression fighters everywhere: "governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens." The problem with this quote, as Keynes well-knew and often talked about, is that not all citizens stand to lose wealth from inflation.

Most citizens in fact stand to gain wealth from inflation. Most citizens are debtors, primarily as a result of a home mortgage, but also due to student loans or other forms of debt. These citizens will stand to gain from moderate rates of inflation. For example, if the inflation rate is 3 percent annually over the next five years, then someone who owns a $300k home can expect the price to rise by roughly 15 percent to $345k (this ignores compounding, which would make the increase somewhat higher). If the person has a mortgage of $270k, then their equity will have more than doubled from $30k to $75k, even before counting any payoff of principle.

By contrast, if the economy has zero inflation over the next five years, then this home will still be worth $300k in five years, giving this homeowner no additional equity. In fact, there is probably no better way to rebuild household wealth and restore balance to the economy than to sustain moderate rates of inflation (3%-4% annually), just as the country did through most of the post-World War II period of rapid growth. By rebuilding wealth, consumers would be able to consume more and businesses would be able to invest more.

It's fine that Mr. Buffet differs with this view, but it might have been worth noting that he is someone who does stand to lose "an important part" of his wealth through inflation. Mr. Buffet is heavily invested in the financial sector, owning large amounts of insurance companies and major banks, such as Goldman Sachs and Wells Fargo. The financial sector will be hurt by inflation because the mortgages and other loans that it has issued will be worth less money.

In other words, Mr. Buffet has a direct personal interest in preventing inflation, just as the CEO of a health insurance company has a direct personal interest in preventing a robust public insurance option. Most people would recognize the latter, unfortunately they may not recognize the former.

Remember, Warren Buffet is a very shrewd investor.

Posted via web from Jim Nichols

Friday, August 21, 2009

Mad High Tax Rates

So lets go to a Foundry Post:

Mad High Tax Rates

On this week’s season premiere of the popular AMC show “Mad Men” viewers were reminded about the punitive high tax rates in the 1960s:
Click here to view the embedded video.
This episode of Mad Men takes place in 1963, when the top income tax rate was 91 percent on incomes over $200,000 ($400,000 for married couples). That translates to about $1.4 million in 2009 dollars. The top rate today is 35 percent on incomes over $372,950. In 1963, by comparison, incomes over $10,000 (about $70,000 in 2009 dollars) paid 38 percent.

As the scene from Mad Men makes clear, high tax rates in the 1960s discouraged working harder to get ahead because a large portion of the worker’s additional income went to paying taxes.

Discouraging work lowers economic growth. When this happens we all suffer because lower economic growth means fewer jobs and lower wages across the economy.

Tax rates have fallen significantly from the 1960s. The top rate today is 56 percentage points lower than it was in 1963, so the incentive to work hard and get ahead is a lot bigger now.

But if President Obama’s plan to raise the top two marginal income tax rates to Clinton-era levels and the House’s plan to slap a 5.6 percent surtax on top of that to partially fund a nationalization of the health care system become law, the top average tax rate in the U.S. will climb to 52 percent- higher than in France, Italy, Germany and Spain.

Many workers faced with a marginal tax rate that takes over half of their additional income will decide the extra effort just is not worth it- just like workers in the 1960s did. This will impede economic growth at the worst possible time as the economy suffers through its most severe contraction since World War II.

Mad Men has brought retro-1960s clothing and decor back into style. Let’s not bring back the economically stifling tax policy with it.


For Bubble-Free Growth, Look to the ’60s

The six-year stretch from 1962 to 1967 showed gross domestic product growing at an average of 5% a year with unemployment dropping to less than 4% from 6%. Median family incomes rose, the U.S. ran trade surpluses, the federal deficit was near zero and the stock market rose at a “very calm” average rate of 5% a year, Romer notes.

Plus the 91% vs. 39.6--are these really the same ballpark?  Really?

Who in the world is trying to bring back a 91% bracket anyways?  Is the sky really falling or did I just miss something?


Posted via web from Jim Nichols

Health Care and the power industry...

Mark Thoma sends us over to Jack Roberts who is looking back to the public/private power debate of the 30's

Public option shouldn’t be deal breaker for reform

Public option shouldn’t be deal breaker for reform Recent reports that the Obama administration may (or may not) be backing away from a public option for health care reform are likely to raise the decibel level of the debate even higher. Unfortunately, the result may be to reduce further the chances of getting health care reform passed at all.

For some reason, the issue of whether the final reform bill includes a public health insurance option has taken on apocalyptic proportions. Both proponents and opponents have made it the defining factor in whether health care reform will succeed. Yet, ideology and emotion aside, there is no reason to believe the exaggerated hopes or fears on either side.

To a great extent, this is reminiscent of the great debate in the 1930s over public vs. private power, a controversy that catapulted Wendell Willkie, a utility lawyer who’d never held elective office, into the Republican nomination for president in 1940. Nowhere was this debate more contentious than in Oregon.

Public power advocates believed that private utilities were strangling the economy and robbing ratepayers, while opponents insisted that public power was a sure route to socialism. Sound familiar? The only thing both sides seem to agree on was that one system or the other must prevail and that public and private power could not coexist.

Jump ahead 70 years. Here in Lane County, most people receive their electrical power from municipal utilities, cooperatives or a people’s utility district. Private utilities such as Portland General Electric and Pacific Power serve most of the rest of the state.

Today, we may use euphemisms such as “consumer-owned” and “investor-owned” utilities, but it is still the same public vs. private power distinction. Except for the Bonneville Power Administration’s public power preference for low-cost hydropower, however, there is actually little difference in the way public and private utilities operate.

The reason is that both public and private utilities are funded by their ratepayers. Public utilities are not subsidized by general tax dollars, as private power advocates once feared.

It’s true that private utilities distribute a portion of their profits to shareholders as dividends. But public utilities rely heavily on bond financing and retain their “profits” as reserves and reinvest them in expansion projects, modernization and employee compensation. Ultimately, the differences are far less than most outsiders imagine.

There is little reason to believe that a public health insurance option would operate much differently from private health insurance companies, either. Already there are nonprofit health insurance companies that operate more or less like their for-profit competitors. Their incentive to hold down costs and operate in a conservative, cost-effective manner is no less than a for-profit company’s. After all, their top management still wants to keep its jobs and be compensated for good performance, too.

Probably the best example of how a public health insurance option could operate is Oregon’s experience with a quasi-public worker’s compensation insurance company, the State Accident Insurance Fund. Formed in 1914, it operated as part of state government until 1979, when the program was converted to the nonprofit corporation that still operates today.

True, its principal private sector competitor, Liberty Northwest, complains about unfair competition, primarily because of the large reserves SAIF was able to retain from its days as a public entity. Yet in a state that requires businesses to carry worker’s compensation insurance, SAIF serves as a critical provider of affordable workers’ comp coverage for thousands of Oregon companies, large and small.

No doubt private health insurance companies see SAIF, with its predominant role in the Oregon workers’ compensation market, as an example of exactly what they fear from the private option. But most Oregonians don’t regard SAIF as representing a government takeover of workers’ compensation, much less a harbinger of socialism. If a public health insurance option works the same way SAIF does, I think most Oregonians will think they are well served.

Yet Oregon’s workers’ comp system is not so clearly better than the 25 states that have no equivalent to SAIF as to render their mandatory workers’ compensation laws worthless or unworkable. The fact is that mandatory workers’ compensation laws were a major step forward for business and workers in America, with or without a public option for providing worker’s comp insurance.

Adopting universal health care coverage will be equally revolutionary in its effect on our society, whethert it initially includes a mandatory public option, and whatever the precise form that option originally takes.

The real key to health insurance reform is to prevent insurance companies from excluding people from coverage or charging higher premiums based on a person’s pre-existing health condition, and then to mandate coverage for everyone.

If we can accomplish these two things, the rest of the details will evolve over time, including whether to have a public option.

Posted via web from Jim Nichols

befogged by bewilderment and fear

Posted via email from Jim Nichols

The trucks won't load themselves....

I'm headed to work, here are your morning quotes...
[S]he refused to be bored chiefly because she wasn’t boring.    --Zelda Fitzgerald, 1922
The power of accurate observation is commonly called cynicism by those who have not got it.     --George Bernard Shaw (1856 - 1950)

Posted via email from Jim Nichols

health reform reality check...

Myths and falsehoods about health care reform

Posted via email from Jim Nichols

Social Mobility

We often think of the United States as a place with a lot of social mobility. What exactly does this mean? And is it true? Ironically, the answer appears to be a fairly decisive "no." In fact, here's a graph from a 2005 New York Times series on income mobility that shows that the United States ranks second to last among Great Britain, US, France, Canada, and Denmark when it comes to the rate of income improvement over four generations for poor families. And here are two very interesting recent studies that come to similar conclusions -- a report on social mobility by the Center for American Progress and a 2007 academic study by researchers at Kent State, Wisconsin and Syracuse. Here is how Professor Kathryn Wilson, associate professor of economics at Kent State University, summarizes the main finding of the latter study: “People like to think of America as the land of opportunities. The irony is that our country actually has less social mobility and more inequality than most developed countries” (link).

Basically social mobility refers to the likelihood that a child will grow up into adulthood and attain a higher level of economic and social wellbeing than his/her family of origin. Is there a correlation between the socioeconomic status (SES) of an adult and his/her family of origin? Do poor people tend to have poor parents? And do poor parents tend to have children who end up as poor adults later in life? Does low SES in the parents' circumstances at a certain time in life -- say, the age of 30 -- serve to predict the SES of the child at the same age?

The fact of social mobility is closely tied to facts about social inequality and facts about social class. In a highly egalitarian society there would be little need for social mobility. And in a society with a fairly persistent class structure there is also relatively little social mobility -- because there is some set of mechanisms that limit entry and exit into the various classes. In the simplest terms, a social class is a sub-population within a society in which parents and their adult children tend to share similar occupations and economic circumstances of life. It is possible for a society to have substantial inequalities but also a substantial degree of social mobility. But there are good sociological reasons to suspect that this is a fairly unstable situation; groups with a significant degree of wealth and power are also likely to be in a position to arrange social institutions in such a way that privilege is transmitted across generations. (Here are several earlier postings on class; post, post, post.)

A crucial question to pose as we think about class and social mobility, is the issue of the social mechanisms through which children are launched into careers and economic positions in society. A pure meritocracy is a society in which specific social mechanisms distinguish between high-achieving and low-achieving individuals, assigning high-achieving individuals to desirable positions in society. A pure plutocracy is a society in which holders of wealth provide advantages to their children, ensuring that their adult children become the wealth-holders of the next generation. A caste system assigns children and young adults to occupations based on their ascriptive status. In each case there are fairly visible social mechanisms through which children from specific social environments are tracked into specific groups of roles in society. The sociological question is how these mechanisms work; in other words, we want to know about the "microfoundations" of the system of economic and social placement across generations.

In a society in which there is substantial equality of opportunity across all social groups, we would expect there to be little or no correlation between the SES of the parent and the child. We might have a very simple theory of the factors that determine an adult's SES in a society with extensive equality of opportunity: the sum total of the individual's talents, personality traits, and motivation strongly influence success in the pursuit of a career. (Chance also plays a role.) If talent is randomly distributed across the population, rich and poor; if all children are exposed to similar opportunities for the development of their talents; and if all walks of life are open to talent without regard to social status -- then we should find a zero correlation between parents' SES and adult child's SES. So, in this simple model, evidence of correlation with SES of parent and child would also be evidence of failures of equality of opportunity.

However, the situation is more complicated. Success in career is probably influenced by factors other than talent: for example, personal values, practical interests, personality qualities like perseverence, and cultural values. And these qualities are plainly influenced by the child's family and neighborhood environment. So if there is such a thing as a "culture of poverty" or a "culture of entrepreneurism", then the social fact of the child's immersion in this culture will be part of the explanation of the child's performance in adulthood -- whatever opportunities were available to the child. (French sociologist Didier Lapeyronnie makes a point along these lines about the segregation of immigrant communities that exists in French society today; post, post.) So this is a fact about family background that is causally relevant to eventual SES and independent of the opportunity structure of the society.

But another relevant fact is the sharply differentiated opportunities that exist for children and young adults from various social groups in many societies, including the United States. How is schooling provided to children across all income groups? What kind and quality of healthcare is available across income and race? To what extent are job opportunities made available to all individuals without regard to status, race, or income? How are urban people treated relative to suburban or rural people when it comes to the availability of important social opportunities? It is plain that there are substantial differences across many societies when it comes to questions like these.

Education is certainly one of the chief mechanisms of social mobility in any society; it involves providing the child and young adult with the tools necessary to translate personal qualities and talents into productive activity. So inequalities in access to education constitute a central barrier to social mobility. (See this earlier post for a discussion of some efforts to assess the impact of higher education on social mobility for disadvantaged people.)

And it seems all too clear that children have very unequal educational opportunities throughout the United States, from pre-school to university. These inequalities correlate with socially significant facts like family income, place of residence, and race; and they correlate in turn with the career paths and eventual SES of the young people who are placed in one or another of these educational settings. Race is a particularly prevalent form of structural inequalities of opportunity in the US; multiple studies have shown how slowly patterns of racial segregation are changing in the cities of the United States (post). And along with segregation comes limitation on opportunities associated with health, education, and employment.

So the findings mentioned above, documenting the relatively limited degree of social mobility that currently exists in the United States by international standards, are understandable when we consider the entrenched structures that exist in our country determining the opportunities available to children and young adults. Race, poverty, and geography conspire to create recurring patterns of low SES across generations of families in the United States. (See an earlier post on Douglas Massey's analysis of the mechanisms of race and inequality in the US.) And limited social mobility is the predictable result.

Posted via email from Jim Nichols

Jon Stewart on Barney Frank's town hall..

Posted via email from Jim Nichols

Thursday, August 20, 2009

links to read... while I go eat dinner

Replay of 1930?

Jobless Claims data

Initial Jobless Claims totaled 576k, 26k more than expected and up 15k from the prior week which was revised up by 3k. This brings the 4 week average up to 570k from 566k. Continuing Claims were 26k more than estimated and up 2k from last week. The insured unemployment rate was 4.7%, unchanged with the prior week. Those filing for Emergency Unemployment Compensation, which includes those that have exhaused their 26 weeks of continuing claims, rose by 92k to 2.878mm, a new high in this cycle. Those receiving extended benefits, which stretch past the life of EUC, fell by 48k to 401k and we’ll see if this is occurring because all unemployment benefits are running out for these particular individuals or it’s because they are finding new jobs. Because the pace of hiring is still extremely sluggish, it is unfortunately likely the former. Bottom line, the labor market remains very difficult.

Investment in non-transferable, intangible capital in Mexico and drug decriminalization

What "Academic Standards"?

The only academic standards I know about for academic economists is "don't rock the boat" and "go along to get along".

Terrorist T-Shirts

How can people have been arrested for wearing anti-Bush T-shirts, while assault guns are ok?

"You never want a serious crisis to go to waste."

In the Confiscation of American Prosperity, I wrote: "Since the election of Franklin Roosevelt in 1932, every Democratic administration with the exception of Lyndon Johnson’s has been more conservative -- often far more conservative -- than the previous Democratic administration. Similarly, every elected Republican administration, with the single exception of George Herbert Walker Bush’s, has been more conservative than the previous Republican administration." At least, Obama has made sure that I will now have to revise a second edition.

Tax Credit for Buying a Hybrid or Diesel Car

The 2009 budget deficit—How did we get here?

In March 2009, the Congressional Budget Office (CBO) projected a baseline deficit of $1.67 trillion, or 11.9% of gross domestic product (GDP) for fiscal year 2009. This was up from a deficit of $459 billion in fiscal year 2008, or 3.2% of GDP, and a reversal from surpluses a decade ago. These growing federal deficits are the result of four primary factors: the 2001 and 2003 tax changes; the external effects of the current recession; increased Bush-era spending, including spending on the wars in Iraq and Afghanistan; and the various short-term responses to the recession, including the American Recovery and Reinvestment Act (ARRA) and financial market bailouts. The recession itself is the most important cause, responsible for just under half of the deterioration. The ARRA constitutes less than a tenth of the total deterioration since 2001.

What's really different about this recession?

 the increase in people reporting that they are involuntarily working part-time rather than full-time is considerably higher in this recession than in past recessions. Although the increase in these workers has moderated some since the spring of this year, the number of people in the category of working part-time for economic reasons remains at 8.8 million, well above the level of past contractions in both absolute and relative terms.


Posted via web from Jim Nichols